Financial Reform - A Disaster In The Making

As if the stock market downturn and declining home sales aren't enough, the so-called Frank-Dodd Financial Reform bill will make sure to kill off one thing that many of us depend upon – our local community banks.

The comprehensive financial reform agreed upon by the House and Senate on Friday, along with all the new regulations of the past year, could signal the end of community banking. The new reforms will give more power to the Federal Reserve to regulate how [small banks] do business.

What does all this mean for our customers? Less credit will be available, costs will increase, and we will be less able to make loans to regular people who were creditworthy in the past. This is the perfect storm for the small retail banking customer. We will start to see more small community bank failures and mergers because of voluminous regulation.

I thought financial reform was supposed to help both consumers and banks to survive. Instead it looks like it's designed to destroy small banks and make it very difficult to get loans of any type. How is this helping anyone...except the banks that are too large to fail?

It has become increasingly apparent the Democrats in Congress are not friends of the American people. The only ones their interested in helping are themselves...to our money

The Supremes Decide: The Second Amendment Applies Everywhere In The US

Those supporting the right of citizens to keep and bear arms won a major victory today when the United States Supreme Court decision in McDonald vs The City of Chicago affirmed the Second Amendment applies to all states and municipalities, meaning the Second Amendment is now incorporated. That means that Chicago's draconian gun ownership ban is now history.

I watched some of the reactions to the decision on ABC's World News and I have to say the response by some folks was disheartening. More than one person decried the decision because it would mean “more blood in the streets.” Isn't that what cities with gun bans have already? Certainly Chicago has seen how well it's gun ban has worked, with numerous deaths caused by criminal gunning down unarmed victims. The gun ban certainly didn't stop them from getting guns or using them. The same was true in Washington DC, where in the Heller vs DC decision the Court decided 9-0 that the right to keep and bear arms was an individual right. (The 5-4 decision was on DC's gun ownership ban.) More than once Washington DC had the misfortune to be the “Murder Capital of the US”, putting a lie to the claim that their gun ban prevented violent crime from being even worse.

What far too many of the “let's get the guns off the street, particularly those owned by law abiding citizens” folks have failed to realize is that widespread gun ownership tends to drop the violent crime rate, not increase it. Every state that has switched over to shall issue concealed carry weapons permits have seen their violent crime rate tumble. Those with laws that make it almost impossible to own guns legally have seen their crime rates skyrocket. What did they expect when those laws disarmed the very people most likely to be victims of those criminals?

Thoughts On A Sunday

It's the first of two NASCAR race weekends here in New Hampshire. All one needs to do is look at the ramp at Laconia Airport to see all the business jets of the various teams and sponsors parked there to know it's race weekend. (I'm sure the same is true at Concord Airport as both airports are roughly the same distance from New Hampshire Motor Speedway.)

I plan to watch the race from the best seat in the house, mainly my recliner in front of the TV. No lines, no traffic, no waiting at the concession stand or the bathroom.

One thing that makes the Lenox Tools 301 different from many of the other NASCAR races? Danica Patrick. She's racing today and I'm looking forward to her showing some of the good ol' boys how it's done.

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BeezleBub is now working his full summer schedule at the farm, meaning at least 8 hours a day, 6 days a week (Wednesday through Monday). It also means I have to get a up even earlier than when he's going to school to get him to the farm by 7AM.

This coming Tuesday he's going for his driver's license test at the DMV and, if he passes, I won't have to drive him too much longer. Even after he gets his license he'll still need to be dropped off at work because his Jeep isn't quite ready to put on the road. Until then Deb and I will still have to drive him.

I have to admit that when the time comes when he's no longer dependent upon us to get him from Point A to Point B will be a bittersweet period. It will be great that I'll no longer need to get up quite so early to get him to work or school, but it also signifies that he no longer needs his dear old dad nearly as much as he used to.

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July 4th isn't all that far away, and with it comes a renewal of the meaning of the Declaration of Independence. Chris Muir reminds us that it is as relevant today as it was almost 234 years ago. All one needs to do is “change the names.”

That's scary.

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Seeing the reports from Toronto on the G8/G20 summit, it has become quite apparent the rest of the leaders attending hold an entirely opposite view from The One. They understand, even if he doesn't, that they can no longer spend money they don't have and now have to live within their means. Obama appears to be stuck in this cryptp-Keynesian mindset that won't allow him to see his course of action is wrong. There is so much historical evidence to prove his way will do nothing more than drive the US, and probably the rest of the world, over an economic cliff.

