Si Senor

Welcome to the end of the world. Where reality is stranger than fiction. Where a reality TV star is actually leading polls for the office for the President of the United States in September before an election year. I know we're circling the drain but evidently the puddle is shallower than I've casually perceived.

So much has been made of Donald Trumps bombastic rhetoric that's short on execution and long on hyperbole. Anyone can talk. And this clown never stops.

Of all the empty promises and hallow words there lies (pun most definitely applicable here) no bigger fugazy than his illegal immigration reform. His words here.

Much has been made about Mark Zuckerberg and Bill Gates support for expanding the H-1b Visa Program. Trump thinks the program should be reduced and instead filled with "the number of black, Hispanic and female workers in Silicon Valley who have been passed over in favor of the H-1B program". So, instead of allowing a corporation to hire whom they want based on the most qualified they must be forced to fill their positions from a dumb down American pool first. American company's forced to hire not the best man/women for the job but the most qualified man/woman Americans for the job. Small government and affirmative action don't jive.

There is the E-Verify program Trump touts to screen legal employees. This program would cost small businesses 2.7 billion to comply according to Bloomberg. Not to mention,  the killing of agriculture; as ending illegal immigration alone wont pick the corn. It still has to be done by people and who does it and how long does it take to get them? Crops don't wait for red tape. There is also the loss of tax revenue implementing this mandated system across the board. According to Bloomberg, this would be around 17 billion in lost revenue for the government. and more importantly there is this... E-Verify would become a defacto National ID system. How can this be the opinion of a small government minded individual?

How in the world does he "impound remittances" of  "illegals" ? Legal Americans of foreign decent send remittances as well. How does this work? Confiscating all and then sifting through the legal and illegal ones? Does anyone trust the government to handle this task efficiently ? Whats next, sorting through their mail too? And this is how this cat funds the Great Wall of Mexico?


Then there is the numbers.

Sites like this advocate the illegals as a drain on the economy. One where illegals cost California alone 21 Billion in wasted tax dollars. Now subtract that from the 130 Billion that Undocumented immigrants alone contribute to California's GDP – a figure greater than the entire GDP of Nevada – or AT&T’s total revenues. Or, you could say 17 Billion more than all the states COMBINED deficit due to illegal immigration. 

What about Social Security? What about the 1-Trillion illegals have contributed to that ponzi scheme that they wont even participate in? Talk about a screw job. Those wars in Iraq and Afghanistan you liked so much? Paid for by the sweat of wetback Mexican laborers. That 2010 Tax Credit from the Hope and Change savior? You rember that 34 dollars dont you? Paid for by fruit picking, lawn mowing Mexicants. Who helped pay for that balanced budget string you got in the 90's by Jizzy and Newt? You know it.

Then there is this from the Right leaning American Action Forum on what taking the 11+ million illegal aliens out of the country and workforce would look like:

• Take about 20 years and cost the government between $400 billion and $600 billion
• Real GDP would drop by nearly $1.6 trillion and the policy would shave 5.7 percent off economic growth
• Not inlcuding the cost of: constructing new courts, prisons, and other buildings that might be needed to process and detain millions of immigrants.

There is also tripling the border patrol. Again, not a small government position.

Last but not least. Above the idiocy. Above the flip flopping. Above the total empty hot air this guy spouts out there is one fundamental flaw with his logic and it has nothing with him being a big government whore. Its life.

We "Conservatives" will tell you a child is not a fetus. We will tell you the child shouldn't be punished for the mothers lack of morals. Funny how fast we flip the script when talking about illegal immigration. All of a sudden those babies don't hold the same value. Funny how politics can be used to promote morality and in the same breathe use politics to discredit the very morality that was justified originally when its doesn't fit an agenda. So instead of babies... they are anchor babies. As if that title denies them the very protection we so vehemently defend all unborn life with.

So if you want to feel patriotic, light a firework, shoot a gun - sing the star spangled banner with your dick in one hand and an American flag in the other... but whatever you do, don't espouse to ideas that essentially cut your nose off in spite of your face. Illegals aliens, undocumented workers or whatever PC term we are using these days are a boon to this economy. It keeps costs down and that provides a strapped middle class with much need savings. Its like having a slice of China in a field near you.

