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Copyright by John T. Reed — Sign up here for free email updates
After being told by many of his fellow Democrats to back off “the sky is falling” rhetoric, Obama inserted some football coach “we can do it” pep talk stuff into his speech.
Let me tell you about the “we” in that reference.
America is not the world’s greatest country because “we” are located between Mexico and Canada. It is not the world’s greatest country because there is something in the water here. Or that “we” Americans have some unique ingredient in our DNA.
“We” are the greatest country because of certain crucial ingredients in our constitution and social compact, namely, the rule of law, free enterprise, private property, and reliance of our citizens on themselves to make their lives better, not on our government.
But the Bush-Obama laws of the last five months have to a large extent made those crucial ingredients illegal!
Obama celebrates how great “we” are and what great things “we” have done while simultaneously outlawing the great things “we” did.
For example, the U.S. has been the financial capital of the world for about a century. The “we” who did that were the bankers and Wall Street guys combined with the U.S. laws and regulations that gave those bankers and investment bankers the freedom and leeway to do what they did.
Democrats now point to the subprime crisis as evidence that the bankers and investment bankers are utter incompetents who know nothing and whose activities need to be outlawed. For example, they are now micromanaging compensation of highly paid employees, including those paid by commission based on their sales or profits, and they are outlawing off-site business meetings according to demagogic, scapegoat stereotypes. What is the effect of this? The head of Morgan-Stanley was interviewed by Charlie Rose. Rose asked about these restrictions on compensation. The Morgan-Stanley CEO said the companies not covered by the new federal regulations on compensation are being gleefully headhunted by U.S. companies not covered by the new regulations and by foreign companies like Deutschebank. These are traders and star executives that those companies have been trying to recruit to work for them for years, with only partial success. Now, they are thrilled that the president of the U.S. has limited compensation. It will lead to an enormous brain drain of Wall Street talent to unregulated U.S. and foreign companies.
So while Obama is bragging about and almost taking credit for the great financial power that “we” created, and promising that since “we” created that financial center of the world, “we” can create it again, he is driving the “we” who actually did it and who know how to do it, away. He is also creating a structure of federal control and other laws that prevent a new generation of “we” from recreating the world’s greatest financial system. This started not too many years ago, in the wake of Enron etc. with the Sarbanes-Oxley new regulations which overnight made the U.S. IPO market number 2 to London after years of U.S. domination. The next great thing in Silicon Valley will have to go to London or Hong Kong or somewhere for financing because New York is now under the thumb of the Democrat politicians.
Obama and his Democrat allies say “we” can recreate our role as the world financial center, but he is simultaneously making it illegal for “we” to do just that. Yes, “we” can, but only if the Democrats change the laws back to permit it to happen. If it is illegal, as with Sarbanes-Oxley and the latest restrictions and nationalizations, it will not happen regardless of the fact that “we” are, as always, capable of doing it.
What about the fact that the bankers and investment bankers caused this problem? It’s true. They screwed up. Anyone who points that out should be congratulated for his grasp of the obvious. The bankers and investment bankers would, without the slightest action by the government, correct the mistakes. Their motive is to make as much profit as possible next year. They cannot do that by making lousy loans or by losing people’s money. They would adopt new internal controls to prevent the same mistakes from happening again. They would strengthen their balance sheets so they can again attract investors. This would happen fastest if there was absolutely no government intervention. The market would force them to do it and they would be rewarded to the extent that they get it right, fast. Some regulations relating to private businesses spending or risking need to be improved, but as always, the government needs to be careful not to overreach. Obama is not being careful to overreach. His picture is now next to the definition of overreaching in the dictionary.
Instead, we now have politicians and bureaucrats making business decisions. There is not a snowball’s chance in hell that management by the politicians and bureaucrats will do anything to the banks and investment banks but destroy them. Politicians and bureaucrats are the folks who run the Bureau of Indian Affairs, Katrina, and so forth.
London was the financial capital of the world a hundred years ago. If the British government does not overreact, London will again become the financial center of the world. “We” will be unable to regain our prior status in spite of our bigger market because our government will have made financial market excellence illegal.
The same thing applies to the car industry. Obama says we invented it, therefore we must save it. Actually, the Germans invented the car. Henry Ford just applied the assembly line (which he did not invent) to the manufacture of cars and applied a business principle other car manufacturers did not think of or rejected. That is, he assumed that low prices would increase the number of cars sold and that increasing the number of cars sold would let him lower the price still further, and so on.
The fact that we had the first successful manufacturer and marketer of huge numbers of cars has nothing whatsoever to do with whether the federal government should endlessly pump taxpayers’ money into the Big Three. We actually did invent the TV, but it has been a long time since a U.S. company manufactured one. No one cares.
The problem with the Big Three is their overly generous-to-the-union contracts. The solution is to renegotiate them either outside of or inside of bankruptcy. Taxpayer money should have nothing to do with it. The foreign car companies who manufacture cars in the U.S. are not in so much trouble because their plants are in the South and non-union.
