Resistance Begins at Ohm!

Friday, May 29, 2009

A Matter of Perspective?

In an article in Pravda, titled American Capitalism Gone With a Whimper
Summary: American decent into Marxism is happening at breathtaking speed.
Essentially, after a 70 year experiment in Russia (paid for with US $ according to the author), the government has finally figured out how to implement Marxism without a struggle.
Not just policy, but operations are now being handled by a bunch of appointed, not elected, officials working czars or tiger teams. Primarily, wallstreet bankers and investment managers.
These unelected, unconfirmed "officials" (stooges) are busy.
  • Tax system to be overhauled "by the very thieves who used it to bankroll their thefts, loses and swindles of hundreds of billions of dollars."
  • Government fired the CEO of GM, and determines salaries and bonuses (and decides which creditors get paid, collateral be damned).
  • Government to reinvent the auto industry (heck they own most of it) in the image of what the Whitehouse thinks you should be driving.
  • Oh, and is reinventing the energy sector based on behavior modification, not supply and demand.
  • Spends incomprehensible amounts of money without Congressional authorization
And how was this done? Well, read the article: Stanislav Mishin for Pravda
A very interesting read, given the source.

Tuesday, May 26, 2009

Exploding debt threatens America

Exploding debt threatens America
John Taylor
Published: May 26 2009 20:48
The writer, is a professor of economics at Stanford and a senior fellow at the Hoover Institution

The short version:
The federal debt was 41% of GDP at the end of 2008. the CBO estimates it will double to 82% in 10 years.
In order to balance the budget, a permanent 60% across the board increase in taxes will be required. The alternative is a 100% rise in inflation.
There is no economic theory or evidence that shows that deficits in 5-10 years will help us get out of this recession. Assuming that the CBO is accurate and we will be back to normal in 2014, the responsible thing to do at that point is to reduce deficits, not continue spending with total abandon.
“But we will cut the deficit in half.” CBO analysts project that the deficit will be the same in 2019 as the administration estimates for 2010, a zero per cent cut.
The current administration is all about fixing the "systemic risk" in the private sector (finance, banking, automotive). The real systemic risk is the government and unabated spending.

Thursday, May 7, 2009

Green Jobs - or working for unprofitable industries

Think Chrysler and GM in this discussion

But what about all those green collar jobs we will be creating? They will be created by government run industries who do not need to produce a profit. They just need to keep sucking up your taxes. Without profit, there are no investors and these companies cannot survive on their own without investment capital. (This sounds a lot like small defense contractors to me.) But, if this administration remains consistent, they will be union jobs.

And what Obama proposes to fix that profit problem is to kill the competition through carbon taxes. He will make current energy (electricity from coal, oil and natural gas, plus consumer products like natural gas itself, oil, diesel, gasoline, propane) so unaffordable that you as a consumer will be forced to purchase the green alternative. At a cost increase of maybe 150% (we really have no idea except we know green energy isn't competitive and we didn't see a lot of it show up when gas went to over $4 per gallon). All to pay that new tax (regardless of your income) on energy and to sustain unprofitable ethanol, windmills and such. How do I know that? He said so in a radio interview when he was the temporary US Senator from Chicago. One thing you do need to give him credit for, he does mean it when he says "as I have said before." We just don't listen.

Cap and trade just means new taxes - what you trade are pieces of paper you bought from the government allowing you to produce carbon dioxide, which by the way, trees need to survive. This is the government creating a market for something that itself has absolutely no intrinsic value. Sort of like extortion/protection schemes run by street gangs.

The consequence of cap and trade (energy taxes) is that everything you buy, not just energy, becomes more expensive. Creating goods, packaging products, getting it to market all require energy. That 20-50% price hike in your grocery products over the last 2 years were a direct consequence of fuel prices doubling. It's not that the cows were more expensive, it's the energy to process the milk (pasteurize and chill), put it in more expensive packaging and deliver it with more costly diesel that makes the milk more expensive.

Well one caveat here, under cap and trade, cows will be more expensive because you will need to buy government credits in order to permit them to fart - a dangerous and climate changing emission of methane. Imagine what that will do to the price of beans.

