Posts Tagged ‘Economy’

How TAX is a Four Letter Word

Economics, Politics | Posted by C.C.Mitchell
Feb 16 2010

Trust me I can count! Of course the kooks in Washington are counting on the contrary. Tax is synonymous with a

Taxes - The Four Letter Word

Taxes - The Four Letter Word

several four letter words that I can think of!

Tax is the grand plan in Washington, the American business owner has been confused with the ATM machine. Politicians will continue to spend and balance it all out with higher taxes on the rich. Taxing the rich means taxing the business owners. Correct me if I’m wrong but that means taxing the job providers. How can any one justify this?

Yeah yeah I know:

The Evil Corporate America dripping with greed; overflowing with apathy; rolling in money filthy. The financial embodiment of the spoils of treachery and oppression. I am familiar with the way the left and the unions view Corporate America.

Increasing taxes on the American economies life’s blood  is not the way to produce jobs in an economic recession rivaled, some say, only by The Great Depression. Nor is it fair or morally sound to expect the haves to pay for the short comings of the have-nots.  That’s Left Washington’s big plan, to increase taxes on the rich to bail out the federal governments entitlement programs and all its other uncontrollable spending.

But it’s not just the Evil Corporate America that will pay the price for Congressional indiscretion. It is becoming more and more evident that Dr.O is planning on increasing taxes on the middle-class as well. No he won’t come out and say it yet but if it’s on the table as he says it is you can bet your bottom dollar that they will.

Think about people, what happens to us if you spend more than you make? You find yourself in debt and struggle to pay off that debt.

Congress doesn’t want to do that! They don’t want to make good on their debts. (I say THEIR debts because they are the ones who over spent, not me). Whats worse Congress hasn’t just racked up debt. They have racked up so much debt that by 2011 that level of debt will be equal to GDP -  Gross Domestic Product. In other words they won’t JUST be spending more than they take in. America’s total amount of debt will be equal to what they take in.

Tax may be a four letter word but it is really they only solution to paying for their irresponsibility. Of course that alone will not solve the problem. They need to STOP spending! Congress seems to increase the debt ceiling with every tax increase. By-the-way what is the point in having a debt ceiling when Congress can raise that ceiling at will? I think I’ll tell my wife that I want a new truck so we are going to overspend some more to cover the expense. NOT!

These people are out of touch. Not just out of touch with we the people but out of touch with reality.

In any balance sheet no matter how big or small incoming is supposed to be equal to outgoing. Money left over in incoming is called a surplus. Now there’s a word they haven’t heard in a long time.

It’s a Cracked World when those who are in charge of the stewardship of our economy don’t understand the most basic concepts of accounting.

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Is Bankruptcy for GM Inevitable?

Economics | Posted by C.C.Mitchell
May 11 2009

Experts say a Chapter 11 bankruptcy filing is all but inevitable for General Motors. To restructure itself and avoid court

General Motors

General Motors

proceedings GM must convince bondholders to accept at trade of $27 billion in debt for 10 percent of its high risk GM stock. Along with that, the automaker must work out deals with the UAW, commit to factory closures, reduce the number of brands by eliminating or selling brands and force hundreds of dealers out of business; all in less than three weeks.

It has been expected for some time now that this would be the case. The long list of unpleasant financial chores to be done by the auto maker hasn’t changed since February, the tasks at hand just become more daunting as time begins to run out.

Although company executives said last week they would still prefer to restructure out of court, experts say all GM is doing now is lining up majorities of stakeholders to make its court-supervised reorganization (a euphemism for bankruptcy) move more quickly. This is evident in remarks by General Motors CEO Fritz Henderson.

“If we need to pursue bankruptcy, we will make sure that we do it in an expeditious fashion. The exact strategies I’m not getting into today, but we’ll be ready to go if that’s required,”

Bankruptcy threats may just be  a bluff to convince bondholders to take the debt for stock swap deal. This strategy didn’t work for Chrysler as a few bondholders held out, refusing to accept what came to roughly 30 cents on the dollar. Most likely GM will be dealing with some of the same bondholders that created roadblocks for  Chrysler. These bond holders constitute the biggest obstacle to avoiding bankruptcy and making the deal will not be easy. Since the government and the UAW will get more stock for debts owed then the bondholders will, they will be reluctant to make such a deal. As with Chrysler the stubborn ones decided to take their chances with bankruptcy hearings.

