Monthly Archives: May 2011

Obamanomics = Failure!

S&P/Case-Shiller signals double dip in housing:

U.S. home prices fell in March for the eighth straight month, confirming the beleaguered housing market has entered a double-dip recession, according to a closely followed index released Tuesday

U.S. consumer confidence declines in May:

Consumer confidence fell in May as Americans grew slightly more pessimistic about future job prospects and business conditions, according to a closely followed survey.

Chicago manufacturing gauge nosedives:

A Chicago-area manufacturing gauge dropped by the largest amount in nearly two-and-half years in May, in a further sign that the rise in oil prices and the Japanese earthquake have affected activity.

Another sign of the Chinese bubble bursting

Marketwatch reports:

Falling land prices may prompt Chinese property developers to write down the value of their assets, forcing a sober reassessment for those with vast land holdings, according to a survey released Monday by Credit Suisse.

Most at risk are those mainland Chinese and Hong Kong developers who added aggressively to their land banks in 2009 and 2010, the prices of which could come under pressure amid Beijing’s ongoing credit tightening, the investment bank said.

The findings were part of a poll of both listed and unlisted companies conducted by an independent research company and commissioned by Credit Suisse.

[…]

Prices for land sold at auction were down 20% so far this year, the report cited one industry expert as saying. Other data indicated price declines of up to 50% for the year to date, although the figures were affected by slumping transaction volumes in cities such as Beijing, possibly overstating the true rate of declines, the report said.

Story continues here…

I’ve written before about the Chinese bubble. Nobody knows when this bubble will burst or deflate, but it will. And now that China is such a major player, it will drag down economies around the world.

Table of contents for ‘Angry Mobs and Founding Fathers’

Preface

Chapter 1: Angry Mobs in Colonial America

Chapter 2: Founding Fathers in Colonial America

Chapter 3: The War for Independence

Chapter 4: Chaos in the Confederation

Chapter 5: Creating the Constitution

Chapter 6: A Republic, If You Can Keep It.

Epilogue

Coming out this summer!

* Details subject to change prior to publication.

New cover for Angry Mobs and Founding Fathers

George Washington speaks up against ObamaCare Exemptions

As the Department of Health and Human Services grants another exemption to part of Obamacare, this time to the American Association of Retired Persons (AARP), I am reminded of what George Washington said:

Tranquillity reigns among the people, with that disposition towards the general government, which is likely to preserve it. They begin to feel the good effects of equal laws and equal protection.

Until we return to a system of “equal laws and equal protection,” there will be no tranquility among the people and the people will not have a positive disposition towards government.

Book Review: Tempest at Dawn makes you feel like the 56th delegate at the Constitutional Convention

Thanks to James Best’s masterpiece, Tempest at Dawn, I felt like the 56th delegate at the Constitutional Convention. Using vivid narrative and expressive dialogue, Tempest at Dawn presents all the major issues the Founding Fathers struggled with. More impressive, you get to know the character of the men who created our great nation.

Tempest at Dawn is based primarily on Madison’s notes to the Convention. Mr. Best adds to the story events that happened outside of the State House. It is a true credit to the author that it is difficult to tell where Madison’s notes end and the author’s speculations begin.

Keeping in mind that Tempest at Dawn is historical fiction, it is a must read for anybody who wants to understand the principles and efforts that went into creating the Constitution and struggles to create our nation.

Taxes paid keeps rising, despite the media’s claims to the opposite

Headline: “Tax bills in 2009 at lowest level since 1950

The reality according to the very same article:

“Federal, state and local income taxes consumed 9.2% of all personal income in 2009, the lowest rate since 1950, the Bureau of Economic Analysis reports. That rate is far below the historic average of 12% for the last half-century. The overall tax burden hit bottom in December at 8.8.% of income before rising slightly in the first three months of 2010.”

Notice that this is only talking about income taxes. As if income taxes are the only means of collecting taxes. In fact, look at what has been happening in Arizona. The legislature has been dropping income tax rates here, but at the same time they and the people through ballot initiatives have been raising the sales tax rate. Looking at only income taxes is looking at about a third of the total.

I decided to collect the data from http://www.usgovernmentspending.com/ and http://www.usgovernmentrevenue.com and create some simple charts.

Yes, taxes paid have declined recently and hit their lowest level as a percentage of GDP since 1959 (not 1950). However, as you can see, tax revenue is 2010 was back up to the same level as 1971 and 2011’s are expected to be the same as 1973’s. In fact, 2011’s tax revenue is expected to be just a point less than that of 2003’s. Big deal! Yet, look at that outstanding increase in taxes between 1910 and 2000.

But that only tells part of the story. As government’s share of GDP grows, the shrinking private sector has to pay for all that new government. So let’s look at taxes as a percentage of the private economy:

The decline in taxes is now much less pronounced. Taxes paid as a percentage of the private economy hovers around 50%. Looking at taxes against the private is much better because it is the private economy tax actually produces. Let’s look at it another way. If taxes were 60% of GDP but 100% of GDP, everybody in the private economy would stop working and government would get no revenue and would be forced to close down. So the private economy is the determining factor in tax revenues, not the total economy.

So the average person working in the private sector as an employer or employees pays, on average, a tax rate of 50%. This includes income taxes, sales taxes, property taxes, vehicle registration taxes, social security and Medicare taxes, corporate taxes, capital gains taxes, etc. FIFTY PERCENT!

And people have the nerve to complain that tax rates and tax revenues are falling.

Taxes need to fall much further. A decline to the 100-year average of 25% of GDP and 36% of private sector GDP would be a good start. In other words, to return to the average would mean a tax cut of $750 billion to $1300 billion. But with huge deficits, spending would have to decline by two to three trillion. But given the immense growth in government over the last 100 years, spending cuts like that would simply return us to the 100-year average.

Remember, USA today compared 2009 income tax revenue to the 50-year average. I am simply following their lead, but looking at all taxes and looking at a 100-year average.