Geithner: Too early to look at unwinding U.S. ownership

U.S. Sen. Jim DeMint (R-S.C.) questions Treasury Secretary Tim Geithner about what will happen when TARP money is paid back (it will not necessarily go toward debt reduction) and when will the U.S. government return control of companies like GM and AIG (hint: not any time soon).

CNBC: Unions vs. Taxpayers

Do the United States need to be more like socialist Europe? Should government redistribute wealth? Should taxpayers foot the bill for everyone's health care to drive down the cost for automakers? Check out the video from CNBC.

Geithner: Capitalism will be different

In the top video from YouTube Treasury Secretary Tim Geithner says capitalism will be different. Will it be different because the government will control it instead of the private sector. Will Geithner's brand of capitalism be socialism?

The video below is the full program.

They want private health insurance to fail

Rush Limbaugh was taken to task (and taken out of context) when he said he wanted President Barack Obama to fail. The context of what he said was that if Obama pursues policies aligned with socialism, then he wants him to fail.

Listen to the crowd's reaction in the above video as U.S. Rep. Jan Schakowsky (D-IL) talks about how Obama's health care reform will not allow the private insurance industry to be competitive. Listening to the crowd, I get the sense they want the private insurance industry to fail. How many people are employed in the industry?

I guess if it is wrong to hope one man fails, then it must be a greater travesty to want a whole industry to fail and millions of people lose jobs, causing financial hardship to families and children.

One-fourth of a penny saved is a penny earned

When President Barack Obama instructed his Cabinet to cut $100 million, what did you think about it? The creator of the above video tries to visually show us how much the $100 million is in relation to what we are spending.

Abandoning free market principles

There's some troubling news emerging about former Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke about the roles the played in Bank of America's purchase of Merrill Lynch. The Wall Street Journal writes about an offer BoA CEO Ken Lewis could not refuse.

The WSJ piece (in its entirety here) states:

In the name of containing "systemic risk," our regulators spread it. In order to keep Mr. Lewis quiet, they all but ordered him to deceive his own shareholders. And in the name of restoring financial confidence, they have so mistreated Bank of America that bank executives everywhere have concluded that neither Treasury nor the Federal Reserve can be trusted.

President Bush said he abandoned free market principles to save the free market. Talk about a toxic asset.

I encourage you to read the WSJ piece.

Like ordering Chinese food: 10 minute

Time reports more quickly than it began, the banking crisis is over (story here). I said about as much on the morning of March 21, 2009 -- three weeks before I am writing this entry.

Actually, I didn't "say" as much, but I tweeted. Check out these two posts:

Checked my 401k, only down 3.2 %, this is in very aggressive funds. So, like Obama's administration sez: Fundamentals are strong.9:16 AM Mar 21st from twhirl

These aggressive funds have outperformed Dow, S&P and NASDAQ since December. Don't feel like a fool for remaining aggressive w/mutual funds.9:20 AM Mar 21st from twhirl

On April 11, I was up more than 13 percent compared to what I (and my employee) contributed to my 401(k). These are in aggressive and high-risk mutual funds. I am not very well diversified, but I am aggressive with my investments.

Many people have said the biggest problem is consumer confidence. Every time my wife and I go out to eat or go shopping, there are always crowds spending money. About the only sign of the recession we have seen is one clothing store having much less inventory than on previous trips, and we do know of some people who have been laid off.

For the most part, the economy seems to be picking up. Many small business owners are somewhat optimistic things will rebound this year.

Time to be patriotic

Coffee, tea or ...

This "rant" by Rick Santelli of CNBC News is what began the impetus for the tea parties that are being planned for Tax Day, April 15. During his "rant," he calls for a Chicago Tea Party.

I had the opportunity to speak to a few people who are planning to attend tea parties in Medina, Ohio, and Ashland, Ohio. They are so fed up with the government spending, borrowing and taxing at levels that cannot be sustained.

As one person put it, we cannot solve our borrowing problem by borrowing and spending more money.

CBO Director's Blog

Here is what the CBO director has to say.

Monthly Budget Review
April 6th, 2009 by Douglas Elmendorf

Today CBO released the latest Monthly Budget Review, reflecting an analysis of budget data through the end of March 2009. CBO estimates that the Treasury Department will report a deficit of about $953 billion for the first six months of fiscal year 2009, $640 billion more than the deficit recorded through March 2008.