The president didn’t much like the hold outs in the Chrysler case. He referred to them as selfish, un-american, and said that he, “does not stand with them”. What does he expect? These companies invested billions in the auto industry and its not their money but their constituents’ money. They have an obligation to their share holders to collect as much of the debt owed them as possible. I know I would be upset if I were an investor in one of those companies that took a massive loss because GM wants to pay only pennies on the dollar.

Under Chapter 11, a company can stay in operation under the protection of the court while it sheds it’s debts and unprofitable assets to emerge in a more stable  financial position.

Yet in the event of a bankruptcy filing we the people can kiss goodbye our $15.5 billion GM has already gotten from the government. They most likely would not be forced to pay that money back. As usual the best option will be the most costly to the American people.

What’s your take on the potential Bankruptcy of GM?

Will it happen or are the blowing smoke to blind those to whom they owe money?

If they do file, is that whats best for General Motors overall?

Its a Cracked World, how do we mend it?

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Are Small Businesses the Key to Economic Recovery?

Politics | Posted by C.C.Mitchell
May 01 2009

Despite all the efforts of Washington think tanks to stave off an even deeper economic recession it appears that all the kings men missed something in the $787 billion spending plan which was supposed to create jobs and rebuild the economy. A point of many top economists, such as Laura Tyson the Chair of President Clintons Council of Economic Advisers; and Carly Fiorina the former CEO of Hewlett-Packard and John McCain’s top economic advisor, is that small businesses have been ignored in the Stimulus plan.

In fact the American Small Business League (ASBL) estimates over $100 billion a year in federal small business contracts are diverted to Fortune 500 companies and other large businesses.

Small businesses were growing out of necessity in 2008 when the economy started to fall . Bizbox has an article of interest to this topic; it states that as larger corporations go under it produces numerous talented, ambitious, but jobless people who find that this is the perfect time to go into business for themselves. Bizbox  refers to this trend as The Great Rearranging.

Seal of the U.S. government's Small Business A...
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President Eisenhower signed into law the Small Business Act of 1953, this was done to stimulate the economy through the advancement of small businesses. Eisenhower and that sitting congress new that small business is the backbone of the American economy. Obama has spent most of his time and over $2 trillion on a spending spree on big businesses that liberal Democrats spend most of their time ridiculing. Nothing has gone to the small businesses of America.

According to The Huffington Post Federal law states that 23% of all federally funded contracts and subcontracts are supposed to be awarded to small businesses.

Existing federal law states that a minimum of 23 percent of the total value of all federal contracts and subcontracts shall be awarded to small businesses.

Unfortunately, during the Bush Administration, the Small Business Act and all the benefits it provided to our national economy were significantly damaged. Since 2003, over a dozen federal investigations found Bush officials in every federal agency allowed billions of dollars in federal small business contracts to be diverted to some of the largest firms in the U.S. and even Europe.

Hundreds of billions of dollars in federal contracts that by law were intended for small businesses, actually went to firms such as Lockheed Martin, Boeing, Northrop Grumman, General Dynamics, Raytheon, L-3 Communications, British Aerospace (BAE) and Rolls-Royce.

It is well known that Obama has spent billions on the auto industry and on Wall Street firms. Lloyd Chapman says he has spent 100% of the $2.3 trillion in stimulus on the top 1% of businesses.

“Small businesses are the backbone of our nation’s economy and we must protect this great resource. It is time to end the diversion of federal small business contracts to corporate giants.”

This quote was a major talking point for the Obama Campaign in early 2008 but he seems to have forgotten this key point when he attempted to spend his way out of the current recession. Both Carly Fiornia and Laura Tyson agree that rectifying this is the best way to “stimulate” the economy. It would also be considerably cheaper than the existing plan.

So why won’t President Obama fix this problem and revert these funds back to the Small businesses where they belong?

Just how important is Small Business in America?

Lloyd Chapman head of the American Small Business Association produced some pretty telling statistics on their importance:

  • Small businesses created 97% of all new jobs .
  • Small businesses create over 70% of our economy.
  • Small businesses account for over 27 million U.S. jobs.
  • SMall businesses supply over 50% of the workforce in the private sector.

