The further to the left or the right you move, the more your lens on life distorts.

Monday, February 27, 2012


When the very first oil embargo occurred during the Carter administration, gas lines stretched for miles, gas prices skyrocketed, and then-President Jimmy Carter recommended that the United States should become energy independent over the next 10 years. That was almost 40 years ago. Both Republican and Democrat administrations have failed miserably to follow one of the few Carter policies that actually made sense.

On the Right, anything that smacks of alternative energy (with the possible exception of nuclear power) is dismissed as uneconomic and untenable. On the Left, radical environmentalists have stopped nuclear power in it tracks, oppose any new drilling, are obsessed with the pseudo-science of anthropogenic global warming, and worry that even alternative energy (wind and solar) has too much environmental impact.

Overall, positions on both the Right and the Left with regard to energy are a travesty. Worse, they are an abrogation of leadership on both sides of the aisle, a national security issue, and one of the many poster-children for ineffective government. Our non-existent energy policy is a national disgrace.

Can a better national energy policy be created? Sadly, I think the answer is “no.”

So what to do?

I’m a very strong proponent of energy independence using a combination of all types of energy sources, but I’m just one person and have no influence on national policy.

So … I’ve developed a very localized strategy to start on the road of personal energy independence. I’m considering putting a photo-voltaic (PV) solar array on my roof, and I’m buying an electric car (EV) within the next six months. The PV array will not provide all of the electricity I’ll need, but there will be times when I will export power back to the grid (my electric meter will run backwards). At a minimum, the PV array will provide all the power I’ll need for my EV and plenty left over for many household needs.

It’s a very, very, small step, and it’s not something that everyone can do. But for those of us who live in the sun belt and who have the resources to accommodate a longer ROI that we'd normally accept, there is an opportunity to become a micro-generation station that makes electricity, rather than takes it off the grid. Makers, not takers … it has a nice ring to it.

I’m doing this with my after tax dollars because I’ve given up on the ability of Washington to address energy in any competent manner. For example, Barack Obama could have used the stimulus money to build a 21st century energy infrastructure that would support private industry in the creation of power—a new electric grid, new pipelines, expedited nuclear approvals, new hydro-electric power, and yes, support for wind, solar and other alternative sources. Instead, his administration spend billions rewarded political cronies (Solyndra comes to mind) and the result was … well … less than impressive.

In the fall, I’ll drive my EV past gas stations and know that my new car is not using a drop of oil or an electron from the grid. I fully recognize that what I'm doing won't "save the planet." I readily admit that this undertaking does not make me any more moral or enlightened than my neighbor who drives a SUV. It's just something that I want to do. It's my personal attempt at energy independence, and I’d say it will be a significantly more successful than the attempts of every president and congress since Jimmy Carter, including the one in the White House at the moment.

Friday, February 24, 2012


The President’s 2013 budget makes no effort to implement substantive cuts in government spending and absolutely no attempt to restructure our entitlements. Instead, the Presdient relies on class warfare arguments that higher taxes on “the rich” will somehow reduce our deficits in a meaningful way. Unfortunately, tax increases cannot and will not change the slope of a debt curve that has become frightening during the Obama administration. The Zero Hedge blog provides the appropriate graph:

The red curve represents our growing deficit during the Obama administration and the blue curve represents the growth in GDP. Early this month, the curves intersected. More important, the slope of the deficit curve is frighteningly steep—the result of President Obama’s belief that big government and more spending will somehow lead to prosperity.

But why is all this important? Greece was saved from imminent bankruptcy by the EU after its debt to GDP ratio reached 160%. As a condition of their bailout, the EU demanded significant spending cuts, reductions in public pension, cuts in entitlement across the board. The result was rioting in the streets. And Greece is not out of the woods yet. The EU just kicked the can down the road.

If Mr.Obama is re-elected and his current spending policies continue (or worse, are accelerated), the trajectory of the debt and GDP curves will put our debt at approximately 120 percent of GDP at the end of his second term. That’s the level that Greece is at after the EU bailout. Virtually every independent observer characterizes Greece as an economic basket case. There are, of course, differences between the United States and Greece, including one rather sobering one: There is no entity on this planet with the resources to bail us out when we reach the inevitable conclusion of the big government spending spree that Barack Obama has initiated.

Thursday, February 16, 2012


The President and his supporters in congress are lauding his budget, emphasizing the “cuts” that will occur over the next decade and suggesting that the taxes he’ll raise come only from the “rich,” making them morally acceptable.

John Stossel comments:
President Obama said in his State of the Union speech last month, “We’ve already agreed to more than $2 trillion in cuts and savings.”

That was reassuring.

The new budget he released this week promises $4 trillion in “deficit reduction” -- about half in tax increases and half in spending cuts. But like most politicians, Obama misleads.