Budget accounting issues are clouding the deficit forecasts for this year. The above estimate of this year’s deficit to date includes outlays of about $290 billion for the Troubled Asset Relief Program (TARP). Although the Treasury has been recording most spending for the TARP on a cash basis, CBO believes that the budget should record the program’s activities on a net present-value basis adjusted for market risk. Using that approach, CBO estimates that outlays of $140 billion should be recorded for the TARP through March. That approach would yield an estimated deficit of $803 billion for the first half of the year.

March receipts were estimated to be about 30 percent lower than receipts in March 2008. More than half of the decline reflects a drop in net corporate income tax receipts, which fell by 90 percent from March of last year, in part because firms may be applying current-year losses to obtain refunds of taxes paid in previous years.

Sounds eerily familiar

OK, this is from Wikipedia, but still an interesting parallel to what we see going on.

(Jospeh) Schumpeter and capitalism's demise

Schumpeter's most popular book in English is probably Capitalism, Socialism and Democracy. This book opens with a treatment of Karl Marx. While he is sympathetic to Marx's theory that capitalism will collapse and will be replaced by socialism, Schumpeter concludes that this will not come about in the way Marx predicted. To describe it he borrowed the phrase "creative destruction," and made it famous by using it to describe a process in which the old ways of doing things are endogenously destroyed and replaced by new ways.

Schumpeter's theory is that the success of capitalism will lead to a form of corporatism and a fostering of values hostile to capitalism, especially among intellectuals. The intellectual and social climate needed to allow entrepreneurship to thrive will not exist in advanced capitalism; it will be replaced by socialism in some form. There will not be a revolution, but merely a trend in parliaments to elect social democratic parties of one stripe or another. He argued that capitalism's collapse from within will come about as democratic majorities vote for the creation of a welfare state and place restrictions upon entrepreneurship that will burden and destroy the capitalist structure. Schumpeter emphasizes throughout this book that he is analyzing trends, not engaging in political advocacy. In his vision, the intellectual class will play an important role in capitalism's demise. The term "intellectuals" denotes a class of persons in a position to develop critiques of societal matters for which they are not directly responsible and able to stand up for the interests of strata to which they themselves do not belong. One of the great advantages of capitalism, he argues, is that as compared with pre-capitalist periods, when education was a privilege of the few, more and more people acquire (higher) education. The availability of fulfilling work is however limited and this, coupled with the experience of unemployment, produces discontent. The intellectual class is then able to organise protest and develop critical ideas.

In Schumpeter's view, socialism will ensure that the production of goods and services is directed towards meeting the authentic needs of people and will overcome some innate tendencies of capitalism such as conjecture fluctuation, unemployment and waning acceptance of the system.

Open Mind: Milton Friedman

Have we got a plan for you

James Stewart on subprime loans

Pulitzer Prize-winning columnist James Stewart spoke about the subprime mortgage crisis during the Great Decisions program. I shot the video April 3, 2009 at The College of Wooster.

Donald Kohn on the economic crisis

Donald Kohn, vice chairman of the Federal Reserve's Board of Governors, spoke about the economic downturn and the Fed's involvement at the Great Decisions program at The College of Wooster. Here is video I shot at the event on April 3, 2009.

William Longbrake on the role of recessions

William Longbrake, former CFO of Washington Mutual and former CFO of the FDIC, spoke during the Great Decisions program at The College of Wooster. He talks about the role of recessions (and how they are necessary) and likens them to forest fires. I shot the video April 3, 2009.

CEObama

I found the news that President Barack Obama, or someone in his administration, ousted GM CEO Rick Wagoner from his post to be somewhat shocking.

I neither own GM stock nor drive GM vehicles, so I did not follow the financial health of the company. I do not know if getting rid of Wagoner was the best thing, was a necessary thing or a foolish step.

However, that the government can tell a private company who to hire and who to fire is a troubling thing. For those who who think this is not an overreach of the government, but a prudent move designed to protect taxpayers' dollars, have you stopped to consider the logical conclusion of this type of government action?

What about those private companies that bid on public projects? Would the government be able to influence them? What about those citizens who rely on government assistance to pay rent? buy food? receive childcare? pay medical bills? Can the government now come in and tell us what types of activities we can engage in, not engage in, what foods to eat, etc.?

Can the government dictate to us how we shall behave or think because we are receiving money from it?

If Wagoner needed to go, the board of directors needed to do it.

More CEOs going out the door?

U.S. Treasury Secretary Tim Geithner cannot even operate TurboTax, but apparently he is a private business guru because he's looking out for us and will pressure more CEOs to take a hike, if need be.

Hope you like the change.

Daniel Hannan on Neil Cavuto

Daniel Hannan on Glenn Beck