Stimulus Math

Obama said at the non state of the union address back in February:
For $784 billion dollars, we are going to save or create 3.15 million jobs.

$787,000 million divided by 3.5 million = $224,857.00 per job!
Hey, I want one of those jobs!
And my taxes won't go up one dime because I don't make more than $250,000!

Seriously, though, how do we know which jobs were saved? Could this statement NOT be true, even if we created no jobs? As long as we don't end up with fewer than 3.5 million people employed - they have all been saved - this claim has to be true.

So, basically, we could spend $787,000 million, create zero jobs or lose more jobs (and that's what increasing unemployment means - more people lost jobs) and Obama could STILL declare this plan is spectacular success! Well, I suppose it depends on what your definition of "is" is.

That is one extreme, but even a realistic person is going to come to the conclusion that we will never know which jobs were created as a consequence of this plan or which jobs were saved, with one exception: Federal government jobs. But what does that do for you? I don't know of any government jobs that actually create wealth. Paying those salaries diminishes wealth. The revenue that pays for those jobs comes right out of the GPD in the form of taxes, and creates no industries or businesses that do not rely on taxes to fund. Transferring our nations wealth to the government, expecting that somehow more businesses will result who will employ more people is -- well -- silly. It just results in a bigger bill to the taxpayer. The taxpayer spends less, reducing commerical activity, resulting in fewer businesses, less investment and more unemployment.

Tuesday, May 5, 2009

I have enough wool over my eyes to knit a nice sweater

information for 2006 tax year - see notes and references below.

Total number of returns 92,741,000
Total number of returns where income (AGI) is less than $100,000 = 65,012,000
Total number of returns where income (AGI) is greater than $100,000 = 16,097,000
Percentage of returns with AGI greater than $100,000 = 17%

The number of taxpayers is greater than 92,741,000
The number of taxpayers who make more than $100,000 is less.

The percentage of taxpayers that Obama says are paying less tax by up to $400 each or $800 for a couple filing a joint return = 95%

And by deduction, if 2% earn more than $250,000 per year, and 5% earn more than $100,000, then 3% earn between 100,000 and 250,000, which we know is not the case.

Just for the sake of the argument, let's say that all returns with $100,000 or less AGI represent 2 income earners and all returns over $100,000 represent 1 earner.

The taxpayer count (rather than the tax return count) works out like this:
taxpayers earning less than $100,000 = 185,472,000
taxpayers earning more than $100,000 = 16,097,000
and the percentage of taxpayers with AGI greater than $100,000 would be 8.68%
I have taken the extreme measure for each estimate which would result in the smallest percentage of taxpayers with AGI over $100,000,
In fact, according to this source,, people who earn more than $108,904 represent 10% of total taxpayers.
If you make more than $100,000, then you are not eligible to receive a $400 tax break - not last year, this year or next year.
Where does the idea that 95% of us are getting a tax break come from? The only explanation I can come up with is that as many people who make more than $100,000, there is an equal number of people who get tax refunds with an AGI of zero or less - in other words, a handout. How else would this average out to 5%?

Obviously someone is playing a shell game. Obama or IRS.
Obama promised that households earning less than $250,000 won't see their taxes increased by "one single dime."
And all that campaign rhetoric about only the top 2% of taxpayers, those making more than $250,000 were going to get a tax increase? Bogus! The numbers just don't add up. If your tax return has income greater than $100,000 (and that means for both of you on a joint return), you are looking at an increase of 8 percentage points - from 33% to 41%, or in other words your tax bill is going to increase by 25% And you are supposed to be feeling good about that.

How's that change working out for you?

Information for tax year 2006, last year I was able to find with this level of detail.
Source IRS,

The total number of tax returns is not the same as the number of tax payers as joint returns would represent two tax payers in cases where both parties have income. The tax returns counted here are those where the taxable income is greater than $0. There are also returns filed where taxable income is less than $0, and those are not enumerated here. It is not known how many of those would receive a tax refund because of the Obama $400 credit, however, the assumption is that few would since it would not apply to people who do not earn income. Or is it?

Friday, May 1, 2009

We have been robbed!