Thou not lead us to temptation

When I was working on my last entry concerning FEMA and Ron Paul, I started to get into a bit of a tirade concerning the debt. This, in this writers opinion, is the United States greatest threat, not some foreign enemy. With most people showing no interest or regard for it, its up to those of us who do hold these truths to be evident, to keep putting that word out there... and that word is debt (specifically insurmountable debt) is slavery and nothing more then a transfer of wealth; from the many to the few. 

In this article I want to tackle two situations that I see problematic and the key cogs to insurmountable debt. First, there is the federal government and our elected "leaders" role in this failure to be reasponsible. Secondly, is the Federal Reserve and its banks, that have been culpable in allowing (through the manipulation of interest rates) this economy to take a path that will see it fall off a cliff. What the recoil will be from QE 2,3,4,5,6,7 bailouts and stimulus remains to be seen, but there can be only one thing we know for sure. 

 (Sodahead.com)

That is, we are accumulating debt. And vast amounts of it. The implication of compound interest makes these actions basically treasonous by our elected leaders and criminal by the FED. How can Congress and the executive branch both complicity push the cost of running the government so far out of the realm of practicality? How is it legal for the FED to lend huge sums at what amounts to no interest to those banks that were all considered "too big to fail" who then take that liquidity and invest in T-Bills that will actually yield a 2-3% interest? These practices destroy existing savings and the incentive to save; thus creating only one desired effect - consumption. 

Because, without people borrowing and spending the whole thing blows up. Money = debt, debt = money.  The biggest problem is that the American population are over saturated in debt thus why the sub-prime in housing was needed. Like its population, the US government, is over saturated as well. They, unlike you and I, have no limits and that defies logic. Lets look at the executive's role.

The Interest payment is the only debt payment required by the Constitution that must be accounted for in the budget each year to be paid.

With that said, every President hopeful on the Republican side and President Obama have all released a budget or a proposed budget.

Not one of them have a plan to balance the budget next year, neither will any one of them do so in four years either (with the exception of Ron Paul). We will without a doubt have continuous mounting deficits that will probably be in the 1-2 Trillion mark annually regardless of who is in office (with the exception of Ron Paul). Starting to notice a trend here?

We have seen Obama’s appetite for destruction already regarding deficit spending; so let’s take a peek at the eventual Republican nominee’s (Mitt Romney) insanity.

Mitt Romney wants to increase defense spending by putting 100k more troops on the ground and rebuild parts of the Navy and Air Force. He would not have left Iraq, appears to have an itch to scratch in Iran and will not leave Afghanistan until its won (the forever war) or at least until his generals say to leave??? His budget has the wealthiest Americans (who pay the most income taxes) getting a significant tax cut on top of the existing tax cuts that are already in place.

Romney has no plans to offset the lost revenue that will surly happen when these cuts take place, nor does he have any plans to make any significant cuts in existing outlays to recoup the ramped up defense spending. This defines logic. Mitt Romney's plans are contrary to anything sane in regards to the federal government living within its means. He’s fiscal policy’s will be train-wreck like.

That however, is not how Romney sees it. He thinks if he cuts taxes the gains in receipts will pay for this increase in spending. The problem with that is that the FED doesn’t think the economy is going to grow by all that much… and they control the money supply. This leads us into the second part of the equation: the insurmountable tag team.

 The FED’s long term forecast is a relatively weak one going forward with long term GDP growth outlook being in the 2.3 to 2.6 percent ranges. The FED has also said it will not look to raise interest rates until, at the earliest, 2014. Here you have the economy just barley keeping its head above water for the foreseeable future, the FED continuing its non-stop intravenous liquidity therapy into bank’s reserves creating a soon to be inflation tsunami all the while our elected representatives continue to show no regard for the situation.

I want to take a look at two charts that really speak volumes for what is going on and what we will being seeing soon enough in our own backyards. Lets start at 2006, when the FED stopped tracking M3. As you can see below, when Shadowstats picked up the tab of tracking M3, the growth in money supply was steadily rising until early 2008. As the recession came, the Fed lowered interest rates to avoid the fire of deflation but banks weren’t loaning, so the money supply dropped with it.  

