More and more soldiers dying in Afghanistan

Reality check.  U.S. fatalities have increased three-fold in the first two months of 2009, compared to January and February of 2008.  A contributing factor to this increase in 2009 is the fact that we have more troops stationed in Afghanistan compared to a year ago.  In 2008, the U.S. had 27,000 troops in Afghanistan.  We currently have 38,000 troops, along with another 17,000 on the way soon.  In a statement to the Pentagon, Mr. Obama stated "I think that because you are going to see that additional engagement, there is a risk of greater additional casualties in the short-term, just as there were in Iraq".  However, these casualties we are seeing are not only U.S. soldiers, but also innocent Afghan civilians.  Unfortunately, these are the perils of war.  Yet, I have failed to see the logic of Obama's policies thus far given we are engaged in Afghanistan.  I think it is an established fact that we are at war with the Taliban.  Now, if our country is at war, it is a potential target.  So, that being said, why would Obama cut defense spending by 10%?  A 10% cut is over $73.4 billion per year in national defense and security.  

It is a difficult enough war to fight, a war on foreign ground against a hidden enemy.  The Taliban uses the mountainous terrain of Afghanistan as a key advantage over the invading U.S. troops.  Also, their artillery consists of IEDs and rockets targeting U.S. convoys.  I strongly believe in the protection and security of America, both on our soil and on any enemy's that threatens our well-being.  I think cutting defense spending is an enormous mistake, with real consequences.  The Taliban is a strong enemy, and to defeat them (especially in Afghanistan) is going to require tremendous financial contributions towards war/defense and manpower.  It saddens me to think that we have only begun to see the ill-effects of this war.  

I am also very interested to hear what any democrats/liberals/Bush antipathetics think about this war and its potential consequences...

I can't believe this is real...

I'm sorry, I just read this.  Apparently, Nadya Suleman (the octuplet mom/Angelina Jolie creep) is considering doing a porn movie with Vivid Entertainment for $1 million.  I only have a few comments as to what should happen to this woman and the twisted doctor who implanted the embryos in her womb.

• She should be imprisoned, and the hospital and L.A. Child Protective Services should take those children and put them in a more suitable environment.
  
• Dr. Michael Kamrava should have his license removed and should be imprisoned.
  
• I can't believe this lady had eight children through IVF, although she already had six kids and was on food stamps.

Here is a copy of the letter (courtesy of TMZ.com) from Vivid to Ms. Suleman asking her to consider pornography:

click here for letter

My sincere apologies, I know this has nothing to do with politics or the economy, but I am just so disgusted with this woman and the amount of media attention she is getting.

$3,600,000,000,000.

Three trillion and six hundred billion dollars.  President Obama just got a spending account worth three trillion and six hundred billion dollars.  The aim of the spending is to halve the federal deficit by the end of his first term in office through expanded government activism, tax increases for wealthy families and businesses, and spending cuts targeted at those "who profited from an era of profound irresponsibility".  Let me put this in perspective for you.  The publicly held debt - which is the money owed to domestic and foreign creditors - was 40.8% of the GDP in 2008.  In 2008, the gross domestic product was $14.22 trillion, of which $5.8 trillion was debt.  In 2009 and 2010, under the President's proposed spending plan, the GDP is estimated to be $14.4 trillion and $14.7 trillion, respectively.  Here's the scary part, the projections for national debt as a percentage of GDP for 2009 and 2010 are 58.7% and 64.6%, respectively.  That's $8.3 trillion in 2009 and $9.5 trillion in 2010 for public debt.  

This unprecedented spending bill is going to fund education projects, nationalized health care, and the shifting of energy sources away from gas and oil.  All this will be done in the name of a massive reordering of the federal government.  So lets recap what we have so far, $780 billion spending bill, $410 billion pork-barrel spending bill, and now this.  Lets not forget that $200 billion has been budgeted for the war in Afghanistan.  And, on top of all this, Mr. Obama is blaming all of this on the Bush Administration and criticizing past war budgeting stating, "and that kind of dishonest accounting is not how you run your family budgets at home; its not how your government should run its budgets, either".  I'm sorry Mr. President, did I hear your right?  Your talking about dishonest accounting and fiscal responsibility?  A) you want to spend 3.55 trillion dollars on God knows what, B) Tim Geitner, Hilda Solis, Tom Daschle, Bill Richardson...enough said.  You've elected members to your cabinet, to sit in positions that hold tremendous power, yet half of these members can't even pay their taxes.  And here he is blasting the Bush administration.  President Bush had his good days and bad, but you cannot possibly blast him for this economic crisis.  This crisis was created because of greedy banks, naive homeowners, and a lack of regulation by the SEC and FED...not by public policy.  Bush spent $600 billion on the war, and here Obama is spending in excess of trillions of dollars, don't forget the interest due.  

