Debt crisis explained

Rep. David Schweikert (R-AZ), pointing out the obvious.  Please watch and share with a leftist.

Inflation and bad data

Data means everything.  You've heard the expression "garbage in, garbage out"? It applies completely to data.  If you have bad data, it doesn't matter how sophisticated your formulas in a system are, your results are going to be flawed.  In a more real world example, let's say someone tells you that eggs are on sale at the local supermarket for 10 cents per dozen.  You love eggs and that's an awesome price, so you hop into your car and drive to the store, hoping to buy so many dozens that you couldn't have walked and saved on your carbon emissions.  But it turns out when you get there it's actually not on sale.  So much for your egg-stravaganza this month. Bad data, bad result.  But there is one thing worse than bad data, and that's manipulated data.

Manipulated data means that someone using that data has altered it to get the outcome they desire. I've been arguing that inflation is going to get much worse than it is. I've also argued that a lot of the price of inflation is hidden by things like size changes in product prices.  Fewer sheets of toilet paper on a roll does not get factored into the price of a dozen rolls of toilet paper.  12 rolls before is 12 rolls now, even if the rolls have been shrunk down to half their former size.  This is how companies hide price increases.  And it aids and abets government's calculation of inflation. It isn't some sort of deliberate co-operative effort, but it is mutually beneficial so no one does anything about it.  The only ones hurt are consumers (aka people).

Here's a great video explaining how it's more prevalent than you might know, and indeed far scarier.  It's worth watching if you want a better understanding of what's happening to us in 2022.

Debt problem is not a Trump tax cut problem

Stuart Varney breaks it down, it's not a revenue issue, it's the spending that is the problem:

The Greatest Single Economic Myth

This talk on debt is not riveting, but it is right.

Japan's (or anyone's) Debt Problems Visualized

A good visual explaining national debt.  In this case they focus on Japan, but the principle applies anywhere.

Does Obama Just Not Understand?

Forget economics, forget debt, maybe the president just doesn't understand how money works.  In this video via CNS News, the president says some frighteningly uneducated things.  We're talking "Are You Smarter Than a 5th Grader?" type things.

CNSNews highlights the following quote;

"Now, this debt ceiling -- I just want to remind people in case you haven't been keeping up -- raising the debt ceiling, which has been done over a hundred times, does not increase our debt; it does not somehow promote profligacy. All it does is it says you got to pay the bills that you've already racked up, Congress. It's a basic function of making sure that the full faith and credit of the United States is preserved."

Obama went on to suggest that "the average person" mistakenly thinks that raising the debt ceiling means the U.S. is racking up more debt:

"It's always a tough vote because the average person thinks raising the debt ceiling must mean that we're running up our debt, so people don't like to vote on it, and, typically, there's some gamesmanship in terms of making the President's party shoulder the burden of raising the -- taking the vote."

The president could not be more wrong on this.

 

Your government is fudging the books

 

Your government is fudging the books America. But don't worry - they're doing it for your own good.

The government doesn't want you to panic - even more than they don't mind breaking their own rules. 

 

Snippets

Don't read these!

Below are some great snippets from recent media articles. All worth a thorough read.

 

From Investors Business Daily, some questions about Obama and Jack Lew's perception of the state of federal debt:

Treasury Secretary Jack Lew calls concerns over federal debt a "false crisis." Like someone falling out of an airplane who refuses to realize he'll soon hit the ground, Lew is deluding himself — and us.

The Democratic Party and their allies on the progressive left, including a number of notable economists who should know better, can't bring themselves to admit the hard reality — their big-spending, debt-increasing policies have wrecked the world's greatest economy and things, if left unchecked, will get worse. Much worse.

And yet, here's Lew on "This Week with George Stephanopoulos," speaking on current budget talks: "We need to remember this isn't just about cutting budgets."

No, given our situation, that's exactly what it's about.

Surging spending has driven the massive buildup of debt under President Obama. Total federal debt today is $17 trillion, twice as high as when Obama began.

Lew and others would have you believe it's Republicans' fault for refusing to spend enough to revive the economy — a common refrain among Democrats.

But federal spending soared from about 20% of GDP when Obama entered office to over 25% — an all-time record — the following year. Today at 23% it's still way above the norm of around 18% to 20%. And it would go even higher, if Obama had his way.

From the Las Vegas Review Journal, some Obamacare troubles;

The Silver State Health Insurance Exchange, the state-run ObamaCare brokerage, last week released preliminary 2014 premiums for Nevada’s individual insurance market. As opponents of the health care reform law have long warned and feared, they’re expensive.

Come Jan. 1, all Americans must purchase health insurance or pay a penalty tax of $95 or 1 percent of their adjusted gross income, whichever is higher. The vast majority of insured Nevadans have their coverage through their employers or unions. Just 15.4 percent of the state’s insured currently purchase their coverage through the individual market.

That figure will increase, and not simply because the mandate takes effect in five months. An untold number of employers are expected to drop coverage for their workers as a result of premium increases. Because President Barack Obama has delayed for one year the Affordable Care Act’s employer mandate — a penalty tax on companies that don’t offer medical benefits but have at least 50 full-time-equivalent employees — businesses now have an incentive to dump their insurance.