(shadowstats.com)

A curious situation started occurring by the middle of 2010. M3 started to rise and its rising still as of now. Meanwhile, Interest rates from 2009 on have stayed basically at zero and as we’ve already heard from the FED, they will remain that way for years. This does not bode well for the dollar or anything equity wise going forward in my opinion. If the economy continues its "recovery” like so many in the media says it is, the eventual outcome will be a pretty substantial increase in inflation. This would, by default, put relatively the majority of commodities into buy, buy and buy more mode. Most specifically gold and silver.

Equally alarming will be the federal governments penchant for debt as we have also seen, they will not live within our means, thus piling more debt on to the insurmountable existing amount. What happens when the FED has to raise interest rates? If we are seeing 450 Billion interest payments already (Intragovernmental and Public) imagine what will happen to those when interest rates go up? They could look something like this:

Just for a little perspective. In 1988, the national Debt was 2.6 Trillion. The interest payment on that in the budget was 214 Billion. The interest payment in 2011 was 450 Billion, roughly double. The principal, as we know, was 14+ Trillion.

The US government will not cut spending and we will continue to finance the welfare/warfare system. What happens in 10 years from now will be interesting thou. Can the FED really raise rates, without completely tanking the economy? And if they did, what would happen to the interest payment on the debt outstanding (besides sky rocketing into the trillion dollar mark). If the FED does not raise rates out of the fear of deflation, isn’t massive inflation the only alternative?

George Carlin said it best:

When you're born you get a ticket to the freak show. When you're born in America, you get a front row seat.

Get 'ya Popcorn ready!

The token FEMA "critique starlet" (Dr Paul) takes his final bow.

As we all know by now, unfortunately, we had another unexpected natural disaster last week, this time in a vast multi-state reach, covering much of the Midwest and into parts of Tennessee. This was a deadly storm that took many lives resulting in tear jerking tragedies. Like this heart wrenching story, where a 15^th month old survived the initial trauma from being thrown by a twister into a nearby field. Her entire family perished that day; both parents and two siblings. Sadly, she suffered the same fate just a few days later. Or like this 36-year old mother, who lost both of her legs; in order to protect her children.

The economic impact of this storm will be in the hundreds of millions, if not approaching the billion dollar range when its all said and done. This will require all hands on deck including those at FEMA. With that said, it appears, like every Tornado and Hurricane season, a reporter (or I should say reporters), tap Congressman Dr Ron Paul on the shoulder to ask him his view on the role of government in the event of natural disasters. This is by no accident.

Dr Paul's response was already prerecorded and written on their notepad, all the crossing of the t’s and dotting of the I’s was already done. That is because Dr Paul’s consistency, can and will always allow, a lazy reporter to get a cheap story that will attract buzz, with little effort in terms of leg work. All they need him to do is go on record and their story is complete, a Presidential candidate says something off the beaten path; It’s a win-win for the reporter and his publisher.

Here is the problem with this.

Does Ron Paul believe FEMA should exist? No.
Does he believe in the federal government having a hands on role in natural disasters? No. 
Is FEMA one of the worst bureaucracies in government in terms of lack of accountability and waste? YES. 

Why does Dr Paul feel this way? Its because the constitution doesn’t specifically allow for it to be funded… period. It’s that simple. So why do they cherry pick this story? Because, asking him what role we have in building up an empire then the subsequent invading of other country’s or allowing the FED Reserve to manipulate interest rates, creating bubbles, isn’t a story. Even though the amount of wealth, blood and treasure those “programs” waste are astronomically higher and oh yeah; neither are written in the constitution either (sorry neo-conservatives, what we have isn’t a defense, its clearly offense).

Now, as Ron Paul has said many times, he has a prioritized pecking order in which he would see programs and departments eliminated and/or trimmed down; specifically aiming at the most costly and unconstitutional programs or agencies we have. Do you know where FEMA would rank on that list?

