" A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years". The author was Alexander Tytler, an 18th century Scottish historian.
I have listened to many reasons, excuses if you will, given for Romney's defeat. The media's biased coverage; Hurricane Sandy and Chris Christie's effusive behavior; Romney playing prevent defense with regard to Benghazi to name a few. But I would argue that Romney lost because we are at Margaret Rouse's tipping point. A critical point in an evolving situation that leads to Tytler's new and irreversible development. There are now more takers than givers. This election proves that we have passed this critical point.
Wednesday, November 7, 2012
Tuesday, August 7, 2012
Ponzi Schemes Revisited
The light of day has fallen on The Social Security ponzi scheme. For the first time, those who retire today will have paid more in social security taxes then they will receive in benefits. We have come along way since 1960 when one could expect to get back 7 times payroll taxes paid.
In 20 years, when the so called trust fund runs dry, the promised benefits will fall by 25%. If we want to keep benefits from falling we will just have to pay higher payroll taxes. It is only a matter of time before the kids figure this out and force politicians to get real..
I wrote a blog a year ago about another federal ponzi scheme called Keynesian Economics. This theory defies common sense. Keynesians would have us believe that if you take from Peter, which will dis incentivize him to increase his productivity , and give to Paul who will be convinced that there really is a free lunch, that this will produce a multiple increase in our national income (GDP). Well just look at the scoreboard. We have increased government spending in the last 3 years by over 8%, yet real GDP has fallen. If my math is any good, that looks like a negative multiplier.
Academia considers the likes of President Obama and Paul Krugman as Keynesian intellectuals. My definition of an intellectual is a person born with a high IQ and zero common sense. Once again, "the emprorer has no clothes". Even Keynes would have agreed with the recent Ernest and Young study that if the President's plan to raise tax rates becomes law, it will kill over 700000 additional jobs.
Ray Zimmerman
Sagle
In 20 years, when the so called trust fund runs dry, the promised benefits will fall by 25%. If we want to keep benefits from falling we will just have to pay higher payroll taxes. It is only a matter of time before the kids figure this out and force politicians to get real..
I wrote a blog a year ago about another federal ponzi scheme called Keynesian Economics. This theory defies common sense. Keynesians would have us believe that if you take from Peter, which will dis incentivize him to increase his productivity , and give to Paul who will be convinced that there really is a free lunch, that this will produce a multiple increase in our national income (GDP). Well just look at the scoreboard. We have increased government spending in the last 3 years by over 8%, yet real GDP has fallen. If my math is any good, that looks like a negative multiplier.
Academia considers the likes of President Obama and Paul Krugman as Keynesian intellectuals. My definition of an intellectual is a person born with a high IQ and zero common sense. Once again, "the emprorer has no clothes". Even Keynes would have agreed with the recent Ernest and Young study that if the President's plan to raise tax rates becomes law, it will kill over 700000 additional jobs.
Ray Zimmerman
Sagle
Thursday, July 12, 2012
FOURTEEN REASONS TO REELECT PRESIDENT OBAMA
FOURTEEN REASONS TO REELECT PRESIDENT OBAMA
Because he believes that:
1). Higher marginal tax rates will grow our economy and spur employment. Even though historically this tends not to be true, our President claims that this time it's different, and we know how prophetic he has been in predicting economic results. But the defining reason for this position is that it is fair.
2). Obamacare will cut costs and increase quality. We can be sure that he will pick fair, honorable, and constitutional loving members to serve on the unelected commission that will decide how our entire healthcare system is rationed. Oh! The shortage of doctors is a overrated problem.
3). Adding an additional $5 trillion to our debt in just 3 1/2 years was extraordinary and beneficial. After all, who is seriously contemplating paying it off.
4). Deficits of $1 trillion plus, as far as the eye can see, is a brilliant strategy. How else can we continue our standard of living? We are borrowing .40 of every dollar we spend. If we reelect him, he will clearly increase this percentage.
5). It is important that we fund the increasing dependency of our citizens such as funding Social Security Disabilities. Where does one go after 99 weeks of unemployment insurance that has expired? The good news is that the number of disability applicants is growing faster than our nation's total job creation.
5). It is important that we fund the increasing dependency of our citizens such as funding Social Security Disabilities. Where does one go after 99 weeks of unemployment insurance that has expired? The good news is that the number of disability applicants is growing faster than our nation's total job creation.
