Category Archives: Predictions


In May of 2010 President Obama spoke at the graduation of the University of Michigan and echoed a theme often proclaimed in his campaign and speeches since his election. He spoke of the ”…basic need to improve the level of civility in our public debate.’ He warned against “demonizing our political opponents or questioning their motives or patriotism.” He continued, “This kind of vilification and over the top rhetoric discourages compromise, undermines democratic deliberation and robs us of a rational and serious debate. It can even send signals that violence is a justifiable response.”

He’s said these kinds of things repeatedly until the word “civility” has become trite. Surprisingly, he does not even make a token effort to rein in his supporters and administration officials who have become increasingly aggressive and uncivil, as his poll numbers have declined.

A classic example comes from Obama’s Labor Day address at a rally in Detroit. Teamster President Jimmy Hoffa introduced him with a fiery speech calling GOP congressional leaders “sons of bitches” and calling for Democrats to “take them out.” Obama took the podium and did not bother to caution Hoffa about the need for civility. Later AFL-CIO President Trumka defended Hoffa and added his own inflammatory comments on his website.

VP, Joe Biden, in his labor day remarks in Cincinnati opined that, “Unions are the only ones keeping the barbarians from the gate.” That’s not the dumbest thing Joe ever said but…

Andre Carlson, one of only two Muslim members of Congress and a leader in the Congressional Black Caucus, said in a vitriolic speech in late August that the Tea Party was intent on “lynching Black Americans”. He advised Black voters to “prepare for war.” Really? Lynching? War?

Maxine Waters, long known for her less than civil remarks weighed in with “The Tea Party can go straight to Hell!” Thanks for sharing, Ms. Waters. (article from the WA Post here.)

OK. We get it. Obama cannot run on his record so he needs someone to blame. His focus group testing has told him that blaming Bush for high unemployment and a dismal economy no longer sells. So he’s decided to attack the Tea Party and conservative Republicans in Congress. His “jobs speech” on Thursday was Exhibit A in this strategy. He said “pass this bill now” dozens of times. Only problem, Mr. President…. There is no bill!! Not a word has been written. There is nothing to vote on. I believe his plan is to play “rope a dope” on this like he did with the debt ceiling debate. IOW, keep changing the terms and backing out of deals until in frustration, little gets accomplished. Then on the campaign trail next summer he can say, “If the damn Republicans had done what I asked them to do, we wouldn’t be in this fix now. It’s not my fault.”

His other strategy is to allow and encourage his hard-core supporters to demonize the Tea Party in hopes of intimidating them into silence and to reduce their influence on less informed voters. This can be a dangerous path. Despite his wise and cautionary words about staying civil in our political debate, his failure to rein in the rhetoric of his supporters can easily get out of hand. Some worrisome examples:

· Governor Scott Walker of Wisconsin attempted to make some modest adjustments in public employee benefits in an effort to get control of the state’s budget woes. Unions and leftist stormed the capitol and occupied the building for weeks, vandalizing the place. Democrat lawmakers fled the state to avoid voting and later millions of union dollars from outside the state flowed into recall campaigns against GOP office holders. Money wasted. It did not work.

· This summer roving bands of Black youths attacked whites leaving the Wisconsin State Fair, pulling people from their cars and beating them. The same thing happened at the Iowa State Fair.

· “Flash Mobs” in Philadelphia, Kansas City, Los Angles, Chicago, Cleveland and DC featured Black youths rioting, beating innocent by standers and looting stores. Read about any of this?

· In Longview, WA this past week 500 union members from the International Longshore and Warehouse Union broke into a grain terminal and took the security guards hostage while they rampaged through the facility cutting train brake lines and dumping grain from the boxcars. This despite a restraining order requested by the NLRB because of previous violence and harassment on the part of the union. This is not collective bargaining, its collective mayhem.

Hear about any of this in the mainstream media? Not too bloody likely. Did Obama or his AG, Holder speak out and condemn any of this? No. The preacher of “civility” remained totally silent. Worse, Holder in his refusal to prosecute the Black Panthers in the voter intimidation case in Phillie (Hey, they already pled guilty) has sent a signal to the Black community that lawlessness is OK.

Black unemployment has reached a 27- year high under Obama at 16.7% with Black youth at 41%. That’s a lot of people with plenty of time on their hands and there are many purveyors of hate out there to incite their anger and disappointment.

Consider this: Note: I am NOT predicting this, only saying that the following scenario MAY be possible.

