Hard Truth: Government spending does not create Prosperity

Whether it is Thad Cochran in Mississippi or Robert Byrd in West Virginia, many politicians like to sell what they "bring home from Washington" as something akin to manna in the Old Testament.

The recent death of Robert Byrd illustrates how vacuous that promise is. Byrd brought home $4billion in pork in the last 20 years of his senate seat, read it all here.

Despite all this largess, West Virginia is still the third poorest state in the Union.

Cochran of Mississippi has brought home a similar bounty and scoffs at constituents who plead for fiscal responsibility. If Mississippi isn't at the bottom of the poor state list, it is close.

Federal spending does not replace or supplant hard work and individual responsibility.

GM Payback Hoax

Did you see the big big headlines today? GM pays back government loans from US, Canada!!!

Well, like everything else in Washington today, the story they let you read is not the full story. As reported here for example, General Motors Co. has repaid the $8.1 billion in loans it got from the U.S. and Canadian governments, a move its CEO says is a sign automaker is on the road to recovery.

Oh, but not so fast! Don't forget that GM still owes $45.3 billion to the U.S. and $8.1 billion to Canada, in exchange for which they received large stakes in the company. The U.S. government now owns 61 percent of the company and Canada owns roughly 12 percent.

Why did we buy GM? Was it to save jobs? Was it to keep the company running? Oh of course not. In a Chapter 11 bankruptcy, the company would have reorganized and continued to run while it got its books and operations back into order. So what would have changed?

Thank you for asking! What would have changed would have been the union contracts! And the unions poured a lot of money into Obama's election and wanted to be paid back. And so they were: we paid them back by buying the company to preserve their anti-competitive contracts.

Love that Hopey Changey thang!

Administration to Tea Parties: We're on Your Side

Yeah, no wonder he is laughing......what a crock! As reported here, no less than Tax-Cheat Tim Geithner said in an interview Sunday, when asked about the Tea Party protests, that the Obama administration is paying more attention to the deficit than the Bush administration did.

Well hell, quit paying attention to it then! Because the more attention you pay to it, the larger it gets!!!

It's the Economy Stupid!!

As we continue to gag on ObamaCare being jammed down our throats, and we wait for the Anointed One to resume his "laser-like" focus on jobs, don't forget the little view of our future taking place over in Greece.

Remember Greece? Land of huge deficits, land of entitlement programs and bloated government salaries, benefits, and bureaucrats?

Well now, the harsh reality of rising bond rates is applying the stranglehold to the Greco economy. All that debt service is getting more expensive daily as purchasers of Greek debt demand higher interest rates.

And Greece can't pay the price. So where do they go after this? We should watch this closely.

Political Stupidity Reaches New Low!

"Mirror mirror on the wall, show me who is stupidest of all"

What else can you say to the man who has run up the deficit as high as this guy in one year? And releases a budget with eye-popping tax increases for the next 10 years AND STILL forecasts trillion dollar deficits as far as the eye can see?

And he wants to appoint, over congress's objections, a Defict Panel to deal with the exploding deficit.

Take your pick. This is the height of political horse-play, making him look tough on spending. Or, this is the way a political coward shoves the responsibility for deficits off on some panel with no accountability.

Either way, it's a sham! This is like a bank robber calling for a a commission to investigate lax security at banks. Whatever you might call this, you sure won't call it Leadership!

Debt: Part III...What if no one purchases our debt?

In the second part of this series on Debt, we talked about the National Debt versus the true level of unfunded liabilities of the United States.

We also asked the question: what if people no longer want to buy our debt because they look at the unfunded liabilities and decide we may get to the point where we can't buy back our debt (ie, pay it off) and so the paper creditors hold is worthless?

If no one buys our debt, does that mean we quit spending? Of course not! There is this little mechanism we can use called "monetizing our debt". What is that?

Let's say the government wants to spend $10,000 today on a program but it only has $9,000 in the Treasury to spend. It doesn't want to wait for new tax collections next week, we want to spend it today! What to do? Well the Treasury can print a bond for $1,000. Then the Federal Reserve Bank can print a new $1,000 bill and purchase the bond from the Treasury. The Treasury now has $10,0000 to spend on the program and the Fed is holding the bond (which theoretically has to be repurchased by Treasury some day).

See what happened? New money was created by going into debt. But the debt is not owned by some "person" who expects to get paid back. It is owned by the Fed who is a nice lender who never requires repayment.

No value, no assets, no wealth created this money, it just appeared out of thin air. This is called Monetizing the debt.

What if we do a lot of this? Well, lots a new money is floating around to buy goods and services. What happens if too much money chases too few goods and services? Inflation!

What if lots and lots and lots of money is floating around chasing way too few goods and services? Hyperinflation.

Can we say Zimbabwe? Remember post-WWII Germany?

Folks, history is not kind to people that do this.

As Goes California so goes the Nation???

From the L. A. Times

1. 40% of all workers in L.A. County (L.A. County has 10.2 million people) are working for cash and not paying taxes. This is because they are predominantly illegal immigrants working without a green card.

2. 95% of warrants for murder in Los Angeles are for illegal aliens.

3. 75% of people on the most wanted list in Los Angeles are illegal aliens.

4. Over 2/3 of all births in Los Angeles County are to illegal alien Mexicans on Medi-Cal, whose births were paid for by taxpayers.

5. Nearly 35% of all inmates in California detention centers are Mexican nationals here illegally.

6. Over 300,000 illegal aliens in Los Angeles County are living in garages.
7. The FBI reports half of all gang members in Los Angeles are most likely illegal aliens from south of the border.
8. Nearly 60% of all occupants of HUD properties are illegal.
9. 21 radio stations in L. A. are Spanish speaking.
10. In L.A. County 5.1 million people speak English, 3.9 million speak Spanish.
(There are 10.2 million people in L. A. County .)

(All 10 of the above facts were published in the Los Angeles Times)

Less than 2% of illegal aliens are picking our crops, but 29% are on welfare. Over 70% of the United States ' annual population growth (and over 90% of California , Florida , and New York ) results from immigration. 29% of inmates in federal prisons are illegal aliens..

Qualifier: Although I do not have a hyperlink reference for this story, based on numerous stories around the nation, it seems credible.

How to pay for this continuing insanity? See next story.

Hat Tip: Tom S.

Red Ink Forever and Forever.......

Early indications are that fiscal 2010, which is about one fourth over, will come in at a record $1.6 trillion deficit. And fiscal 2011, despite all the budget discipline rhetoric of the State of the Union speech, will rack up $1.3 trillion (a likely understatement) and the trillion or so dollar deficits will extend as far into the future as anyone can see.

This means two things: first, the size of government is still expanding and two, we are continuing to rack up debts that we have no hope of every paying in the typical fashion. So, what is our future? Massive inflation? Debt repudiation? Neither looks good.

We need to limit the size of government, get the economy back on track, and demand fiscal discipline. That's how we do the household budget, that's how Washington is going to have to learn to work.