6). The $830 billion stimulus was a investment like Solyndra, and a very profitable one at that. The American People paid a very reasonable $278,000 per job for one that paid $35,000.
7). Having a photo I.D as proof that one is eligible to vote is down right discrimination. We should stick to the honor system. Why would one want to cast a ballot illegally?
8). Saving General Motors by bailing out the UAW saved thousands of union jobs. (sorry bond holders. Be careful to whom you loan money). The good news is that we have been paid back. Some day (not in our life time) the 500 million shares that we the taxpayers own at $55 a share may make a profit. The shares are currently trading at $19.
9). It is unconscionable! It is not what we are all about! It is torture to waterboard terrorists, but it is humane to kill them even with accepting innocent women and children as collateral damage.
10). Even though it is a matter of their conscience, it is still wrong for the Catholic Church to deny free abortion pills to their employees.
11). Just because an employee loses his employer's health coverage which the premium was paid with pre-tax dollars, and he is forced to buy insurance in the state exchanges using after tax dollars, this is not considered a tax increase because the President has proclaimed this a bogus argument.
12). With regards to leaking classified intelligence, sharing our technology and secrets with the rest of the world is the fair thing to do. Plus it makes our president look macho and cool.
13). A more progressive tax system will enable the bottom 50% who do not pay any income taxes, to become the bottom 60%. This will ensure the election of future politicians who will guarantee future fairness.
14). As Marx believed, that fairness trumps freedom.
Ray Zimmerman
Sagle, ID
Sagle, ID
Monday, June 18, 2012
PROFIT
President Obama's knock on Free Enterprise is that it is driven by profit. Where does he think jobs come from? Jobs, both private and public, are generated by profits, and they are maintained only when profits are maintained. He says he wants to grow our economy. Grow what? If he desires more tax revenue, profit cannot be a pejorative term. Profits are the mothers milk of a growing vibrant economy.
According to our President, the government is the driver of growth. Recently, he stated that he was not worried about the private economy, but the public side needed some help. But state and local layoffs have not resulted from falling tax revenues. These are up 6%. It is the rising pension and health care costs that are causing the shortfall and layoffs. He wants Federal taxpayers to send money to Jerry Brown in California so Brown can continue his State's insane public pension policy. But liberal parts of California are beginning to see the light. Last week the liberal city of San Jose voted 70% in favor of cutting pension and other fringe benefits for their public workers. This event along with Wisconson's failed recall could be a catalyst for much needed public pension reform.
Ray Zimmerman
According to our President, the government is the driver of growth. Recently, he stated that he was not worried about the private economy, but the public side needed some help. But state and local layoffs have not resulted from falling tax revenues. These are up 6%. It is the rising pension and health care costs that are causing the shortfall and layoffs. He wants Federal taxpayers to send money to Jerry Brown in California so Brown can continue his State's insane public pension policy. But liberal parts of California are beginning to see the light. Last week the liberal city of San Jose voted 70% in favor of cutting pension and other fringe benefits for their public workers. This event along with Wisconson's failed recall could be a catalyst for much needed public pension reform.
Ray Zimmerman
Dreams From My Father
Four years ago, I read President Obama's first book about himself. When I finished, I felt confident that America would not elect someone so self absorbed; someone who had such antipathy for America.
David Maraniss's new book "Barack Obama: The Story", sheds a not so complimentary new light on our President. Just like Richard Blumenthal, who served in Vietnam and didn't, and Elizabeth Warren, a Cherokee who isn't, our President exaggerated his job history and basketball prowess. According to Maraniss, Obama never had meetings with Japanese financiers and German bond traders. His office was so small, barely large enough for a desk. He worked in back rooms checking things on the phone. And in highschool, he claimed that he was denied a starting role on the basketball team because of his black style of play. It turns out that he didn't jump very well. Were these "Dreams From Barack"? By the way, his team won the State Championship.
As Charles Krauthammer said, "How many people have written a total of two books, both about himself? That should have given us a clue."