Then there is the issue of Bush and Obama bankrupting the country. When “we” made the U.S. the greatest country in the world, we did not have the ridiculous debt levels—either in dollars or percentage of Gross Domestic Product or whatever metric you want to use. Whether “we” can become great again while carrying this mind boggling debt weight on “we’s” back is very questionable. “We” did it before. And “we” can do it again. But “we” never did it with an $11 trillion dollar debt before. That debt that is now 79% of our gross domestic product and climbing by hundreds of billions or trillions a week as Obama passes one new monster program after another. Our national debt has not been that high since World War II/Korean War. During the Great Depression, the national debt was only about 20% of the gross national product.
It is fairly easy to come up with multiple scenarios in which that debt prevents us from regaining the greatness that “we” created in the past.
Obama is fond of saying we have to spend, spend, spend because we are facing the worst financial crisis since the Great Depression. Actually, at present, the financial crisis is more like the 1981 recession than the Great Depression. One could make a more compelling argument that we have to cut, cut, cut spending because we have the biggest debt since the World War II/Korean War period.
Wall Street has crashed and crashed again and crashed again as Bush and Obama have stumbled ineptly from one “try this” to another. Obama’s spokesman says he pays no attention to the stock market.
Say what? I believe the stock market is where the vast majority of Americans invested their life savings, their retirement money. The only reason Obama pays no attention to the stock market is because it keeps panning his “solutions.” The fact is until Obama causes the stock market to stop falling, everything else he does is just throwing gasoline on a fire.
The locomotive of the American economy is its entrepreneurs. Obama pays lip service to them, but all his policies hurt them. Monstrous borrowing by the federal government crowds out the entrepreneurs seeking financing or drives up the interest rates they have to pay. Raising taxes on the top 2% reduce the incentives that motivate entrepreneurs. Crack downs on Wall Street make it hard or impossible to do the initial public offerings that are the keystone event in the history of companies like Microsoft, Google, and Apple. Democrats would unionize their factories and burden them with greater health care costs. In fact, Obama really thinks jobs come from government and he will kill the private sector by draining more and more tax revenue from them and by regulating them out of profitability.
Yes, “we” can, but only if the government does not outlaw it. Government is outlawing and discouraging and elbowing aside entrepreneurial activities. Top talent in the U.S. will brain drain to the Middle East or London or Hong Kong or Singapore or wherever if the opportunities are better there. Obama seems to have no understanding of that.
We have been hearing for years that social security will bankrupt the country. And it will. The Baby Boomers start drawing their social security retirement benefits in five years in 2014. There is no money in the bank to pay them.
Medicare is worse Alan Greenspan was asked what will bankrupt the country first. He answered “Medicare” and gave the same answer years later when asked again. Medicare is a medical program for the elderly. The Baby Boomers hit 65 in three years.
Medicaid is another program we have been told will bankrupt us. And it will. It is also a program that will be hit by a Tsunami of Baby Boomers is a couple of years.
Several “progressive” states have tried to enact universal health care. All were forced to back off of it within months. It costs too much. Yet Obama is going to enact it right now.
He is also going to pay to send everyone in America to college or vocational school after high school. And spend hundreds of billions on solar and wind, which has already had tens of billions spent on it and it still hasn’t made economic sense. And he is still encouraging a trade war that will all by itself throw the world into a Depression. And he’s going to give 98% of the population a tax cut.
And who’s going to pay for all this? Not our grandchildren. gee, I’m glad to hear that. No, the top 2% who make more than $250,000 a year are going to get their taxes increased and all of the above will be paid for by them and only them.
Well, that would be me and my wife among others. Memo to Mr. Obama: We cannot afford to pay for all that even if we were stupid enough to do so. Richest man in the world Bill Gates’ entire net worth would not pay for even 10% of the “stimulus” bill. We are not stupid enough to do so. If you raise our taxes, we will look for ways to reduce them. I am the author of the book Aggressive Tax Avoidance for Real Estate Investors, now in its 19th edition. If I cannot find such legal ways, I will probably decide that making more than $250,000 a year is not worth the effort and let my income drop down to $249,999. It won’t affect our lives much. I expect most others will do the same.
Others will decide that cheating on their taxes is too valuable to not risk it. The higher tax rates go, the more people cheat. People can also move to other countries with lower tax rates, if they renounce their citizenship. Obama’s turning the U.S. into a socialist country will no doubt cause many to do just that, especially those with high earnings.
In short, Obama’s speech was incoherent. There is not enough money in the world to pay for all the stuff he promised. We cannot even afford the stuff we enacted into law before last year. And his additional promises that we will not leave a big debt for our grandchildren or raise taxes are even more at odds with reality. Yet every time he made another insane promise, the audience stood up and applauded again.
America has lost its mind. Reality, national bankruptcy or hyperinflation is what we will get. How many years from now? I will look for media stories by experts who run those numbers. It can’t be much longer.
I appreciate informed, well-thought-out constructive criticism and suggestions. If there are any errors or omissions in my facts or logic, please tell me about them. If you are correct, I will fix the item in question. If you wish, I will give you credit. Where appropriate, I will apologize for the error. To date, I have been surprised at how few such corrections I have had to make.