Too Big To Fail: What A Joke!

I can’t be the only one growing tired of the constant barrage of the use of the word “crisis” by elected officials and the media, especially when it comes to issues regarding our economy and future prosperity. Let’s consider what “We The People” have been through, and been told, over the last three years.

George W. Bush came to us first during the financial “crisis” and told us that the banking system in the United States was on the verge of collapse. His advisors, and talking heads on television, began to tell us that if we didn’t cough up a lot of cash, then the system would collapse and we would enter into a second Great Depression. Because of all the bad loans on the books, and financial companies leveraging their assets to ridiculous levels (mostly due to subprime mortgages), and terrible business practices the term, “too big to fail” was introduced into our daily lives. We were told that if companies that had taken on too much risk were allowed to fail our economy would collapse as the media painted pictures of Depression-era bread lines.

So then President Bush and his advisors told us that we would have to pay for a program called TARP (Troubled Asset Relief Program) to the tune of about $700 billion, you know…to bail out those companies that are inefficient and make bad decisions. In 2008 the good folks on Main Street that pay taxes were already hard pressed with a slowing economy, and now this hit the fan. GM and Chrysler were also collapsing because of bad decisions by management regardless of how many cars they sold. AIG was on the verge of going under and two of Wall Street’s legendary firms, Bear Stearns and Lehman Brothers, were the first two to officially close their doors. That was enough to scare Wall Street, Washington, and many investors. The stock market collapsed about 50% from the fall of 2007.

We were told that the taxpayer would probably make money from the massive bailouts over time as the economy recovered and the “toxic” assets on bank and corporate balance sheets were sold. And the government may have recouped a big portion already, but I don’t see an equivalent amount of tax cuts going to Americans. The same tax structure was voted on to be kept in place. However, Neil Barofsky, Special Inspector General for the TARP fund went on record to say, “Inadequate oversight and insufficient information about what companies are doing with the money leaves the program open to fraud, including conflicts of interest facing fund managers, collusion between participants and vulnerabilities to money laundering.” All of a sudden I didn’t feel so confident that the American people would ever know the truth about whether they lost money or made money. Even if they made money, I don’t see Washington willing to cut taxes one bit to send that money back to the taxpayer that foots all the bills.

Then when we supposedly got out of the mess of the bailouts President Obama and other elected officials quickly sold us on why we needed to pass a nearly $1 trillion dollar stimulus bill to pump up the economy. Financial analyst and economist hit the airwaves telling us that if we didn’t pass the bill then the unemployment rate would skyrocket. We had just gone from one crisis to another. And if we passed the stimulus (an amount never heard of before) then we would keep our national unemployment rate under 8%. In hindsight that is completely laughable. The rate went to well over 10% (by Washington’s calculations) and still remains above 9% now. Many economists will tell you that the real unemployment rate, when you consider the underemployed and those that have stopped looking for work, is closer to 15%. I agree with that number, although it might even be higher. What was supposed to kick start the economy only ended up giving it a light shove.

So after expanding the debt level enormously, officials in Washington, primarily with the Federal Reserve and the Treasury Department, told us that the economy needed a strong jolt, so they began the cycle of quantitative easing. I highlighted this topic in my previous commentaries on debt, and spelled out the dangers of such action and how it has failed when tried in other countries such as post WWI Germany and more recently in Argentina.

The second round of the FED’s quantitative easing is coming to an end, and it only cost you an additional $600 billion. It has been an absolute failure. Did it create some jobs? Yes. Analysts (according to a www.marketwatch.com article) estimate that it helped to create about 700,000 jobs at a cost of about $850,000 each. Does that sound like a success to you? After all, you pay taxes and you have to eventually foot the bill for this, too. The quantitative easing also threw a lot of cheap money out there that has propped up the stock market, but not the economy. It has certainly helped to increase inflation despite what those at the Federal Reserve tell you. We were told that it was vital to do this in order to jump start the economy. How’s the economy looking from your point of view?

This summer we’ll be upon another instance where the word “crisis” will be tossed around. This time it will be over the budget. I’d bet a nickel that our elected officials will cry wolf and insist on raising the debt ceiling again. The only problem is that they will never stop. Either they make tough choices now and tackle serious issues, or at some point in the near future those around the world will be talking about America’s debt the way we are talking about Greece…a default and total economic collapse.

J.C. Schweingrouber, Portfolio Manager
Virginia Financial Innovation Corporation
(276) 623-2654
www.vafic.com

More Tolerance and Compassion From Liberals

Here is the latest manifestation of the compassion and tolerance and inclusiveness of liberals. Ed Schultz has a prime time (10:00 p.m.) show on MSNBC, the "Ed Show". On May 24, he called noted conservative activist Laura Ingram a "right wing slut". He them immediately apologized and took a self-imposed one week leave without pay.

This also lays bare the breath-taking media double-standard. While they ignore this latest outpouring of hate form a liberal, I want you to do a little thought experiment. What would the media response be if Rush Limbaugh or Sean Hannity or Neil Boortz or any prominent conservative referred to, say, Hillary Clinton as a left wing slut? What would the response be in the new media then? But when a liberal does it ----- complete silence.