Ray Zimmerman
David Maraniss's new book "Barack Obama: The Story", sheds a not so complimentary new light on our President. Just like Richard Blumenthal, who served in Vietnam and didn't, and Elizabeth Warren, a Cherokee who isn't, our President exaggerated his job history and basketball prowess. According to Maraniss, Obama never had meetings with Japanese financiers and German bond traders. His office was so small, barely large enough for a desk. He worked in back rooms checking things on the phone. And in highschool, he claimed that he was denied a starting role on the basketball team because of his black style of play. It turns out that he didn't jump very well. Were these "Dreams From Barack"? By the way, his team won the State Championship.
As Charles Krauthammer said, "How many people have written a total of two books, both about himself? That should have given us a clue."
Ray Zimmerman
Sunday, April 29, 2012
Government Accepted Accounting Principles
Government Accepted Accounting Principles
This week, the trustees for The Social Security Trust Fund issued their annual report. The good news is that the Trust's funds will last until 2033, but that is 4 years earlier than last years projection. This news is only good if you believe that Elvis is alive and well, or that raising tax rates encourages investment and job creation.
They report The Trust Fund's total assets of $2.7 trillion, all of which are invested in U.S. Treasuries. In other words, we, the taxpayers, owe The Social Security Trust Fund $2.7 trillion. So, "where's the beef"? They can't have it both ways! If we could use the principles of government accounting, we could borrow and spend all the money in our 401Ks and IRAs, and replace those assets with our personal IOU. We could spend our total retirement, and still have it.
On a related subject, in 2011 our national income (GDP) grew by $600 billion. Sounds good until you compare what we spent (1.3 trillion deficit) to achieve this growth. Where is that elusive Keynesian Multiplier? If my math is any good, this Obama investment only lost 54%. When compared to Solyndra, not bad!
This week, the trustees for The Social Security Trust Fund issued their annual report. The good news is that the Trust's funds will last until 2033, but that is 4 years earlier than last years projection. This news is only good if you believe that Elvis is alive and well, or that raising tax rates encourages investment and job creation.
They report The Trust Fund's total assets of $2.7 trillion, all of which are invested in U.S. Treasuries. In other words, we, the taxpayers, owe The Social Security Trust Fund $2.7 trillion. So, "where's the beef"? They can't have it both ways! If we could use the principles of government accounting, we could borrow and spend all the money in our 401Ks and IRAs, and replace those assets with our personal IOU. We could spend our total retirement, and still have it.
On a related subject, in 2011 our national income (GDP) grew by $600 billion. Sounds good until you compare what we spent (1.3 trillion deficit) to achieve this growth. Where is that elusive Keynesian Multiplier? If my math is any good, this Obama investment only lost 54%. When compared to Solyndra, not bad!
Wednesday, March 14, 2012
Interesting statistics
From the mid 1980's through 2005, California's population increased by 10 million. Unfortunately, it added a whopping 7 million to its Medicaid roles, but only added a measly 115,000 folks who pay income taxes. Regrettably, they treat stock options and capital gains as ordinary income, so the top 1% contributes (in good times) one half of the State's total income tax revenue. Because the State Retirement System (Calpers) is underfunded by $250 billion, Jerry Brown wants to raise the maximum marginal income tax rate to 12.3%, making it the highest rate of any state. What a great idea!!
President Obama favors eliminating subsidies from the oil industry. After all, they make billions! Why should they receive any subsidies? Well it turns out, they don't receive any subsidies. They do receive tax deductions (expenses etc.) like all other businesses. In fact, they pay a higher percentage of their earnings (41%) to the U.S Treasury than any other industry. They have paid more to the government than they paid their owners (stockholders). Apple Computer pays an effective rate of 25%, and Obama thinks that is too much.
The oil and gas industry has invested trillions in order to make billions. Their return on their trillions invested is 6.7%. Industries in pharmaceuticals, technology, beverage,etc., triple the oil and gas industry's return on investment. Interesting facts!
Ray Zimmerman
President Obama favors eliminating subsidies from the oil industry. After all, they make billions! Why should they receive any subsidies? Well it turns out, they don't receive any subsidies. They do receive tax deductions (expenses etc.) like all other businesses. In fact, they pay a higher percentage of their earnings (41%) to the U.S Treasury than any other industry. They have paid more to the government than they paid their owners (stockholders). Apple Computer pays an effective rate of 25%, and Obama thinks that is too much.
The oil and gas industry has invested trillions in order to make billions. Their return on their trillions invested is 6.7%. Industries in pharmaceuticals, technology, beverage,etc., triple the oil and gas industry's return on investment. Interesting facts!