Cato Institute economist Dan Mitchell, a recent guest on my Fox Business show, cut through the fog to get at the truth of the $2 trillion “cut.”

“We have a budget of, what, almost $4 trillion? So if we’re doing $2 trillion of cuts,” Mitchell said, “we’re cutting government in half. That sounds wonderful.”

But what the president was talking about is not even a cut. The politicians just agreed that over the next 10 years, instead of increasing spending by $9.48 trillion, they’d increase it by “just” $7.3 trillion. Calling that a “cut” is nonsense.

Mitchell gave an analogy: “What if I came to you and said, ‘I’ve been on a diet for the last month, and I’ve gained 10 pounds. Isn't that great?’ You would say: ‘Wait, what are you talking about? That’s insane.’ And I said: ‘I was going to gain 15 pounds. I’ve only gained 10 pounds, therefore my diet is successful.’"

Democrats use this deceit when they want more social spending. Republicans use it for military spending.

And the press buys it. The Washington Post has been writing about “draconian cuts.”

“The politicians know this game,” Mitchell said. “The special interests know this game. Everyone gets a bigger budget every year. ... And we wind up, sooner or later, being Greece.”

We are definitely on the road to bankruptcy.

As I write this, unrest in Greece continues. Greeks will not abide any cuts to their entitlements, even though the cuts are by no means draconian. As we approach a time when more than half of the U.S public will have some form of government support, I have to wonder whether the reaction in the United States would be any different.

I find it interesting that the majority of MSM outlets are giving the Greek story very little coverage, and if they do cover it, they almost never provide a detailed discussion for the reasons that Greece is on the edge of bankruptcy. Normally, video and photos of violent protests, stores burning, overturned cars, and people asserting their “rights” make it onto front pages and prime time news ad nauseum. Recall the 'Arab Spring' coverage. But Greece? Crickets.

Could it be that the President’s many supporters in the media are just a bit uncomfortable with the story, worrying that the viewing public might draw parallels with the financial trajectory of our country, with the President’s irresponsible fiscal management, and huge deficits he has run up over the past three years. Nah, that couldn’t be the reason for limited coverage of Greece, could it?

Sunday, February 12, 2012


Two or three decades ago, arguments about the advisability of unrestrained government spending and the increasing growth of the federal government were theoretical in nature. Most people on the Left supported a large role for government with its attendant costs and chose to ignore the long term consequences of unrestrained spending. Most people on the right argued against big government, but conservative politicians did little to restrain spending growth and the deficits that resulted.

Today, the arguments are no longer theoretical. Europe (at the moment it’s Greece, soon to be followed by Italy and Spain) is providing us with the consequences of big government and unrestrained spending. The harsh reality cannot be wished away. Reuters reports:
As [the EU] parliament prepared to vote on a new 130 billion euro bailout to save Greece from a messy bankruptcy, a Reuters photographer saw buildings in Athens engulfed in flames and huge plumes of smoke rose in the night sky.

"We are facing destruction. Our country, our home, has become ripe for burning, the centre of Athens is in flames. We cannot allow populism to burn our country down," conservative lawmaker Costis Hatzidakis told parliament.

The air in Syntagma Square outside parliament was thick with tear gas as riot police fought running battles with youths who smashed marble balustrades and hurled stones and petrol bombs.

Terrified Greeks and tourists fled the rock-strewn streets and the clouds of stinging gas, cramming into hotel lobbies for shelter as lines of riot police struggled to contain the mayhem.

State NET television reported that trouble had also broken out in Heraklion, capital of the tourist island of Crete, as well as the towns of Volos and Agrinio in central Greece.

Despite the chaos, Finance Minister Evangelos Venizelos warned that Greeks faced "unimaginably harsher" sacrifices if parliament rejected the package, which demands deep pay, pension and job cuts, when it votes later in the evening.

Tomorrow, President Obama will introduce a 2013 federal budget that has virtually no real spending cuts whatsoever, does absolutely nothing to address the structure problems with entitlements, suggests that taxing the "rich" is our road to solvency, and continues to promote his fantasy that big government can cure our nation’s ills.

It’s almost as if the President and his supporters refuse to recognize the ominous signs in the Reuters reports. The fires and social unrest in Greece are real, not theoretical. They are a consequence of decades of lies offered by irresponsible politicians to a Greek public that was only too happy to accept massive government subsidies, handouts, and cradle-to-grave government programs. These became “rights” that were inalienable—until the money ran out. And now that forced austerity is necessary, a deep anger that has shaken Greece to its core.

The Greek story should be a lesson for all of us in the United States. It is truly tragic that our President and his supporters refuse to learn from it.

Update (13 Feb 2012):
And today in Greece reported by Reuters:
Scenes [in Athens and other locales] of running battles between police and rioters and flames engulfing cinemas, shops and banks underscored a sense of deepening turmoil in the country after more than four years of recession and two of punishing austerity.