Quick, call Joe the plumber!
OK, this is a little convoluted, but if it were straightforward, I'm sure there would be a lot of screaming right now.
1) The US Gov't gives Chrysler $4 billion in Feb or there abouts
2) The Gov't tells Chrysler to give its brand name assets to Fiat because Chrysler does not make cars that people want. Like Fiat does. Like minivans and Dodge trucks aren't every-freakin-where.
3) Hold-up, Chrysler Financial is a major liability at this moment, so something has to be done with that first.
4) The Gov't declared GMAC a bank a while ago, making it eligible for TARP funds (money to GM that is not part of the $17 billion bail-out gift-loan). The Gov't promptly gave GMAC enough to keep it viable at least on the books and pawned it off on Cerberus, which coincidentally (?) owns Chrysler. The idea is to merge GMAC and Chrysler Financial, thereby giving Chrysler auto a better chance. And I suppose we are to believe that two losers will make a winner somewhere along the way. Cerberus, by the way, isn't a TARP beneficiary. I guess that makes them an investment vulture. Must not be friends of Barry.
5) OK, now we are back on track, so the next problem are the investors who hold $6.9 billion in collateralized debt. Collateralized, meaning that they hold title to the company. 70% of the debt holders are banks and other not-until-now banks like Golman-Sachs (meaning non-vulture investment companies) that received massive TARP and non-TARP Federal Reserve bailout money (the Federal Reserve has been printing money and giving it to banks outside of TARP). But 30% of the debt holders aren't on the TARP carousel where everyone gets a few gold rings. And 30 cents on the dollar for secured loans when other unsecured lenders get more isn't fair now is it? That's what they say. Barry says they are just greedy hedge funds. That cash for debt payment would be $2.25 billion courtesy of the federal government just to get rid of the $6.9 billion problem. That the money does not have to be returned to taxpayers.
6) Chrysler threw in the towel today and basically said, feds, union, it's all yours. Cerberus is the group that really gets screwed in this because they are stuck with Chrysler financial as well as GMAC. Maybe they get paid off with non-TARP funds. I doubt they will see any 30% return and they actually own the company.
7) So for $6.25 billion of your tax dollars, the government gives United Auto Workers retirement health care fund 55% of Chrysler, the government taxpayer gets 25% and Fiat gets 20% in exchange for their technical know-how. If you were born before 1975, I'm sure you have a less that favorable opinion of Fiat's technical knowhow. Wait, did you notice that? UAW gets a 55% share of Chrysler? If you were born before 1975, I'm sure you have a less-than favorable opinion of UAW's ability to manage anything involving money and future obligations.

Conclusion: for more than $6.25 billion, the government gives Chrysler (at the expense of investment firms that did not take your tax dollars) to UAW. And a European company known for making really crap cars gets a minority share, all brand rights and a dealer network.
The investor losses on Chrysler debt, 70% of $6.9 - 2.25 billion or $3.25 billion is probably paid for by a combination of TARP and Federal Reserve "lending" to the same Wall St. banks and investment companies that have had their hands seriously in your pockets since last September. Shweeet! For them. If you aren't a TARP welfare case? Well, you can just suck wind, you greedy, capitalist investment vulture.
Chrysler essentially becomes a non-commercial cooperative. Like that's going to get you your $6.25 + $3.25 or $9.5 billion back.
The government will guarantee your car warranty, at a future risk of unknown dollars, but given UAW history, Chrysler isn't going to cover it.
I have no idea what Fiat did to get this deal.
In other words for something like $10 billion or your tax dollars to be paid in future years, the Obama administration has essentially transferred a privately held corporation to UAW by paying off Chrysler lenders and giving them 55% of the company.
The alternative being that the company could have gone into bankruptcy back in January without your $10 billion, pretty much to the same effect except the UAW would have stood in line with the rest of the unsecured creditors. And Fiat probably would have had to pay something for what they got out of the deal. If I have this figured out correctly (my calculators don't have enough digits for billions), that is $33,333 for you and me and every other card-carrying citizen of this country.
This has to be one of the most sophisticated (because of the number of hands involved) and devious (because Congress never voted for this) transfers of wealth since Venezuela confiscated US oil company assets.

Is anyone paying any attention to this?