But then Obama is incapable of admitting he's wrong about anything. It's the rest of the world (and all the little people in the US) that are wrong. Call it yet another facet of his unchecked narcissism.

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Could the catastrophic results of the Gulf oil spill been averted? According to the Dutch, the answer is yes. Apparently the Dutch have the equipment and expertise that would have helped to greatly reduced the effects of the damaged well head and headed off the contamination along the shorelines of Louisiana, Mississippi, Alabama, and Florida.

Too bad Obama told the Dutch and other foreign nations offering help to 'piss off'.

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Eric The Viking comments about one of the biggest “gotcha's” of ObamaCare:

In Orwellian fashion, the new health care reform bill is called "Patient Protection and Affordable Care Act." I guess it's an "act" after all.

He'll get no argument from me.

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Gee, the GPD expansion rate has been revised downward again? Big surprise!

NOT.

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Poor Bogie.

She and her Wonderful Spouse have to deal with a recurring mold problem in their attic.

Their insurance company paid for the first remediation effort, but it looks like Bogie will be footing the bill for this next round.

Mold sucks.

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I like this take on the so-called DISCLOSE Act.

Although the DISCLOSE acronym officially stands for:

Democracy is Strengthened by Casting Light on Spending in Elections

… a more accurate translation is:

Democrat Incumbents S**t on Constitutional Liberties, Offer Sanctimonious Excuses

Yup. I'd say that just about covers it.

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Are Congressional Democrats using the Gulf oil spill to pull attention away from their plan to have no federal budget in place for fiscal 2011? After reading this, I'd have to say yes. Ed Morrisey writes:

The Democrats in Congress believe what Rep. Gerry Connolly told the LA Times, which is that no member of Congress ever lost an election because of a failure to pass a budget. They don't want to be on the hook for the hard decisions that must come in FY2011, which is either to drastically reduce spending from the binge levels of the last three Democratic Congresses, or to raise taxes to cover it. Spending cuts won't change voter perception of this Congress at this late date -- and tax hikes will make it worse.

So it appears they figure that if they can delay passing a budget until after the mid-term elections they'll stand a better chance of getting re-elected. Little do they realize that it's already too late and that such a maneuver will gain them nothing but scorn.

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Is it any wonder that conservatives have little trust in the MSM?After Sarah Plain's speech at California State University – Stanislaus, the Journalist Variant of Palin Derangement Syndrome was evident as caught by some open microphones at the event.

As the saying goes, “There is no such thing as a closed mic.”

(H/T Cap'n Teach)

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And that's the news from Lake Winnipesaukee, where another NASCAR weekend has come and gone, the Fourth of July is just around the corner, and yet again Monday has returned all too soon.

Video On Saturday

While looking for blog fodder I came across a number of interesting videos. Some of you may have already seen them. Some of you haven't. It doesn't matter since they because they're good enough to see more than once.

First, there's this from Arizona Governor Brewer, calling President Obama on the carpet for his failure to fulfill one of his primary duties as president: Protecting our borders.



Then there's this, made by an unknown author, that brings the problems with the 111^th Congress and the President into focus. Some have called it a new Republican campaign ad. I think it's a warning to those in power that we, the American people, are not to be trifled with, condescended to, or ignored.



America will indeed rise on November 2, 2010. We “shall not go quietly into that goodnight.”

Last, but not least, is this video from Penn & Teller's cable show, calling “Bulls**t!” about health food and the scare tactics used by shallow, holier-than-thou racists willing to let millions upon millions starve to death just so they can feel good about eating expensive organically grown, not-available-to-the-Third-World food. (Sorry, you'll have to follow the link as I couldn't find any embed code to add it here.)

The BP Oil Spill Is Not Obama's Katrina

Again and again we've heard President Obama's detractors (including me) saying the BP oil spill is Obama's Katrina.

We're wrong. It's worse than that.

While President Bush was limited in what he could do by law since the state and local governments were ultimately responsible for their actions prior to and after Katrina, Obama's response to the oil spill in the Gulf has been dismal considering the federal government had sole jurisdiction since the accident took place in federal waters. To equate the two is dishonest.