As the 2012 campaign for President proceeds into the late summer and the US economy continues its slide into deep recession with high unemployment, especially in the inner cities, the rhetoric becomes more heated. The “rich” (code for “White”) and the Tea Party (“Racist and White”) are blamed. It becomes increasingly likely that Obama is going to go down to defeat in a landslide election. In the inner cities throughout the US, Blacks riot in rage and frustration. The cities burn and the violence spills out into the predominately white suburbs where frightened citizens break out their hunting rifles in self-defense. Meanwhile, unions fearing their loss of an ally in the White House stage illegal job disruptions and violent confrontations with police.

Obama declares Marshall Law and calls in the troops of the Army’s Northern Command to restore order. He orders the confiscation of all firearms. (Can’t do it? Posse Comitatus is full of loop-holes and they did confiscate all firearms in New Orleans during Katrina.) He postpones the 2012 elections indefinitely. Civil war erupts…. Again.

OK, that’s the doomsday scenario and I’m not saying it will happen. However, Obama could do much to calm things down by reiterating his calls for “civility” and kicking the asses of his own supporters in the media and fellow Democrats when they cross the line.

That he has not shown leadership and done so already worries me.

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Filed under Obama, Politics, Predictions, Tea Party

Jobs, Jobs, Jobs

“Jobs, jobs, jobs.” That was the mantra of every politician from both parties in the recent election. With real unemployment in the US at around 16% (at least) and a subject very much on the mind of every rational voter, that was unsurprising. When you think about it though, nearly all of these politicians have never created a job. And, in many cases, never actually had a real one, having spent their whole career in politics or entombed in the vacuum of academia. What do these guys know about creating a job?

Then too, for all the talk about a “wave election”, when you get right down to the numbers, 86% of the incumbents got re-elected. In other words, 86% of the idiots who got us into this mess are still there. True, that’s down from the usual 98% but still insufficient to effect real change in policy. I mean, why should the incumbents who got re-elected suddenly change policy? There’s no upside. For them, what they’re doing now is working fine.

To get an idea on how to create jobs it might be useful to look at why and how we lose them. I gave that a try in the recent piece “The Buffaloization of America”. Buffalo and all the other “rust belt” cities lost their manufacturing industries by a series of policies that made it difficult or impossible for companies to compete and make a profit. Aggressive and demanding unions, stifling regulations, predatory lawyers and excessive taxation drove companies to either move to more favorable climates (literally and figuratively) in the south or over seas … or die.

Corporations are not charitable organizations. They have to show a reasonable profit for their activities or their stockholders, many of whom are union retirement funds or the IRAs or 401Ks of average citizens, will demand the head of the CEO. If they can’t make a profit in Buffalo or California on their production of widgets they will simply move to where they can.

Then there is the matter of competition. If your company that manufactures in the US or Canada and is competing with a company making a competitive product manufactured in say, China you are going to be at a serious disadvantage in your cost of goods. The cost of any product is a function of the materials, labor, overhead and profit. The usual suspect in any discussion of “jobs going overseas” is labor. And it’s true as far as it goes. In the past much lower labor costs in Third World manufacturing was mitigated by improved productivity i.e. automation of the process. Of course, the foreign manufacturers eventually got the same sophisticated machinery and caught up.

Union work rules represent a bigger problem than the wage differential. These often conflict and cause work stoppages and productivity declines. Strikes are even more destructive.

Then there are labor laws and the employees and lawyers who game the system. In one of my businesses we had an employee who made a career out of getting fired. She would make everyone around her miserable until she finally got fired. She then sued for “unfair termination” or some such and won a big settlement every time. To my knowledge she has done this at least three times. We were the second company to hire this bit… er, pro. The company that got stung before us could not warn us because they would get sued again for saying something negative about her. Nor could we warn the next company in line. We were instructed by our lawyers to answer when asked for a reference on this crook to only say, “She worked here from X date to X date” and nothing more.

We had another employee at a different company who we fired for stealing from the company. She filed a sexual harassment complaint with the EEOC… not against me, thank God, but against some of our other employees. Of course, the charges were totally bogus. One of them was that she was out drinking one night after work with a bunch of her young fellow employees and someone said something offensive. Imagine that. The leap here is that my company is responsible for the speech of my employees when they are on their own time drinking in a bar? Yep, apparently so. It cost us a lot of money.

And let’s not forget product liability. I once dropped in on a friend that was baby-sitting her grand daughter who was a year old or so. It was a hot day and they had a “swimming pool” set up for the tyke. It had to be less than 4 feet in diameter and maybe 3 or 4 inches deep. Emblazoned on the tube was the following warning: “No Diving!!” Ya think?