Why should you care?  Because taxing households and businesses making $250,000 or more is not going to fund all of this mayhem.  Top economists agree that he will most likely have to begin lowering that number to $150,000, maybe even $75,000.  Someone has to pay for this, and that someone is the American people.  Obama is basing his optimistic, and in my opinion unrealistic, projections on the fact that he believes the economy will recover and growth will be established at a faster pace then most economists and scholars are willing to accept.

I'm not only frustrated, but sadly disheartened, as our country moves in a direction so far skewed from its roots.  As Margaret Thatcher once said, "the problem with socialism is that you eventually run out of other people's money".  Call it socialism, call it fiscal responsibility, call it payback even.  I don't care what you call it.  Obama is going on a massive spending spree on our tab and on our children's tab.  His Robin Hood mentality of stealing from the rich to fund the poor is wrong.  His massive spending in times of economic hardship is wrong.  His criticism of past administrations, and accusations of accountability and irresponsibility are wrong.  I'm a Republican, but don't get me wrong, I am all for Obama doing well and succeeding, and I think anyone who is not doesn't love this country.  But when I see wrong, I am required to point it out.  The best thing everyone can do, is read up on these spending bills, contact your local representatives and let them know what you think.  Government is supposed to work for us, not the other way around.  I don't mean to end on a pessimistic note, but I really can't see the light at the end of this tunnel, and its very troubling.

How did we get into this economic meltdown?

First off, I would like to thank everyone not only for their positive comments, but also for their interactions period.  I think we all have a lot to learn from one another, and constructive arguments and disagreements definitely aide in the transfer of information and knowledge.  Lets get to today's main points.

When discussing the current economic situation here in the U.S., and also on a global basis, a lot of people just don't know what went wrong.  How did we get to this point?  What are we doing about it?  What are "stress tests"?  What's the TARP?? Well I think its worth discussing and trying to make sure everyone knows what's going on, because it definitely effects you or at least someone you know.  

Lets start with how we got ourselves into this whole mess.  Some people say the seeds to this economic disaster were sowed back in the late 90's during the tech boom.  This may be so, but I think we entered this mess a few years later through the sub-prime mortgage crisis.  What is sup-prime lending?  Sub-prime lending is basically when financial institutions (like Fannie Mae and Freddy Mac) who provide credit to buyers who do not meet the prime underwriting guidelines.  Now you ask, "why would someone loan money through credit to someone who can't afford it?".  Greed.  Lenders are supposed to make sure a borrower has enough income, good credit, and assets before they are able to loan money from financial institutions and banks.  However, these lenders signed off on mortgages and loans that borrowers could not pay.  I think it is a combination of greed, stupidity, and lack of regulation that really accelerated our downward spiral into this recession.  So now you have people defaulting on their loans and mortgages, leading to foreclosures which are seized by the lender or bank.  Real estate markets are starting to decline, banks are starting to accumulate bad debt on their balance sheets, and the snowball is quickly turning into an avalanche.  

This sub-prime crisis began to effect the financial markets, and when markets are effected it means that investor confidence has been rattled.  We started seeing 600, 700, and even 800 point drops in the DJIA (Dow Jones Industrial Average).  Bad debt had been packaged together and quickly sold into the financial markets, and once it hit the markets there was no turning back.  Because so many people were defaulting on loans, banks were stuck with all of these foreclosed properties, and that is the worst possible thing a bank can have on its balance sheet. In response, banks had no other choice but to cut their lending and lines of credit.  You could have five cars, an 800 credit score, and a hefty in come and even then it was tough to get a loan.  Next we began to see the ripple effect, the global financial sector was stopped right in its tracks.  Northern Rock, a British bank, was nationalized by the government because it was hit so hard by the sub-prime mortgages.  The Japanese, Middle Eastern, and European markets went ballistic, they were reacting off of the U.S. markets.  Places like Dubai had a real estate market collapse and a number of economic problems.  Banks stopped lending to one another, which started to lower the LIBOR rate.  And so we found ourselves quickly going into crisis mode.