I remember when then Louisiana Governor Blanco complained at one point that the federal government had done little to help during and after Hurricane Katrina. Apparently she wasn't aware the feds could do nothing until she asked for assistance. Until then the federal government could do nothing as they had no jurisdiction. The same was true of New Orleans Mayor Ray Nagin, condemning the federal response prior to and after Katrina struck when ultimately it was his responsibility to see to the safety of his constituents. It was his failure to use the resources he had on hand that caused a lot of the misery and deaths that followed in Katrina's wake.

It must be remembered that the two incidents are also dissimilar since Katrina was a natural disaster and the BP oil spill was man-made. But still these two incidents show the differences in approach between Obama and Bush, with Obama being too laissez faire about something well within his area of responsibility and Bush being restrained by law from helping at the state and local level until there was little the government could do except help pick up the pieces.

Thoughts On A Sunday

It's been a combination weekend for us here at The Manse, between the graduation of my dear brother's middle son, Father's Day, and the end of Motorcycle Week in the Lakes Region of New Hampshire.

I spent the afternoon down at my brother's with the WP Parents, celebrating the matriculation of John's No.2 son. Unfortunately I was the only one from our household able to attend as BeezleBub was working at the farm (catching hay all day) and Deb had to work, too.

We headed over to the WP Parents' place on the other side of the hill (The Manse and their place are literally on opposite sides of the same hill) for a Father's Day celebration, wending our way through the large number of bikes making their last runs of Motorcycle Week before heading home.

The weather certainly couldn't have been much better, with no rain on Saturday and a few quick passing hit-or-miss showers late on Sunday.

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Speaking of Bike Week, Bogie has a few pictures she and her Wonderful Spouse took along Lakeside Avenue in Weirs Beach.

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It appears Obama's honeymoon period is now over. With even purported supporters now questioning his abilities and competence, one has to wonder if he will indeed be the next one-term president.

Obama's biggest problem is his disconnect with the American people. Is it because he believes he's the only one with the answers and that the people are too stupid to see his brilliance, or is it because the American people see that he's an arrogant elitist without a friggin' clue as to what's really important? Or is it both?

On one side is America — fickle and excitable, hotheaded and prone to overreaction, easily frightened and in constant need of reassurance.

Easily frightened? Hmm. I'm not sure about that. Maybe easily pissed off when they're being talked down to. The only reassurance most Americans need is that the government is going the leave them alone and
,a href=http://jammiewearingfool.blogspot.com/2010/06/hundreds-of-construction-workers-forced.html>not take away even more of their money and not spend money it doesn't have.

On the other side stands Obama — solid and sober, rooted in the belief that his way is the right way and in no need of alteration. He’s the emotionally maimed type who lights up when he’s stroked and adored but shuts down in the face of acrimony. Other people’s anxieties are dismissed as irrational and unworthy of engagement or empathy. He seems quite comfortable with this aspect of his personality, even if few others are, and shows little desire to change it. It’s the height of irony: the presumed transformative president is stymied by his own unwillingness to be transformed. He would rather sacrifice the relationship than be altered by it.

The more successful presidents were willing to make compromises and work with the people rather than telling them “I know better than you, so sit down and shut up.” It is clear Obama is the more the latter than the former.

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To add fuel to the fire in regards to Obama, it doesn't help that most of the world sees Obama as incompetent and an amateur.

Hey, they're only seeing what a lot of us here in the US see, too, that being Obama is the 21st Century Jimmy Carter.

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Ace of Spades has a breakdown of the state Moocher Index, described as “the percentage of state residents who receive some form of welfare and subtracted the percentage who fall under that state's poverty level.”

An interesting observation points out that “the 5 of the top 10 mooching states also have some of the country's highest effective tax rates.”

Why doesn't that surprise me?

While my home state ranks pretty low on the tax burden scale (#46), I wish it rated at the same or lower level on the Moocher Index than it does (#32). (Note: the tax burden rating is based on 2008 figures.)

(H/T Maggie's Farm)

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All my life I've heard the pundits and the politicians talk about poverty in America. Listening to them one would think all those we define as poverty-stricken are living on the streets or in slums, with little food to eat and none of the comforts the rest of us above the poverty line take for granted. But the truth is that many of those presently at or below the poverty line are living better and are better off than most of the middle class in the 70's and 80's.

...the poor's material well-being has improved. The official poverty measure obscures this by counting only pre-tax cash income and ignoring other sources of support. These include the earned-income tax credit (a rebate to low-income workers), food stamps, health insurance (Medicaid), and housing and energy subsidies. Spending by poor households from all sources may be double their reported income, reports a study by Nicholas Eberstadt of the American Enterprise Institute. Although many poor live hand-to-mouth, they've participated in rising living standards. In 2005, 91 percent had microwaves, 79 percent air conditioning and 48 percent cellphones.