Meanwhile, the President's spokespeople were making the Sunday rounds claiming that Obama's budget really does cut spending, that his health care mandate will save the country money, and that if millionaires would only pay their "fair share," all would be well. These claims are startlingly dishonest and even worse, will drive us closer to a time when must face what Greece is living through at the moment.

Friday, February 10, 2012

No Money Down

Two years before the great crash of 2008, my son decided it was time to buy a condo in the Los Angeles area. Prices were dramatically inflated and rising higher by the month. The bubble was inflating rapidly, but on the ground (and without hindsight) it was hard to see it.

Since this was the first residence he would purchase, he asked if I might advise. Of course, I agreed. I told him that it was a good idea to put at least 20% down, to structure his mortgage payments so that they were less than 33 percent of his monthly take home income, and to look for fixed, low rates rather than a balloon mortgage.

He contacted a number of mortgage brokers and banks and learned quickly that my advice was archaic. He was offered a number of low-interest balloon mortgages with no money down, was advised to borrow more than he needed so that he could purchase furniture, redo the kitchen, and maybe buy a car, was given the most cursory credit check, and was asked to sign on the dotted line.

That’s when I got my first inkling of the economic debacle to come. On the phone, I insisted that the mortgage brokers were wrong, and that although my advice might be old school, it was solid. Luckily, he listened, and although his condo has lost value, he has equity, and continues to pay his mortgage faithfully. But millions in California took another path and the vast majority of them are now underwater with a significant number being foreclosed.

Enter President Obama, who yesterday announced a $26 billion bailout program, supposedly funded by big banks, that would save 1 million mortgage holders who are being foreclosed. It’s an election year, and President Obama needs to buy votes. What better way than to be perceived as punishing the large banks while at the same time being perceived as helping much beleaguered homeowners who are now in default on their mortgages. Unfortunately, like many things associated with the President, perception is not reality.

Charles Gasparino comments:
… the [big] banks will cough up $26 billion for various abuses, including illegal foreclosures. Many “victimized” homeowners will get relief, mostly in the form of refinancing of underwater mortgages. So, they can stay in their homes, at least for a while.

It’s such a win-win, the administration is boasting, that even those people not part of the specific victimized class will benefit because the deal creates a stronger housing market. If banks can’t foreclose on properties, the theory goes, they can’t depress housing prices more by selling these properties on the cheap.

Problem is, almost all of the “logic” behind the deal isn’t logic, but a combination of half truths and outright lies. Even worse, the settlement will likely prolong the housing slump and set the stage for it to happen again.

Take the “victims,” who faced eviction from their homes because of the banks’ supposedly corrupt foreclosure practices. These homeowners didn’t really own their homes; many, in fact, barely plunked down a downpayment for a mortgage.

By borrowing far more heavily than what they could afford, they were also gambling that housing would keep rising in value, defying basic rules of economics.

Now they’re being rewarded for their mistakes. Ironically, even the government officials who were part of the deal have privately conceded that, with few exceptions, more than 95 percent of the so-called victims weren’t victims at all; they faced imminent foreclosure because they were delinquent on their mortgage payments — often for a year or more.

Unfortunately, the MSM would have us believe that nafarious paperwork errors made by the banks are the real problem. They are not. The real problem is that homeowners didn’t pay their mortgages for 12 to 24 months and then declared the bank’s attempts to foreclose as null and void because proper signatures on foreclosure documents were not developed.

Now, if it was only the banks that suffered, I say ‘good on em.’ After all, their actions in allowing people to take out loans that they couldn’t afford to pay back were irresponsible (albeit that they were under pressure by the government agencies and activist groups to do so).

But at the end of the day, this administration’s blatant political attempt to do something to fix the problem will, in fact, make matters worse for the vast majority of responsible homeowners who pay their mortgages on time and who have also suffered a significant reduction in their home’s value over the past four years. Why? Gasparino answers that question:
All of [this] sounds harmless — until you realize that foreclosures are a necessary ingredient to the housing market’s recovery, because they allow prices to hit bottom and entice people who can afford homes to buy them and bid up prices again.

So, the bailout does little more than delay the pain because housing prices at some point must reflect the market, with its glut of inventory in many areas.

We’re also teaching a generation of homeowners that there are no risks to their decisions because the government will bail them out. If there are no consequences to risk, why not just roll the dice again and again?

It’s tempting to see the mortgage settlement in the broader context of the bailout mania that has swept the country since the 2008 financial crisis. The auto companies and the big banks got bailouts, so why shouldn’t homeowners?

But when will it end? Probably when it isn’t an election year.

This is still another example of President Obama’s continuing series of bailout programs that may give the appearance of lessening short-term economic pain when, in fact, these bailouts do nothing more than prolong it.