Corporate giants like AIG, Merrill Lynch, Citigroup, Bear Sterns, and Lehman Brothers were on the verge of bankruptcy and destruction.  If you would of told me a year ago that Lehman Brothers was going to declare chapter 11 bankruptcy, I would of told you that you were an ignoramus.  But, surprisingly, on September 15 the unimaginable happened.  Next was Merrill Lynch, who was saved because they were acquired by Bank Of America in December 2008.  Citigroup and AIG are on the verge of collapse, even though both have received billions of dollars in bailout money.  In my opinion, either the government has to take a larger equity stake in these companies or they have to just let them collapse.  That's the vicious yet necessary cycle of capitalism.  It's Darwinian evolution, the survival of the fittest.  If AIG receives $85 billion in bailout money, and they are still flying corporate jets and throwing parties in Vegas, I say you let them crumble.  

This whole crisis is really a difficult thing to summarize and explain.  I have listened to Harvard economists and financial experts try to explain it in layman's terms and its near impossible.  There are just so many contributing factors that served as catalysts to this economic breakdown.  And now, we have to deal with, and our children have to deal with it...

The good news is that we are not going to dive into a depression, and this seems to be a U shaped recession.  We won't go into a depression because we have to many economic and financial mechanisms that prevent us from falling back into an era of 25-30% unemployment.  Also, back in the 1930's they didn't have the Federal Reserve.  The FED has enough cash and power to control this situation, although it does take a lot of time to heal the wounds, we should get out of it eventually.  Also, quickly, Nouriel Roubini (an economist I have come to very much respect) believes we will have a U shaped recession lasting 12-18 months.  There are different kinds of recessions, V, W, L, U, etc...but a U shaped recession is a shallow drop followed by a stagnant period of no economic growth, and then finally an increase in productivity and a freeing of the credit markets.  Its tough to say, most analysts see it as a V or U shaped recession.

What are we doing about this?  When the crisis hit, and markets started destabilizing, the Emergency Economic Stabilization Act of 2008 was conjured up by Secretary Henry Paulson. The "Paulson Plan" pretty much allowed the U.S. Treasury to acquire up to $700 billion in mortgage backed securities.  This didn't seem to do the trick, it only really stalled in the inevitable.  Next, we saw the largest spending (and yes I call it a spending bill, and not an economic stimulus) in U.S. history.  President Obama signed a "stimulus" package worth $787 billion (over $1 trillion once you factor in interest paid).  So now we have to sit and wait to see how this money will be distributed and how jobs will be created.  

I personally think we need to target the banks, we need to be able to free up credit and get investor confidence back to normal levels.  Tim Geitner, who I have my reservations about, has suggested we conduct Bank "stress tests".  Roughly 20 different banks with assets of over $100 billion will subjected to this stress test to see if their financials are strong enough to weather the storm.  Reuters gives a good description of some of the ways in which banks will be tested, I have listed some of these points bellow:

-"The tests will analyze banks' potential firm-wide losses, including in their loan securities portfolios, as well as from any off-balance sheet commitments and contingent liabilities/exposures over a 2-year period beginning in 2009"

-"The banks' conditions will be tested under two economic scenarios: a baseline scenario and a more adverse scenario."

-"Banks will forecast internal resources available to absorb losses, including pre-provision net revenue and allowance for loan losses."

-"Supervisors will determine whether the institution has a capital buffer sufficient to ensure the bank can preform its vital role in the economy."

The government will not publicly disclose the results of these stress tests.  Naturally.  But who really knows if this will work, we haven't seen a recession of this magnitude in decades, so we really are just firing into the dark.  However, a margin of error is very very very small.  Could we see the Swedish model in effect?  In which the smallest banks are nationalized, their trouble assets cleaned up on the balance sheet, and then sold over a period of time?  Could Obama's spending/stimulus plan create jobs and save the economy?  Will we get out of this mess anytime soon!?!  I hope so.  Stay tuned.

Obama Addresses Congress

President Obama received several rounds of applause before and during his lengthy address to the members of congress, supreme court justices, and other officials.  My main concern with his address was what his tone was going to be, whether it was going to be the usual negative "crisis mode" tone or a positive one.  He seemed more positive tonight, which is a good sign, however his ambiguous comments might not help the markets too much tomorrow, we will just have to wait and see.  