Ray Zimmerman
Sunday, March 11, 2012
KICK THE CAN
When I was a kid, I played this game in the alleys and on the streets of the Southside of Chicago. The Greeks have taken up this game in search of a solution to ameliorate their fiscal woes. They have forced most of their lenders (bond holders) to swap their bonds for new securities worth half the value of the originals. It was imperative that they were able to pull off this confiscatory debt swap so that the ECB (European Central Bank), the EU (European Union), and the IMF (we taxpayers are major participants), would loan them even more money.
To quote Thomas Donlan in Saturday's Barron's: "Greece is defaulting so that it won't have to default. It is reducing debt by borrowing. The Greeks are avoiding solvency by acknowledging that their country is insolvent, and daring the world to call them on it. They can only cover their debts by convincing their lenders not to demand payment". Obviously, this deal fixes nothing!
After Greece, who is next? When it is our turn, will there be cans to kick or will we just swap our greenbacks for say bluebacks? And if we are lucky, we might save half the value. What are we doing? Who are we kidding?
Ray Zimmerman
To quote Thomas Donlan in Saturday's Barron's: "Greece is defaulting so that it won't have to default. It is reducing debt by borrowing. The Greeks are avoiding solvency by acknowledging that their country is insolvent, and daring the world to call them on it. They can only cover their debts by convincing their lenders not to demand payment". Obviously, this deal fixes nothing!
After Greece, who is next? When it is our turn, will there be cans to kick or will we just swap our greenbacks for say bluebacks? And if we are lucky, we might save half the value. What are we doing? Who are we kidding?
Ray Zimmerman
Saturday, March 3, 2012
$4 Gas!! Who Do We Blame?
President Obama and his progressive minions claim that the high price of gasoline is not their fault, and is not in their control. They claim there is no silver bullet solution. The greedy oil companies and and oil speculators are to blame. They have this crazy idea that oil speculation should be severely restricted or even made illegal. Would they stop people from stockpiling food, medicine, and energy because they fear an impending natural disaster? Those acts would drive up prices. Many countries in the world are preparing for their own storm, a conflict that might cut off their energy supplies, so they are buying in speculation that this conflict may occur and therefore cause prices to rise. Thanks to free markets, we currently are able to buy and sell acting in our own self interest.
The President and his team claim and take credit that America is producing more domestic oil than ever before even though he has cut lease approvals both in the Gulf and the Interior by more than 50%. His predecessor is responsible for this output, but there is no praise only blame. Does he have no shame?
President Obama and even Bill O'Reilly claim that the greedy oil companies are exporting our oil rather than sell it here. This is true. We export about 20,000 barrels per day, all of it to Canada. We could keep it and refine it but that would add to the cost because the US refinery is 1500 miles farther than the Canadian refinery. The President's and O'Reilly's problem is not that they do not understand the law of supply and demand, its that these facts are so inconvenient for their argument. O'Reilly ends his nightly show assigning his audience a vocabulary word. I think he should look up the word fungible. Oil is fungible. Understanding it's meaning destroys his argument. He does, however, part company with Obama on his refusal to approve more leases, drilling in The Arctic National Wildlife Refuge, and the "no-brainier" Keystone XL.
Oil is traded throughout the world in US dollars, therefore if our dollar becomes stronger (higher demand for it), the price of gasoline will fall. One of the reasons gasoline is $4 going to 5 is that under President Obama, our dollar has weakened in purchasing power by over 20% against most major currencies. Even though Japan imports all their oil, their Yen has appreciated by over 15% against the dollar. Even the Euro with it's PIGS (Portugal, Italy, Greece, and Spain) has outperformed the dollar in the last 3 years. The Canadian and Australian currencies have outperformed by over 25%. Why? Because this administration has added $5 trillion to our debt and The Federal Reserve has printed $4 trillion. These policies have depreciated our dollar causing our price of gasoline to increase by over 20%. The price of gas has more than doubled under our President and the falling dollar represents 1/5 of that increase.
This President is stuck in his ideological green mud. He refuses to realize that America's energy resources are not limited anymore. To quote Kimberly Strassel, "New technologies in 3D mapping, fracking, and horizontal drilling has turned this country into a resource monster."