If you make something some idiot will figure out a way to injure himself with it and sue you. The annual cost of torts on businesses in the US is something like $300 to $400 billion, depending on which study you prefer to believe. Clearly, that direct cost does not even consider the cost of defensive measures and both add to the cost of producing that widget making it less competitive with the foreign produced product. Congress has been passing these laws for years giving lawyers hunting licenses to sue companies. These lawsuits drive up costs and drive business owners absolutely nuts.

The loss of manufacturing jobs has been going on for years and is not going to be reversed overnight, if ever, in the US and other “developed” countries. However, there are some things that the new US Congress could do immediately that would help the situation in the near term.

1). Ratify the free trade agreements with Columbia, S. Korea and Malaysia that were negotiated during the Bush Administration. The Democrats have been sitting on these agreements for two years as payback to the labor unions that object because… well, they object and the environmentalists object because that’s what they do. The US Chamber of Commerce estimates that the S. Korea agreement alone is second only in importance to NAFTA and could create 345,000 jobs.

2). Extend the tax rates due to expire on January 1st for everyone. Keep the rates where they are for everyone and forget the class warfare shit. Not increasing capital gains and dividend taxes alone will be beneficial, not to mention eliminating uncertainty.

3). US international corporations are sitting on some $400 billion in cash in their foreign subsidiaries. If they bring it back to the US they get whacked for 35%, so in the past they have been reinvesting that in further foreign expansion. The Democrats want to tax that cash whether they bring it back or not. Instead, I suggest that they offer a limited time window for them to repatriate that money at a very low rate… say 5%. That would encourage a flood of new capital back into the US.

4). They should immediately lift the defacto moratorium on deep water drilling imposed by the Obama Administration. The have ostensibly lifted the ban but in fact have issued no new permits. If they would start issuing permits again they could put a lot of people back to work immediately on the Gulf Coast.

None of the above addresses the long-term reforms that need to be accomplished to really restore an economic boom and create the eight million jobs that have been lost. That would include: serious tort reform; deep sixing Obamacare; reducing the corporate tax rate to 25%; taking a brutally sharp knife to spending and letting oil and coal start again on US soil. None of the long-term reforms can possibly happen until after 2012 and unless a conservative President gets elected along with more, many more, conservatives to Congress.


Filed under Jobs, Obama, Politics, Predictions

Score Card

In February of 2009 I posted a piece entitled “Prognostications” in which I made a number of predictions about what Obama and the Democrat controlled Congress would do now that they had complete control. As I was driving back from our annual fly fishing expedition to central BC the other day I thought about that list and concluded it was time to see how I faired in my predictions. Hereafter, the list and the score thus far into the “Hopie-Changie” era.

· The Stimulus Package: Originally at some $870 billion, winding up with some add-ons at around $1 trillion, has failed miserably to prod the US out of recession. The “neo-Keynesians” that populate the Obama economic brain trust assured us that if this thing were not rammed through Congress immediately that unemployment would go above 8%. Well, it’s been hovering around 10% for many months and only that low because the millions of workers who are no longer even bothering to look for work are no longer counted in that calculation. 325,000 people dropped out of the “lookers” category last month. Congress recently passed an extension of unemployment compensation to 99 weeks, assuring that the unenthusiastic and disinterested will remain on the sidelines. The recession continues. The deficit? Greece here we come. According to the Heritage Foundation the US is poised to have the deficit exceed the GDP in the near future. Score: YES.

· Card Check Legislation: They made some feeble attempts at this but backed off to concentrate on the health care bill. Obama did reward the unions big time by giving them big chunks of GM and Chrysler stock when the two auto giants went tits up. Score one NO.

· Give More Money to the Auto Companies: The US government now own most of GM and the bondholders at Chrysler (these are the secured creditors in a bankruptcy) got stiffed. GM paid back part of the money, but that money came from previously borrowed government funds. So, you can’t really say they paid off the loan. They still owe some $40 billion. Score: YES

· Pass the Fairness Doctrine: They did not really have the courage to tackle this one and totally piss off the millions of listeners of conservative talk radio. Instead they dispatched Mark Lloyd, the Diversity Czar for the FCC to see if he can “back door” the thing through regulations. Score: NO.