The biggest issues discussed were alternative energy sources, health care reform, education improvements, and the ECONOMY.  I don't have much to say about alternative energy sources, I'm all for them and I think the more we decrease foreign oil dependency the better it is for our children and children's children.  Reformed health care to me means nationalized health care, similar to systems seen in France, UK, Australia, etc.  I oppose this for several reasons.  Firstly, nationalizing health care is a long and difficult process, and its not like its free, someone has to pay for it...and who is that someone? Taxpayers.  Also, doctors around the world are fleeing countries with nationalized health care and coming to the United States because they just don't get paid that well.  Well, if we start nationalizing our health care system, we will start loosing some of the best doctors around, making our service/health care mediocre.  Instead of this "reform", why don't we decrease our welfare rates and try employing people, creating job opportunities, and giving corporate tax breaks for companies that increase health care benefits for employees?  I think there are numerous ways of dealing with healthcare, using socialism fundamentals and nationalization policies is not one of them.  

I was on a plane recently and sat next to a woman who works in health care.  She told me we spend nearly 99% of health care funds on treatment, rather than on prevention.  Imagine how much "change" you can bring about by dedication 10, 20, even 30 percent of funding towards disease/illness prevention and research rather then just treatment. Anyways, on to the next topic.  

Education.  I think this is definitely an area we can improve upon.  We need to get more kids through high school, more enrolled into college programs, and we need to be able to help them pay for this kind of education.  I wonder if there is some sort of federal scholarship program, if not, maybe some of the bailout money should be used for that.  However, there are two things that really bothered me regarding President Obama's speech this evening, and those are the closing of GITMO and the promise "to create 3.5 million jobs in two years".  I don't want to sound like a pessimist, but that's roughly 150,000 new jobs created per month for the next 24 months.  Let me put that in perspective for you.  Last month, we lost 598,000 jobs.  In order for Obama to create new jobs we would need economic growth.  Growth is not predicted to occur until at least the third quarter, if not the fourth quarter, of this year.  Meaning, he would realistically have about 12-16 months to create 3.5 million jobs.  Again, call me a pessimist, but I just don't see that happening.

Lets move on to Guantanamo Bay.  I have had several discussions with people regarding the closing of gitmo, and am yet to hear a valid reason as to why we should shut it down.  It is a known fact that suspected terrorists and/or know terrorists return to terrorist activity once released from being detained.  If you think somehow that they can be deterred, then you are in for one hell of a surprise.  These people are programmed to do one thing, and that is follow a chain of command in a fantasized Jihad that they have played out in their heads.  Now lets walk through the logic.  Say we close gitmo.  Lets say Osama Bin Laden is walking around Union Square and gets caught, arrested, the whole nine yards.  What happens?  He gets a lawyer, and the right to a fair trial?  If he is imprisoned, do we (taxpayers) have to pay for his jail accommodations?  I just don't get it.  I know the man loves America and wants to protect us, but when you want to close gitmo, let terrorists go free, and cut defense spending by 10%, I start to question some things.

Overall, I would give his speech today a C, maybe a C+ (unlike CNN's report card of straight A's).  I think the President brought up the main topics of concern that the country is dealing with, and I think he explained the issues in a manner in which the public could relate to and understand.  However, as usual, he was very vague and ambiguous and did not offer many details, which is a troubling and frustrating habit of his.  

Lastly, has the republican party just completely given up?  Because I'm pretty sure I could have delivered a better answer speech tonight then Bobby Jindal did.  I actually felt sorry for the guy, following up Obama with a speech is not an easy thing to do.  But please don't tell me he is the new face of the GOP...otherwise I'm voting independent next time.

Inaugural Post

This blog was created for the sole purpose of informing and educating friends and family about the current economic and political situations that not only our country faces, but the global community must face.  Too often I hear people ask "what is really going on in the economy?" or "what happened in the credit crisis?".  This blog will discuss, summarize, and answer questions regarding numerous facets of both the current economic situation, political policies, and anything and everything that may be of relation.  

We are facing one of the worst economic downturns in history, and it is important for people not only to understand why, but to understand what is being done about it.  The next post is going to be a recap and evaluation of President Obama's address to Congress.