First, you would have to look to see where FEMA's budget comes from and that would be none other then Homeland Security. How fitting, an agency that was created in 2002 overseeing another program that was initially funded and created in 1979. Hardly constitutional and it fits the exact model and voting record of the self described “defender of the constitution”, but I don’t want to defeat my own point before I have even made it, so I will ignore that tidbit.

Last year, FEMA spent about 13 Billion dollars. That is a big number but it terms of our budget? Is it? It is roughly 0.003% of our budget. I would assume clearly, Dr Paul would look elsewhere for the cuts. Why not start with the national debt? Sure, we couldn’t pay off the 15 Trillion, but what about that 250 Billion interest payment on that debt? Imagine the savings if we actually started to balance the budget annually?

Why not defense? The funding for defense, as I have reported numerous times, is outright offensive and hardly a defense department. Its become a slush fund for big business and a "global force for good", their words, not mine. There is not any justification i can understand in fighting rouge terrorists who claim no allegiance to any nation on principal, let alone for the amount we have spent, and to boot - in this economic environment. The Department of Defense’s base budget has increased 81% nominally and 43% inflation adjusted since 9-11. Throw in the Nuclear budget, and that spending itself has increased 21% (inflation adjusted) since 9-11.

Imagine the savings if we knocked those back to the 2001 levels or at least cut them in half? Or, what about the 1.3 Trillion spent in endless wars in the Middle East? Surly we could find savings there. We are talking about saving TRILLIONS, not to mention lives on both sides and actually using our defense to I don’t know, maybe even defending our own borders? Now that is a novel approach, eh? Using the National Guard to actually guard the nation, as opposed to fighting wars across the globe? Who knows, maybe even providing assistance, logistics and overall support for natural disasters would be available??

Quit these wars, bring the troops home. Let them spend their money here. Let’s have a real stimulus package. We are up to our ears in debt. Trillions and trillions of dollars and no end in sight for these wars. Then we could take care of our people. Matter of fact, I have even proposed on many of these programs that I don’t fully endorse because technically they are not permissible under the constitution. But taking care of sick people and the elderly and children I have nothing against that… IF YOU CUT THE SPENDING. - Ron Paul

Those are places where Ron Paul would start. Even though FEMA is one of the worst bureaucracies in terms of waste and inefficiency, its small potatoes in the grand scheme of things, it would not be a top priority. Cutting FEMA or asking about the role of food stamps surly create emotional responses, but in reality these issues are not what is draining us. In a vacuum, those are philosophical questions that would make an interesting debate… but we are living in a time where the stakes couldn’t be higher as we fight to remain solvent, vacuum type thinking is irrelevant. We need solutions to problems and until we start asking the right questions, we will never have those debates; thus we will never fix the real problems.

"Republicans are starting to realize you cant say “oh, lets cut money for food stamps but not the food stamps for the military industrial complex” because its just not going to work. - Ron Paul

So, the next time a reporter wants to tap Dr Paul on the shoulder for a quick story when hurricane or tornado season comes around, he wont be around. He is retiring form congress at 76 years old. He, as I write this, is well behind on Super Tuesday; thus he will not be our next President. They will have to find someone else to do the work for them. Maybe, they could go out and do actual reporting. Cover the minutes from the FED meetings. Maybe go out and find Stephanie Decker, the mother who lost her legs and bring her story to the masses. Or maybe seek out these heroes from Branson Missouri, who risked their lives in order to save others in the face of a deadly tornado or the hundreds of others  if not thousands from this past week who saved lives.

There are plenty of stories waiting to be told, they just need to be reported. If that’s not juicy enough, cover the destruction of our dollar and our nation through crony capitalism, fractional reserve banking and a debt driven economy that results in war and more spending (debt) to finance it. That, however, may not make it past their publisher or editors desk. We can’t have people actually learning how bad off things really are, now can we?

When is close, too close?