Harold Hamm, the richest oilman in North Dakota told our President that the Bakken and other oil fields both on private and federal lands could produce so much wealth in new royalties, profits, and employment, that our debt could be made insignificant. Obama's response was that he was not interested in increasing our supply of fossil fuels, that we would have revolutionary battery technology in the next five years.
GREEN MUD!
There has been minor salutary effects from the $9 trillion increase in debt owed and money printing. Most of this money has found its way to the stock market, not the economy. Higher prices on energy and food could backfire on both, the unintended consequences of this phony stimulus.
What if our President digs himself out of this green mud, (don't hold your breath) or better yet, we elect someone else who puts this resource monster to work. We could emulate Brazil. Their currency has appreciated 25% during Obama's term. How did they accomplish this? Our President helped by loaning Brazil billions to drill off their shores. (Where did you think all those gulf rigs went?) Not only does he want to be their banker, he also wants to be their best customer. We pay for their oil in our dollars which strengthens their currency and weakens ours. But if we drill and sell, our currency would have the same trajectory as Brazil's. The result would be more jobs, more investment, and more revenue to the treasury. And just maybe down the road, not only a budget, but a balanced budget and hope for the future of our grand kids.
Ray Zimmerman
The President and his team claim and take credit that America is producing more domestic oil than ever before even though he has cut lease approvals both in the Gulf and the Interior by more than 50%. His predecessor is responsible for this output, but there is no praise only blame. Does he have no shame?
President Obama and even Bill O'Reilly claim that the greedy oil companies are exporting our oil rather than sell it here. This is true. We export about 20,000 barrels per day, all of it to Canada. We could keep it and refine it but that would add to the cost because the US refinery is 1500 miles farther than the Canadian refinery. The President's and O'Reilly's problem is not that they do not understand the law of supply and demand, its that these facts are so inconvenient for their argument. O'Reilly ends his nightly show assigning his audience a vocabulary word. I think he should look up the word fungible. Oil is fungible. Understanding it's meaning destroys his argument. He does, however, part company with Obama on his refusal to approve more leases, drilling in The Arctic National Wildlife Refuge, and the "no-brainier" Keystone XL.
Oil is traded throughout the world in US dollars, therefore if our dollar becomes stronger (higher demand for it), the price of gasoline will fall. One of the reasons gasoline is $4 going to 5 is that under President Obama, our dollar has weakened in purchasing power by over 20% against most major currencies. Even though Japan imports all their oil, their Yen has appreciated by over 15% against the dollar. Even the Euro with it's PIGS (Portugal, Italy, Greece, and Spain) has outperformed the dollar in the last 3 years. The Canadian and Australian currencies have outperformed by over 25%. Why? Because this administration has added $5 trillion to our debt and The Federal Reserve has printed $4 trillion. These policies have depreciated our dollar causing our price of gasoline to increase by over 20%. The price of gas has more than doubled under our President and the falling dollar represents 1/5 of that increase.
This President is stuck in his ideological green mud. He refuses to realize that America's energy resources are not limited anymore. To quote Kimberly Strassel, "New technologies in 3D mapping, fracking, and horizontal drilling has turned this country into a resource monster."
Harold Hamm, the richest oilman in North Dakota told our President that the Bakken and other oil fields both on private and federal lands could produce so much wealth in new royalties, profits, and employment, that our debt could be made insignificant. Obama's response was that he was not interested in increasing our supply of fossil fuels, that we would have revolutionary battery technology in the next five years.
GREEN MUD!
There has been minor salutary effects from the $9 trillion increase in debt owed and money printing. Most of this money has found its way to the stock market, not the economy. Higher prices on energy and food could backfire on both, the unintended consequences of this phony stimulus.
What if our President digs himself out of this green mud, (don't hold your breath) or better yet, we elect someone else who puts this resource monster to work. We could emulate Brazil. Their currency has appreciated 25% during Obama's term. How did they accomplish this? Our President helped by loaning Brazil billions to drill off their shores. (Where did you think all those gulf rigs went?) Not only does he want to be their banker, he also wants to be their best customer. We pay for their oil in our dollars which strengthens their currency and weakens ours. But if we drill and sell, our currency would have the same trajectory as Brazil's. The result would be more jobs, more investment, and more revenue to the treasury. And just maybe down the road, not only a budget, but a balanced budget and hope for the future of our grand kids.
Ray Zimmerman
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