Plenty of Nevadans who currently have health insurance very well might find themselves in the market for an individual policy by this fall. They won’t like what they find.

Powerline has some thoughts on Hillary 2016. After recounting the series of Hillary biopics upcoming, the post sums up beautifully;

The funny thing about Hillary Clinton is how vastly her reputation exceeds her accomplishments. In reality, the only reason anyone has heard of her is that she married Bill Clinton. Otherwise, she would have toiled away as an obscure, reasonably competent if obnoxious lawyer. She was a relatively unpopular First Lady who is best remembered for being embarrassed by her husband’s serial infidelities. She served a brief term as a Senator from New York, a role in which she achieved nothing. Then she lost the Democratic nomination to Barack Obama, and punched her ticket during a singularly unsuccessful stint as Secretary of State. Never has she had an original thought, formulated a successful strategy, or stepped out of the shadow of her singular husband.

And in the Washington Post, some thoughts on the Obama White House hypocrisy;

Last night on Fox News’ “Special Report,” Charles Krauthammer eloquently exposed President Obama’s ability — or preference — to remain oblivious to the economic conditions he has created. Maybe the president is in denial, or maybe the bubble that he has constructed shields him from any unpleasant conclusions. Whatever the case, Krauthammer points out that as a direct result of Obama’s economic policies, “the median income of the middle class of Americans has declined by 5% in his one term,” and we are experiencing “growing income inequality, chronic unemployment . . . [and] the worst recovery since World War II.”

It is stunning that President Obama himself said “this growing inequality is not just morally wrong” but “bad economics,” as if he had nothing to do with it. In his recent “economic pivot,” which started with his speech at Knox College in Illinois on July 24, no one has mentioned that since Obama took office in 2009, he has created an economy of renters and part-time jobs while the number of billionaires in the United States has increased by more than 23 percent. The hypocrisy is remarkable. How can the president get away with railing against an economy of his own making?

I agree with Frank but not this time.

The always delightful-to-read Frank Hill over at LeftCoastRebel makes a reasoned and sound point about how none of these scandals rocking the Obama administration are as important as the national debt.  He's right when he says this:

They are all important issues of governance or malfeasance, however you want to call it...

But none of them can do the damage to our future that out-of-control spending can cause because our debt gets too high and then, when interest rates return to 'normal'? It either crowds out other essential functions of government or inflation rears its ugly, ugly head and everyone suffers. Especially the elderly, poor and infirm.

He makes perfect sense and speaking as someone who believes national solvency trumps all other issues, I disagree.

I respectfully disagree with Frank for two basic reasons.  Firstly Frank is talking at a strategic level. But the root of the overspending problem is the mindset of the liberal spenders. Tactically it's a good idea to dislodge that mindset is to remove their power to influence the public.  One way to do so effectively is to ride these scandals until the president is truly a lame duck. His message of spending and growing government can be deeply if not mortally wounded if people lose faith in his message and also see what his ideology has wrought- an IRS not afraid to bully the citizens of America.

The other reason I disagree with Frank is that while economic concerns are paramount, the nation must be guided by principled leaders with courage and integrity.  This leadership has none of those qualities. They will be an obstacle to economic sanity at every turn because it suits their agenda. If they cannot be overcome (in the short term) then they must be exposed.   Exposing them is part and parcel to emasculating their grow-government agenda.

Frank is correct. The debt crisis is indeed the most important issue facing America today.  I only disagree on the approach to fighting that battle at the present time.  You have to play the cards that you are dealt and right now the right is holding a flush.  It would be a shame to fold this hand hoping that in the next game the cards we get dealt are an American Epiphany on economic fundamentals.  Not gonna happen.

Just saying.

Two Word Opinions - 2013 first edition

No, two REAL words.

I've been busy in my personal life to an extent that it has unfortunately disrupted regular blogging for the time being.  It doesn't mean I'm not following the news and politics or that Nonsensible Shoes is going to fade away.  But lacking time, for now I'm going to revert to some more two word opinions as a means of catching up a bit.

Ron Paul made some pretty damn insensitive remarks about the death of a Navy Seal sniper - Really dumb.

Iran might just be aligning with the newly 'democratic', Islamic Brotherhood controlled Egypt - Conservatives knew.

Post Office is shutting down Saturdays - More please.

Immigration reform on the table again with the secret ingredient being amnesty sauce - Not robust.

The GOP is getting the idea that outreach to minority voting blocks is important - not...really.

CBO claims the US will add $7 trillion in national debt over the next decade - THAT'S conservative.

That's about it for now.  Back soon.

Financial hardship and socialism

I've never really been well off. In fact, it's always been a struggle for me to stay in the middle class, though I pretty much have.  I've made a pretty good living over the last ten years, and played it safe enough not to have a crazy mortgage, when I could have gotten one.  Nevertheless, I've spent the last six years paying off credit card and financing debt, and I still have a ways to go.  As a result, I haven't had much disposable income for a long time, and I will admit it's been a hard struggle pretty much all of the way, and it will be for some time to come.