In my week off, a great investigation from the Washington post was published surrounding all members of both the House and Senate and its findings were quite detailed and very telling of the dysfunction that lies in the heart of Washington. If there is a reason for this blog its stated in the subtitle and out of the 47 members being investigated; its only fitting that we have 22 vs 25 representing both party's almost equally (22 R vs 25 D). The most telling of this investigation however, in my opinion, is the relationships of sons and daughters to their parents who are elected representatives. This regardless of how innocent the situation appears and it very well may be; it should always be looked down upon as unethical.


Now some of these findings appear to be a big reach as far as corruption is concerned, if nothing more then totally coincidental. For example, Rick Rahall, a Democrat Congressman from West Virginia, who ear-marked 20 million for a parking garage with a bus and taxi facility in downtown Beckley WV. The rub is the construction sits a half a mile from his sons home and about a mile from one of  the congressman's personal property's. Ive been through Beckley West Virginia many times on my way to Florida and its "downtown" is small enough that downtown basically fits inside a mile or at the most a two mile radius; so its not as if the property's could avoid nestling up to one another in that postage stamp.


While some of the others tend to look like outright nepotism. Take for instance, representative Corrine Brown (D) of Florida. This was from the Washington Post investigation:

Between 2005 and 2010, Brown helped secure $21.9 million for six clients of a lobbying firm where her daughter works. The clients paid the firm more than $1 million to represent them before Congress. Brown was the sole sponsor of $1.79 million in earmarks sent to a seventh client, the Community Rehabilitation Center, while her daughter worked as a lobbyist on behalf of the center, the Florida Times-Union reported in 2010. The congresswoman declined requests for an interview. Her daughter did not respond to requests for comment.

According to Sen. Bill Nelson, also a Democrat, was a co-sponsor for the pork containing the rehabilitation center. After learning about the connection to Corrine's Daughter he bailed and rightfully so:

“We try to do our due diligence. The center had the backing of many community leaders,” Nelson spokesman Bryan Gulley told the Post. “But when we learned her daughter was involved in lobbying for the center, that raised enough concerns that we no longer supported the project.”

This wasn't the first time Rep Brown was in hot water because of her lobbyist daughter. There was the situation in 1998 where a millionaire ex-con (Foutanga Bit Babani Sissoko) who just before he was sent to prison, turned around and handed Corrine Browns daughter the keys to a brand new 50K Lexus. Then it was said Mrs Brown "led a feverish lobbying campaign" to then Attorney General Janet Reno for his pardon. I'm sure some type of vote down the road required by the Clinton Administration would be sufficient payment enough? 


According to Sissoko's lawyer however, the car was meant for Brown herself... I wonder why she didn't take it? Sissoko, being from West Africa, might not understand the ethical concerns of that - but you can be sure Brown did; hence the re-gifting of the vehicle to her daughter. The same lobbyist daughter who would join her mother on long weekends (and there were many of them) in one of Sissoko's lavish Miami property's. 

Mrs Brown is certainty not the worst offender on this list in terms of dollar amounts but it raises some serious questions about ethics when you have a sitting member of Congress doling out billions of dollars to company's or organizations that are represented by family members of said Congressmen. The relationship between Congress and lobbying  is already too close for comfort but when you factor in family members working on K-Street it just opens up an entire new paradigm. One that only tightens the grip special interest has on our coffers.

Apparently the Grinch does have a heart after all?

Newton Gingrich, who is said to be the Tea-Part choice (it’s good the paper muffles my chuckles) for the Republican ticket for November is angry over cuts Mitt Romney made while Governor. Which I find funny because Gingrich said himself cutting waste and fraud in the Medicare and Medicaid program would save $1 trillion over 10 years.

I disagree with much of what Mitt Romney has to say as I have pointed out on many occasions, but this piece in the New York Post that Gingrich is trying to use against him in Florida (a big Jewish population no doubt) is one where I cant fault Mittens. Apparently, in 2003 as governor of Massachusetts, Romney cast a veto that would nix $600,000 in additional funds for poor Jewish nursing-home residents to get kosher meals.

Romney said it “unnecessarily” would lead to an “increased rate for nursing facilities”. That is because of the costs of Medicade and what it was doing to the budget. We are talking about Medicade here; which means we are talking about government money. Romney’s spokesman defended his opposition, saying the state was in crisis and the kosher funding veto was needed to head off higher reimbursement rates for Medicaid.