These are some impressive and at the same time damning statistics. Why wouldn’t any one who is trying to fix the economy not follow this route?  Simple most small businesses don’t make notable campaign contributions because they lack the huge company coffers required to do so. Mr. Chapman, who appears to show no love for President Obama or his predecessor President Bush, speculates that President Obama will divert even more government contracts to wealthy venture capitalists that made significant contributions to his campaign.

Here are his comments as seen on Glenn Beck:

As for Mr Chapmans’ speculations, if Obama does divert more funds to his campaign contributors and I find out about it you’ll be reading more about it here. On that note I have to point out that it was the Democrats that were shouting to the rafters about George W. Bush awarding no bid contracts to Haliberton.

Do you see a connection here?

Are these two points relevant to one another?

Are Small businesses the key to Economic Recovery?

Its a Cracked World; I’m just trying to sort it out.

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TARP Funding Forced on Banks that Didn’t Want It

Politics | Posted by C.C.Mitchell
Apr 08 2009

After all the outrage over the Troubled Assets Relief Program (TARP), it appears that more government

Bail Out Bucks - Who's Next?

Bail Out Bucks - Who's Next?

misgivings are at the crux of it. After-all the outrage over a $35 billion bail out to two of the big three auto makers, government power grabs were at the crux of it. The recent government spending spree has been nothing more than a well orchestrated power grab.

Case in point, CEO for General Motors Rick Wagoner was pushed out in return for government aid. Now renamed by political pundits across the nation as GM (Government Motors), the Obama administration claims they do not want to control GM but are making decisions regarding executive personnel.

Now, thanks to Stuart Varney of The Wall Street Journal we find that these sorts of power grabs have been taking place for several months now. The TARP funding of last fall has been turned into an attempt to control the banking industry:

  • How much their top brass makes
  • What industries to lend to
  • What regions to lend to
  • What favorite lobbyist to lend to

His opinion expressed in the Wall Street Journal earlier this week Varney wrote:

If the banks are forced to keep TARP cash — which was often forced on them in the first place — the Obama team can work its will on the financial system to unprecedented degree. That’s what’s happening right now.

Fox News colleague Andrew Napolitano (with the names and some details obscured to prevent retaliation). Under the Bush team a prominent and profitable bank, under threat of a damaging public audit, was forced to accept less than $1 billion of TARP money. The government insisted on buying a new class of preferred stock which gave it a tiny, minority position. The money flowed to the bank. Arguably, back then, the Bush administration was acting for purely economic reasons. It wanted to recapitalize the banks to halt a financial panic.

Fast forward to today, and that same bank is begging to give the money back. The chairman offers to write a check, now, with interest. He’s been sitting on the cash for months and has felt the dead hand of government threatening to run his business and dictate pay scales. He sees the writing on the wall and he wants out. But the Obama team says no, since unlike the smaller banks that gave their TARP money back, this bank is far more prominent. The bank has also been threatened with “adverse” consequences if its chairman persists. That’s politics talking, not economics.

Would some one please explain to me how this is constitutional?

How is that they are allowed to perpetrate   such financial atrocities?

Next they’ll be bailing out Warren Buffet and telling him how much money he is allowed to keep.

It came out that as many as 95% of banks in America had no toxic asset problems and didn’t need to be “Recapitalized,” as according to Heidi N. Moore of The Wall Street Journal. We now find out that the remaining 5% are the problem, not the entire industry. This 5% is constituted of the largest of banks in the country such as Bank of America, and Goldman Sachs.

The argument can be made that TARP was forced onto un-needy banks for reasons not nefarious,  I found several of these possible reasons at Scholars and Rogues:

  1. Stronger Banks may buy up weaker Banks
  2. Stronger banks may lend more
  3. Mistrust of stronger bank’s accounting practices
  4. Spreading around the risk like a Mutual Fund

This is all well and good but their is still the demon of socialist prospects. This indoctrination into “Liberal Fundamentalism” is just what the current administration wants. Government control of the Banking industry. Expect the Health care system to be next. Look for something similar to this for the Energy sector as well. They already have their hooks into the auto industry. And lets not leave out the Life Insurance TARP.

Long explanation short; Government shouldn’t give money to private sector entities because government shouldn’t be running private sector entities. Because that IS socialism.

I can see it now, once Obama is running the rest of America he’ll join us up with the European Union so we can slowly start to buy up those countries too.

Its a Cracked World, probably because the Federal Government is controlling more and more of it everyday.

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