· Restrict drilling for oil and gas: At the time of posting “Prognostications” Salazar had already cancelled leases and set aside huge swathes of the west where no drilling was allowed. Now, with the oil disaster in the Gulf every-thing is shut down. The irony is that if the regs had not forced the oil companies to drill in such deep water (a mile down) and instead were allowed to drill on land or in shallow water, this thing would have been fixed already. Score: YES

· Not allow the construction of nuclear power plants: Obama says they want to build them but they shut down the Yucca Mountain repository where they were to store the waste signaling their real intentions. Score: YES

· Enact cap and trade: It has already passed the House and is currently introduced in the Senate. Debate has been stalled with the intrusion of other matters like voting themselves a raise and fine-tuning their special medical program. Some GOP Senators will vote aye. Score: YES

· Toss money at solar and wind power: Money for these industries was included in the stimulus bill and much more to come with the cap and trade legislation. Score: YES

· Abandon missile defense and reduce US nuclear arms: Obama cut funding for missile defense programs, refused to provide funding to upgrade the US’s aging nuclear arsenal, cancelled the missile defense shield for Europe and made a lopsided deal with Russia to reduce the number of nuclear weapons. Score: Big YES

· Enact restrictions on gun ownership: Hillary is trying to work something through a UN agreement. Score: NO

· Appoint “living constitution” fans to Supreme Court: Sonia Sotomayor has been confirmed and Elana Kagan has been nominated and awaiting confirmation in the Senate. She’s sure to be approved. Score: YES

· Squelch school choice: The Congress withdrew funding for the charter school program in Washington, DC, thus ending a successful program and signaling the Adminis-tration’s aversion to charter schools. Of course, the Dems are much beholding to the teacher’s unions and they hate charter schools. Obama has created a program called “Race to the top” providing certain states with substantial funding. Some states are refusing to participate as the money comes with the Feds getting too involved in local schools. BTW, the June 5th edition of the WSJ has a great piece about Madeleine Sacker, an independent filmmaker, who has created a documentary called “The Lottery”. It’s about the thousands of Harlem kids and their parents who show up for a lottery to try and secure the few slots open at Harlem Success Academy. Surprise! The teacher’s union paid Acorn $500,000 to pretend to be parental protesters. Score: YES

· Abandon tort reform: Of course. Don’t be silly. Score: YES

· Attempt to make illegals citizens: They are trying to push “comprehensive” immigration reform, but not yet. Score: NO

· Put the government in charge of health care: You know all about that one. Score YES

Somehow I neglected to put tax increases in the Feb ’09 post. It did, however, appear in previous posts. Here’s a list of the tax increases the Democrats have enacted so far.

· $500 billion included in the Health Care bill.

· Double taxation on corporations doing business overseas.

· When the Bush tax cuts expire taxes on upper incomes will increase from 35% to 39.6%. Dividends will be taxed at 39.6% instead of 15%. The capital gains tax will increase from 15% to 20%. The inheritance tax will increase from 0% this year to 55%.

Congress is currently working on a bill to raise taxes by $43 billion on corporations and another bill to tax S-Corps (small businesses taxed as individuals). While the details of this one are as yet unclear, it appears to apply to independent operators like architects, accountants and the service industries. It sounds like it will hit them at about 15%. So much for the talk about helping small business and not taxing the little guy.

Another thing I did not anticipate is Obama’s muddled and wrong-headed foreign policy. He has offended and insulted the US’s allies, especially Israel, Poland and the UK while trying to suck up to the Muslim world. This has only confused our allies and emboldened our enemies. The combination of an isolated Israel and an aggressive Iran and Syria only make the likelihood of war in the Middle East more certain than not. He’s pushing Israel into a corner. Watch the price of oil when that one tees up.

As a new prediction (at least to blog readers) I feel the sum of Obama’s economic policies insure a double dip and protracted recession. You cannot crowd out capital with an annual deficit of $1.5 trillion dollars, raise taxes on individuals and corporations, driving jobs and businesses offshore, raise the price of energy with cap and trade taxes and expect a growing economy. They’ve got a lot of Harvard folks in the Administration, but they will need to get glass eyes installed in their navels if they expect to see where they are going.

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Despite my busy schedule of swimming, golfing and soaking up the sun here in Hawaii, I have been keeping abreast of developments back on the “mainland”. (We’ve got TV and the WSJ here. Internet too.) While it has been amusing watching the Obama Administration floundering with their tax dodging appointees, the serious business of the economy and the fate of the “stimulus package” keep the laughter in check.

Obama and the Democrat Congress have been moving quickly on several fronts and I have noted that they are working their way down my list of predictions of what they would do once they had control of the levers of government. One of my three faithful readers once said we would have to wait to see the accuracy of my predictions. So, I thought it might be useful to go back through my blogs and make a comprehensive list so you could keep score at home. Maybe print out a copy and put it on the fridge? Run a yellow hi-lite through the correct ones and red through the misses? Just a thought.