"Cash For Clunkers" Pushes Up Used Car Prices

Back when Congress passed one of the most idiotic laws in the history of the country, cash-for-clunkers, I pointed out that one of it’s likely effects would be to drive up the price of used cars. Now that has happened. In a recent article in the Wall Street Journal, it is reported at length that used car prices have gone up dramatically. “Prices for used cars hit a record high in April and are poised to go even higher ----.”

I scored a bulls-eye on that one.

FEMA Tells Virginia To Take A Hike

Many people are struggling to understand FEMA’s decision to deny disaster assistance funds to Virginia; it seems to make no sense. Dear reader, let me explain. In 2009, Virginians elected a Republican governor, a Republican lieutenant governor, and a Republican attorney general. In 2010, voters in Southwest Virginia turned a 28 year incumbent Democrat U.S. Representative out of office and installed a Republican.

Obama is on the record as saying that Democrats should punish their enemies.

Obama's New Energy Policy

President Obama announced his new energy policy this week; he says he wants to ramp up domestic oil production. "Drill Baby Drill", in other words.

Big Bird Loving Liberals Go Wild

Hell hath no fury like a liberal spurned.

It is truly amusing, as well as very telling, to watch the left-wing liberals squeal like stuck pigs over reductions in state funding for public broadcasting (PBS). Based upon what I’ve seen in the Roanoke Times of late, I have visions of them rolling on the ground, foaming at the mouth, sputtering “Puh ----puh, puh puh, P – B - S. Not PBS!!!! “

On May 5, the Times ran an editorial (“McDonnell’s final budget shot”) bemoaning Gov. McDonnell’s line item veto of a $424,000 increase in PBS funding for educational programming. Note the word “increase” there. In that editorial, the Times uses the word “cut” five times, while fully admitting that what happened was the elimination of an increase. Regardless of what one may think of PBS, it is instructive to note that in the minds of big government liberals, eliminating an increase is a cut. The editorial goes on to note that PBS in Virginia will still, after the “cut” of an increase, receive $3.18 million of your tax dollars.

Three days later, Dan Casey just goes nuts in his Times column (“PBS cut nothing to crow about”). I don’t want to hear any more of you Liberals trying to denigrate Conservatives with your talk about birthers and global warmers and what-not-ers when you’ve got Casey spouting off in public about the conspiratorial machinations of McDonnell and Republicans concerning the 2012 Presidential election. I follow this stuff pretty closely, and nowhere have I seen or heard anyone in the national media mention McDonnell as possibly running for President. In the Fox News debate of Republican Presidential contenders the other night, McDonnell wasn’t there or even talked about for not being there. I have asked McDonnell personally myself about this, and have been told he has no plans to run. Yet here is Casey claiming that such an insignificant event as a line item veto of $424,000 in the state budget is McDonnell’s opening move in his run for the President. Laughable.

And then the Times really loses it on May 10 by running a cartoon showing heavily armed soldiers (Navy SEALS, not doubt), receiving orders form McDonnell to “take out PBS.” It is also very telling that the Times impugns the motives of anyone who dares to disagree with them by publically saying those people are willing, nay, anxious, to resort to extreme violence. Oh yes, today McDonnell exercises his line item veto authority, as every governor does, and tomorrow he’ll be sending out the commandos to the PBS offices.

This cartoon is highly offensive and I demand an apology from the Times.

Liberals, take three deep breaths and listen to me carefully: Tomorrow, the sun will rise.

In order to fully understand the PBS issue, we must review some history.

PBS was started in 1970 as an attempt to provide additional television programming content that normally wouldn’t be found on the commercial TV stations at that time. This was due to the nature of the TV industry in that era. There was no cable (much less satellite) TV; virtually all TV programs came over the air from three privately owned national networks (ABC, NBC, CBS). These networks were commercial enterprises and were financially viable by means of the selling of on-air commercials. That meant that they were primarily interested in broadcasting programs that a lot of people would want to watch.

It was felt by many that an alternative TV outlet was needed that could carry programs that were not totally dependent on their ability to sell commercials for their existence, perhaps more educational programs. So Congress established PBS and subsidized it.

As a side note, I remember when my family got its first TV. I was about nine years old. The set was large and bulky, and we got a grand total of ------ one ------ channel from an antenna on the roof of the house.

Now, of course, things are much different. We have cable TV, satellite TV, hundreds of channels, the internet, YouTube, HULU, DVD’s, etc. We have Animal Planet, The History Channel, A&E, Discovery Channel, Healthy Living Channel, all of the news channels, etc. ad nauseum.

It is not realistic to now claim that society or our education system cannot, in any stretch of the imagination, continue to function effectively without PBS. The world has changed in the last forty years, and PBS is now an anachronism. If some people want to preserve it, have at it (send your check to --- well, look it up). But please, behave like adults rather than throwing childish hissy-fits. And, especially, don’t tell the rest of us that we have to pay for your favorite TV channel with our tax dollars.

Water Boarding vs. Being Shot In The Head

For years while Republican George Bush was President, Democrats railed incessantly about how water boarding was torture, as bad as anything that happened in the gulags, not consistent with our American values, Bush and Cheney were war criminals for allowing this to happen, etc. ad nauseum.

Now that there is a Democrat in the White House, the very same Democrats who insisted that terrorists could not be water boarded because it was an inhumane practice apparently have no problem with an unarmed terrorist being shot in cold blood and his body dumped in the ocean.