With all of that, you'd think I'd be a bit more progressive-liberal friendly.  'Somebody help me with my mortgage."  "The government should take money from somebody richer than me and give it to people like me."  But the thing is, despite the financial struggle, I'm not.

A jolt is need, a nudge may be all we get

Picture via Commentarama

The U.S. economy is still faltering while the federal government is barreling along towards a national debt default. What is needed to fix the problem is a major course correction. A jolt to the existing order is needed. Unfortunately in today's political climate, anything more than a nudge is probably impossible. Even if it was successful, it might result in a civil war. But there is a way to make a nudge work.

Mature Subject Matter - Reader Discretion Advised

Go play, grown ups are talking.

If you are in France, you can't read this. You just voted in a socialist government because you couldn't handle the necessary austerity measures, in a country so socialist already, it shouldn't make much of a difference that the socialist won - there isn't much room to move left anyway:

France currently has a government that absorbs more than 50 percent of its economy. They have a cradle-to-grave employment system, where once you have a job it is virtually impossible to lose it no matter your level of performance.

The retirement system for many union and government employees allows a person to retire at age 55 at close to full pay. For a while they had in place a 35-hour work-week law, which is still followed by many businesses and government entities. 

With these types of policies, it would seem difficult to imagine what a socialist government would change. But there is still room for movement to the left, according to the folks who are running. 

One candidate, who was eliminated from Sunday’s runoff but whose ideas linger on, proposed that all income above $350,000 should go to the government. A cause célèbre of the campaign has been a $22 million euro bonus which reflected in large part accrued, deferred compensation paid to the head of one of France’s fastest growing and most profitable companies that has added hundreds of new jobs.

In case you've forgotten, your country is insolvent.

Let's talk money and how much the U.S. government ( acting on behalf of the people of the United States) really owes.  You have allowed this to happen by your silence and complacency:

When the president talks about investments, he's really talking about spending, and that means more debt. Remember that.

Bill Whittle, Paul Ryan, Tim Geithner and Martin Short

The debt party can't last.  Bill Whittle explains. Watch for cameos by Paul Ryan, Tim Geithner and Martin Short.  Yes, Martin Short.

For context on the Martin Short appearance:

60 Minutes - Click here for the most popular videos

Another sign the 'recovery' isn't solid

What's in your wallet?

Well into an article about credit card debt rising again to dangerous levels, MyFoxDC reports (emphasis added);

In a weak economy with high unemployment, Dvorkin noted, many people with big card balances become vulnerable to financial catastrophe.

Lewis J. Altfest, a Manhattan adviser who targets professional, high-income clients, devotes part of his practice to telling the well-heeled how to cut back on credit card debt. "It's still a big problem. Some people want to live life to the fullest even though they are using their cards too much," Altfest explained. He said many clients last year tried to reduce card debt. But some "are falling back into their old ways."

Indeed, last holiday season many consumers financed Black Friday trips to the mall and Cyber Monday online buying sprees by making purchases with plastic, Dvorkin contends.

"As the bills begin to roll in, consumers may find themselves unable to pay them off. It's good to see an increase in consumer spending, but never is it worth going into debt," according to Dvorkin.

 In other words the situation hasn't changed much for consumers and the credit purchases may have put a lot of people back up towards their credit limits or credit comfort levels once again.  That means that if credit card purchases are fueling the tepid-at-best recovery then that recovery may have already run it's course or may be nearing that point soon.

It's one more thing for the president to choke on.

Stossel makes it simple

Tired of trying to explain the budget situation to your liberal friends?  John Stossel explains it in relatable, simple terms.  Via Townhall:

Imagine this family budget:

Last year, you earned $24,700. But you spent $37,900, incurring $13,300 in debt, and you were already $153,500 in debt.

So you say, "I promise I'll spend $300 less this year!"

Anyone can see that your cutback is pathetic and that you need to spend much less.

Yet if you add eight zeroes, that's America's budget.

Go read the whole thing.  He talks about the hard choices that need to be made, the same point myself and others have been making for years. 

SSOTU: Supposed State of the Union

Oxymoronic SOTU

A quick preview of the president's State of the Union.would be remiss if it did not include the notion that the president is going to take the opportunity to use the opportunity as a campaign speech.  Indeed, many see it as the president's kick-off of his 2012 re-election effort (aside from the myriad of fundraisers that have been going on for months).  The president's speech in that spirit will do three things.  It will argue that the country is hurting and it will require more of his efforts to fight income inequality.  Secondly, in an oxymoron destined to go mostly unchecked, it will call for more spending and lower deficits.  Finally he will work in there somewhere, a narrative that he hopes will hold is that the country is spinning its wheels because of a Do Nothing Congress.

What is that going to look like?

Some new two word opinions

Again I'm swamped.  But I've got some more quick - very quick, in fact two word opinions - on some of the latest news items because I just can't let them pass without saying something.

Obama is twice the man Bush was!

President Obama is twice the man President Bush was - sorta.  Consider the following statistics.