In a piece called “Elections 2006” written prior to the ’06 Congressional elections, I predicted that the Democrats would takeover Congress but, that Bush vetoes would slow their worst instincts. Careful readers will note that this piece is not on the blog. Hey, I don’t show you everything. I sent it to a selected list of friends. So too with a 11/12/06 piece called “Now What?” In that piece I predicted the following:

· The election of a Democrat as President.
· The election of a veto proof Democrat Senate.**
· A recession.
· Closing down of Guantanamo and release terrorists.
· Restrictions on intelligence gathering with possible disastrous consequences.
· The raising of taxes.

Looking pretty good on the above ’06 predictions. (**With the three RINO Republicans, it looks like they have it.)

In case you missed it, Obama has ordered Gitmo closed and already dismissed charges against the mastermind of the USS Cole bombing (Ali A Kaboom?). While everyone was looking the other way Congress also reversed the estate tax reduction and increased tobacco taxes. But hey, BHO and the Dems have only been in power for less than a month. They’re just getting warmed up. Like I said, I did not post those predictions but if you want the pieces, send me a polite email.

In blogs I did post I made the following predictions:

· The Democrats would enact the “Card Check” legislation making it easier for unions to organize. · Pass the “Fairness Doctrine” to stifle conservative talk radio.
· Return the restrictions on drilling for oil and natural gas on public lands and offshore.
· Give more money to the auto manufacturers.
· Not allow the construction of nuclear power plants.
· Enact Cap and Trade carbon emission limits through the EPA, which will cripple coal-fired electric generating plants.
· Toss huge amounts of money at solar and wind power.
· Abandon missile defense and reduce our nuclear arsenal. (or upgrade it).
· Enact restrictions on private gun ownership.
· Appoint “living constitution” proponents to the Supreme Court.
· Squelch school choice.
· Abandon any efforts to enact tort reform.
· Attempt to make illegal aliens citizens.
· Put the government in charge of health care.

In less than a month BHO and his comrades Nancy and Harry have made an impressive start on that list. New Sec of the Interior, Ken Salazar has already cancelled 77 drilling leases in Utah (Bob Redford is thrilled) and is now “reviewing” the opening of drilling off the coasts. Right.
One thing I did not anticipate… that the White House would be audacious enough to take over the US census. With that power play they get to fiddle with the numbers that determine Congressional districts and distribution of money to various groups.

Of course, the biggie is the so-called “stimulus” package that passed Congress on Friday. This massive spending bill was enacted before anyone could actually read it. At 1078 pages it would take more than a few hours, so no one knows for sure what’s in it. The scant details revealed so far indicate that the Democrats loaded it up with massive cash to their favorite constituent groups. My personal favorite is the $8 billion for a high-speed rail connection between LA and Las Vegas. In case you’ve forgotten, Nancy Pelosi is from CA and Harry Reid is from Nevada. As Craig Ferguson would say, “Coincidence?” Sure. The $4 billion to community groups like ACORN comes in a close second.

As I predicted, this stimulus will not work. Recessions usually last 18 months and despite Obama’s characterization of this one as the worst since (and maybe worse than) the Great Depression, the economy was actually in more trouble when Reagan took over from the hapless Jimmy Carter. Unemployment was 10.8% in 1982 and is 7.6% at latest count. It was 25.2% in 1932. GDP actually grew in 2008 and the Congressional Budget Office predicts a drop of 2% in 2009. That’s about the same as 1982 and a far cry from the 30% drop in the period 1930-32. But, BHO and the Dems needed a major crisis to ram this hard port tack into socialism down everyone’s throat. And, with popular support fading, they had to quickly pass the thing late on a Friday before anyone had a chance to see exactly what’s in it.

Obama and the Democrat leaders in over-hyping this economic “crisis” are actually making it worse. One of our biggest problems right now is fear and a lack of confidence. Running around the country on Air Force One telling everyone the sky is falling is not going to encourage anyone to purchase a new Chevy or invest in a share of stock. Reagan solved the recession of the early ‘80s by cutting taxes and exuding confidence and optimism.

Keynesian spending has not worked in the past and, from what we know of this package so far, will have little impact on the demand side that the proponents hope. Also, it remains to be revealed how much protectionist language is included in the bill. Historians note that FDR’s massive spending and the protectionist measures of that era prolonged and deepened the depression of the 30s. But, just because it didn’t work before does not mean that liberals won’t try the same thing again. For the Left ideology always trumps fact and previous experience.
Few are giving much consideration at this juncture on the inflationary impact of this legislation or the tax implications on future generations that will have to pay for it. The voters will eventually figure all this out. Look for big gains by the Republicans in the 2010 Congressional elections and the end of the Obama love affair in 2012.

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Filed under Keynesian theory, Obama, Politics, Predictions, Stimulus