Of course there was stiff opposition. Jeffrey Goldshine, the retired CEO of a company that operated a kosher facility in Massachusetts said this when being interviewed by the NYPost: “I was outraged. For the elderly Jewish residents of a nursing home that have always been kosher — they should be entitled to continue.”

There was also Brooklyn state Assemblyman Dov Hikind, an Orthodox Jew and Newt Gingrich supporter, who also had this to say: “People who are kosher — it’s not a choice they have, everybody understands what kosher is. You have huge communities of Jews who eat only kosher and you have a huge community of senior citizens”.  

Let me state that I have no religious background nor preference and I feel no religion should be upheld by government and this veto by Romney is no exception. Then you have a Mormon in Mittens who is not only making cuts to Old Jewish folks but Catholics as well according to Newt (who is a Catholic) at a recent campaign stop in Pensacola: “Let me note in passing that Romney as governor imposed on Catholic hospitals provisions against their religious strictures” said at a campaign stop in Pensacola.

We can debate what waste is and we know what’s fraud, but when do you have to make tough decisions as to what to cut? Gingrich wants to make serious cuts to save money as he sees half a Trillion annually in savings on the budget if you modernize. How do you suppose you “modernize” and “cut waste and fraud in Medicade” if you never have to make the tough decisions? You don’t. Newt has no plan to shrink government and this proves he doesn’t even want to make the tough decisions when its time to break out a scalpel.

For Newton to somehow say on the stump: “he (Romney) has no understanding of the importance of conscience and importance of religious liberty in this country” because Romney made cuts to Medicade is insane. Of course it’s not popular. The Assemblyman and retired CEO of the Kosher Company illustrate that. I see it this way; no religion or beliefs should be paid for by government across the board. Secondly, Newt is using fear to drive voters. He even used the infamous “I know of a” to strike his point. “And in at least one parish I know of, the priest talked about the danger of a dictatorship that imposed anti-religious standards in all of us.” Stop it Newt.

Lastly, since there is “huge communities of Jews who eat only kosher” as the Assemblyman says there is, I would suggest they ought to pick up the check and not the government. This goes for all religious beliefs when it comes to Medicare. If I fault Romney for anything in this, it is simply not reaching out to said  community, thus giving them a chance to help.

If Gingrich is running to cut government and restore fiscal responsibility, why does he chastise thou that do? He went after Mittens for his experience at Bain he goes after his for cutting Medicare expenses when he was Governor. I think there is much bigger issues to cut besides Kosher food from Medicare as i think there is more honorable things than basically being a corporate raider, but Mitt's work history and his balancing budgets is in the realm, I don't think you can say the same for the Grinch. Maybe is realm truly is on the moon?

Pimp My Crony Capitalist Ride: Starring Prez Obama

There is something about a true free market that is romantic and optimistic, so much so that it arouses the deepest emotions in all of us if we imagine the boundless possibilities. The simplicity and beauty of a true free market is that way because it’s derived from nature itself. Its self correcting, rewards hard work and due diligence but also poetically enough; punishes and discards the losers and Mal-investment. You could call it Darwinian, and it can be cruel but more than anything it you have to call it fair.

Now comes what we have – crony capitalism. American capitalism today and for over a century has been anything but free. The system we have in place today is corrupt and has been completely hijacked by the collusion between big business and legislators on the take. I’m not talking about the overt sleazy ones either; im talking about almost every single one of them outside of maybe a Ron Paul. Capitalism today is being destroyed by itself. We are eating our own. Corporations are collectively smarter than politicians. Politicians also need money. Corporations need favorable legislation and thus what we have today is a shell of a free market.

