One Single Dime? More Like Thousands!

"...you will not see any of your taxes increase one single dime."

Does anybody remember the flowery rhetoric of Candidate Teleprompter and his claims of tax stability? Lest you still believe the nonsense coming off the Presidential teleprompter, perhaps you should listen to what Treasury Secretary and tax cheat Tim Geithner has to say.

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Geithner, in an interview with George Stephanopoulos, refused to rule out tax hikes. Rather, he stuck with the rhetorical flourish of, "We’re going to have to do what’s necessary.”



CBS5 explains it this way:

President Barack Obama's treasury secretary said Sunday he cannot rule out higher taxes to help tame an exploding budget deficit, and his chief economic adviser would not dismiss raising them on middle-class Americans as part of a health care overhaul.

One more time America, Obama and his enablers in the Congress are tax and spend liberals! Obama has definitely gotten the spending part down, now he is moving in for the taxes. Whether it is his ObamaCare albatross, "stimulus" package, or "Cash for Clunkers," this administration and Congress have spent this nation into the ground. What's worse, is that they are foolish enough to believe they can tax their way out of this spending crater.

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When American consumers have less money with which to consume, the economy suffers and revenue to the US Treasury decreases. Their no disputing that fact. When Americans are engaging in economic activity, whether it is spending or investing, the economy grows. When the economy grows, tax receipts grow.

However, when taxes are increased, economic activity decreases, as does revenue to the Treasury. No amount of government spending or "stimulus," can replace the multiplier effect of the American consumer. Keynesian economics just doesn't work.

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If you are serious about reducing the budget deficit, contact your elected representatives. Tell them to quit spending like drunken sailors (apologies to drunken sailors)! Also tell them to keep their hands off of the best health care system in the world. Finally, register to vote, if you are legally eligible to do so. The 2010 elections are just a year away. Do you have a message you want to send?

A Moral Hazard

CNBC's Rick Santelli got it right about this "Mortgage Relief" being pushed by President Obama. While I generally stay out of particular political issues in this blog, the video clip really hits the nail on the head.

For reference, Wikipedia has a good definition of moral hazard:

Moral hazard is the prospect that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk. Moral hazard arises because an individual or institution does not bear the full consequences of its actions, and therefore has a tendency to act less carefully than it otherwise would, leaving another party to bear some responsibility for the consequences of those actions.

So, some homeowners got themselves into mortgages which they probably knew they wouldn't be able to make. Now that they are sinking, in rides the US taxpayer to bail them out. As somebody who pays their mortgage on time, I resent having to bail somebody out of their uninformed mortgage mistake. You can read a great primer about the financial crisis here and here.

While I have sympathy for those who don't fully understand mortgages and mortgage documents, I don't have sympathy for mortgage brokers and those who just got big eyes for big houses. I also have only a modicum of sympathy for banks who were bullied into making bad loans by the US Justice Department via the 1977 and 1999 Community Reinvestment Act.

Although I could get on my soap box about thrift, savings, mortgages, living within your means, I won't. Rather, I wish that US citizens will seriously consider both the economic stimulus signed into law and these mortgage and mortgage relief provisions that President Obama wants passed. Finally, I tip my hat to Rick Santelli for telling it like it is.

The Free Market Strikes Yet Again!

What started off to be a piece gently mocking the heavily subsidized alternative energy disciples has actually left me somewhat humbled.

In an article from the "New York Times" titled "Dark Days for Green Energy," there was much wailing, moaning and gnashing of teeth around wind, solar and geothermal suffering from the credit crisis. Smugly, I was going to point that in peoples' faces and remind them that cheap and plentiful coal, as well as clean, renewable nuclear power were the way to go.

However, when I started looking into the big 3 solar stocks, SunPower (SPWRA), Suntech Power Holdings (STP), and First Solar (FSLR), I found something quite surprising. They are all pretty decent stocks that are doing well. While they are below there 52 week high, it seems the solar market is actually hanging in there, despite what the New York Times says. Surprised, aren't you? I didn't think so.

It turns out that these companies are locked into some pretty sweet deals with major power companies to install solar plants and that is driving the share price. While we can successfully argue the merits of solar, you can't argue that the stocks have done well. So yes, I made a snap judgement that was wrong.

However, about this I am right, neither solar, nor wind are currently profitable in the free and open market and require tremendous subsidies, that is, American tax payers are making up the difference. Further, wind and solar don't produce reliable power like coal, natural gas, or nuclear.

In short, I was taken in by the New York Times. What I thought was going to be an article bemoaning the crumbling of the alternative energy market actually turned out to be desperate plea to increase "green" funding in the stimulus bill. How could I have been some dumb?

***I am not a licensed financial adviser/planner/etc. This article doesn't constitute financial advice. If you buy the stocks listed in this article, you are on your own. You have been warned.***