The overt transparency of fraud became evident in the Obama administrations predecessor (the Bush Administration) who used the wars in Iraq and Afghanistan and disasters like Katrina to facilitate no bid contracts and cost plus contracts with huge corporations like Bechtel and Dick Cheney’s former company Halliburton (do i really need a cite or link here). There was also Treasury's Hank Paulson (former Goldman CEO) giving his former cohorts on Wall Street inside information as to governments plans weeks and months before things happened during the financial crisis of 2008. Not nearly as talked about but equally suspect was the 1 Trillion dollar (and counting) Medicare prescription-drug benefit that facilitated a giant subsidy to thepharmaceutical industry. Maybe it’s the rise of the information age, maybe its our system finally coming undone; either way this type of corruption is something I have never seen or read about since the days of the industrial revolution.  

 

This current administration is no stranger to this corruption either (just look at his past contributors). In fact, what we are seeing under this administration is unprecedented on the subject of crony capitalism and that's saying alot considering Bush's track record. . 

One of the most notorious cases has been the solar company out of California, Solyndra. This was a company that received a 535 Million dollar loan from the federalgovernment in 2009 - spent 1 Million dollars in lobbying in 2010 – then went bankrupt in 2011. This put US taxpayer’s on the hook for the 535 Million dollar loan. Solyndra was also influential in the Presidents (who toured Solyndra in 2010 and tabbed it a success) election as its board contributed large sums of money from their own accounts. We also learned via the Tribune Washington Bureau that the Department of Energy employee who helped monitor the Solyndra loan guarantee was one of Obama's top fundraisers.

Solyndra however doesn’t touch the GM scandal. As I pointed out before, the US buying a stake in a company and having it competing with other company’s in the same industry who is not back by the federal government is not supposed to happen. Talk about an UN-leveled playing field? But it did.

GM saw what the Prius was doing a decade ago and for years wanted to get into the hybrid market but never could gain traction. So it concentrates on the next big thing, the electric car. This drive towards the electric car breeds the conception of the Chevy Volt. In September in 2008, the Volt was unveiled. By this time, GM is failing and on its death bed. Nine months later enters Obama and his blank check.   

So here the President sits with a gigantic stake in GM. It’s actually us, the taxpayer with the giant stake, but for the sake of the argument, it is Mr President since he has our check book…we just pay the bills (but only some as we have annual trillion dollar deficits). This could go on forever.

Let’s reset. It’s 2009 and with the US tax payers on the hook for GM, and the economy in the tank, Obama puts together the: Presidents Economic Recovery Board. On that board he appoints several giants across the commerce spectrum; one of them is GE Chairman and CEO Jeffery Immelt. GE is known for many things and being a conglomerate, it is obviously diversified. One of the technologies GE is bullish on is Wind Turbines (read green energy) so it makes sense when you take into account this administrations feverish green outlook. GE is also smart, they havent grown to their size and scope being naive; so they do not take risks that aren’t highly calculated.

So what happens in 2010 is pretty interesting. Remember Jeff Immelt? He cuts a deal with GM to have GE  buy 12,000 Chevy Volts by 2015. This is the same Chevy Volt that there is no demand for, the same vehicle that has serious questions about its reliability and its safety. Yet, one of the richest, most diverse corporations in the world decides to replace half of its fleet with a car that is still much in question? How does Obama show his gratitude, for buying into this boondoggle? He gives Immelt a promotion. One might start to ask themselves, how does a Chairman and CEO of GE…receive a promotion? Simple, President Obama Gave him another chair, and made him Chairman of the: Council on Jobs and Competitiveness on January 21, 2011.

My Congressional representative (3^rd district of PA) Mike Kelly, who is a car dealer himself, had this to say recently about the Volt and Administration:

 

“This is a halo car, not so much for General Motors , but for this administration,” Mr Kelly Said. “If GM thought this was such a good investment, they would have launched it themselves many years ago. If these cars are so great and so marketable, why do we have to subsidize them so heavily?”

 

Here you have a sitting President with a green agenda buying with US taxpayers a stake in an American company GM who sells cars in the US against other US car manufacturers with no federal coffers to dip into. That is the first strike. Then you have said President in a cozy relationship with a CEO of a company like GE (who also has green interest) buying an enormous amount of cars off of GM, who is backed by the federal government. I mean, why not the Ford Fusion Hybrid? They are an American automaker as well and the Fusion Hybrid is actually a better car, according to many industry experts. Strike Two.

Last but not least is ethics. How can a President (who came in loaded with a cabinet of Wall Street insiders) so stuck in a jobs rut side with a company that has been shipping some of its businesses and jobs offshore all the while using tax loopholes to escape paying taxes while using the Volt as another tax win with its tax credits? Or how can we cut joint venture deals with the Chinese to sell the Volt; then to only have the Chinese steal the technology to turn around and use it against us like they have on so many other occasions across multitudes of industry. It’s pretty obvious that the end game is this: GM must succeed for the President to succeed, regardless of how it’s done. The ends justify the means. The government picking and choosing winners, betting on what technology they think is the best option instead of the market place is why Obama strikes out on this matter.   

There have been numerous examples of crony capitalism over the years but we are seeing some pretty alarming examples at the height of our elected representatives over the last decade, and the corruption starts at the doorstep of 1600 Pennsylvania Ave. This isn’t a partisan problem; this is a national, state and local problem; as this affects all of us and at every level of our government. If it happens there and is so visible, imagine what we don’t know about? We can call it crony capitalism or call it a plutocracy or a plutarchy but whatever you do; do not call it capitalism and never under these conditions dare call this market free.

GM and the US taxpayers are at the halfway point to break even on GM

It was learned this week that the US tax payers are still missing the repayment of 132 Billion dollars from  TARP, which was launched in 2008. In a report issued Thursday by Christy Romero, who is the acting special inspector general for the Troubled Asset Relief Program. The Program, as we all recall, was to save the financial sector from themselves because of their addiction to the derivatives game (think World Series of Poker).

In 2009, the remaining cash in TARP was split between a variety of business (mostly banks) but there sat GM. Facing Chapter 11, GM was first rebuked then denied by the President. GM had to do what any failed business has to do, it had to file for bankruptcy and they did; wiping out all the stockholders who stocks were completely vaporized into worthless pieces of paper. Then after filing and less then a month off of the stock exchange; GM reemerged with an infusion of American taxpayers borrowed capital. With backing of the US and Canadian government; GM was now owned more by the state then it was private investors.

Fast forward to this week. Here is what President Obama had to say in the State of the Union Address:

On the day I took office, our auto industry was on the verge of collapse. Some even said we should let it die. With a million jobs at stake, I refused to let that happen. In exchange for help, we demanded responsibility. We got workers and automakers to settle their differences. We got the industry to retool and restructure. Today, General Motors is back on top as the world’s number one automaker. We bet on American workers. We bet on American ingenuity. And tonight, the American auto industry is back. 

This is classic example of where politicians say things that are rather hallow but are not completely false, so in lies some grey area (wiggle room). Mr Obama actually did refuse to help GM at first. So therefore, President Obama only refused to let them fail, well... only after he first refused to help. He can say it was because he "demanded responsibility" but the truth of the matter is; he was weighing the political capital in letting it fail or saving it. Being one of the most anticipated Presidents in decades, he wasnt about to start out his presidency by backing a losing horse. Think about it, organized labor are as close to the Democratic hip as the Evangelicals are to the Right's, so for him to not having saved it from the jump means he was weary of the public's growing anger towards the bailouts. 

As far as the 1 million jobs, it is including all the suppliers and they wouldnt have all lost work. There is many small businesses across the country that feed off the automotive industry but many of them would have survived because most of them are diversified enough to withstand the hit. Its also worth noting that even if GM did face liquidation, another automotive company would have stepped in and bought the brand. Thus many jobs would have been saved if not most; even without the bailout.

As far as GM being some kind of triumph or success story... you give me any business and dump 34 Billion dollars of outside investment money into it that costs said company nothing; Ill build you a success story too. Who couldnt, with that type of Capital/lottery/welfare? Now, about the American auto industry being back? In the words of the immortal Lee Corso: not so fast my friends. According to the US Treasury, US Taxpayers would need to sell its GM stocks at $53 per share to break even. Friday, January 27th it closed at $24 per share. How long do we have to wait to see if this investment at least breaks even? Being GM is the "worlds number #1 car-maker" now, don't ya know...lets hope its sooner rather then later.