I'm not saying that there aren't any poor out there. I'm saying we may have to redefine poor in order to reflect the reality. And 'poor' here in the US would be considered wealthy in a number of other countries. It's all a matter of perception.

In the book MiG Pilot: The Final Escape Of Lt. Belenko, Viktor Belenko describes watching Soviet propaganda films showing the desperation of the poor in the United States and how the capitalist system exploited them. But what Belenko saw were the 'poor' with their own apartments furnished with the modern conveniences (ovens, refrigerators, TV sets, etc) - something that was rare in the Soviet Union at the time – and in many cases, owning their own cars. The 'poor' in America were far better off than the average Soviet citizen in the 1970's.

Maybe it's time to change the definition of poor.

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I have to agree with David Thompson on this one: “...the more egalitarian a person says he is, the more superior he wishes to be, or assumes he already is.”

Basically, they believe everyone should be equal in all things...except for themselves. This is because they also believe some people are more equal than others. Frankly, anyone pushing for a more egalitarian society should immediately be taken out and put in the stocks or pillory, making sure, of course, there is a large supply of rotten produce handy for passersby to throw at the hypocrite.

As I have written more than once, 'egalitarian' societies always end up being the most oppressive and tyrannical because they are based upon the false premise that they can force people to be equal. Unfortunately equal usually equates to “equal to the lowest common denominator”, which in the human species is always a Bad Thing™.

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Oh, yeah, let's make sure there will be big incentives for foreign investors to not invest in the US by making sure they'll know the Obama Administration will ignore the rule of law and use threats and extortion to get its way.

Obama is starting to make the US look more and more like a corrupt Third World nation every time he opens his mouth. Like that will help our economy recover.

November 2012 can't get here soon enough.

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I loved this!

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And that's the news from Lake Winnipesaukee, where the weather has been marvelous, the boating has been great, and the rumble of thousands of motorcycles has been stilled until next year at this time.

ObamaCare Dying A Death Of A Thousand Cuts

You know it's bad when even CNN is dumping on ObamaCare.

The CNN report linked above covers the growing problems with Massachusetts health insurance program upon with ObamaCare has been modeled. None of the goals stated in the Massachusetts version have been met. The system is failing financially, with no control over costs, mandated coverage adding to health insurance premiums, subsidies for low/medium-income earners heading ever upwards, disincentives for people to work (higher income means paying a lot more for health insurance), and unintended incentives for businesses to drop their employees health insurance plans entirely.

The Massachusetts system is a preview of what we can expect as ObamaCare kicks in.

Already the the side effects of ObamaCare can be seen as the costs of it become more apparent. If most of the details of this bill had been made known to all of Congress before the vote it never would have passed. Anyone in Congress with a modicum of knowledge about business would have been able to see the negatives of ObamaCare far outweighed any perceived benefits.

With the unintended incentives ObamaCare gives businesses to drop employee health care, or worse, have all future hires brought on as temporary or contract employees, Obama's promise that we'd “be able to keep our present health insurance if we want to” rings hollow and shows he either doesn't truly understand the ramifications of health care reform, or doesn't care. The fact that he needs to spend $125 million of taxpayer funds to sell the idea that ObamaCare will be wonderful proves how bad it will be. If it was truly all that great it would sell itself. But the more he tries to push it on the American people the more they resist letting him destroy the imperfect but world class health care system we have.

Anyone with even a little math ability can figure out that the numbers don't add up, that they don't take into account real world conditions, and totally ignore the effects of the fiscal disincentives that will cause companies to drop health insurance for their employees and induce health care professionals to leave the medical field.

80 Years Since Smoot Hawley...And The Dems Want To Do It Again

It was 80 years ago yesterday, June 17th, that President Herbert Hoover signed the Smoot-Hawley Tariff Act into law, which instantly turned the Great Recession into the Great Depression. It was an act of trade protectionism that had exactly the opposite effect from the one intended. Call it an example of the Law of Unintended Consequences writ large.

Hoover and his congressional allies thought that reducing imports would strengthen the economy. Instead, it contributed to a collapse in world trade and the spread of protectionism around the globe. The lessons from this policy mistake are unfortunately all too relevant today.

The Smoot-Hawley tariff, conceived as a Republican ploy to gain the farm vote in the 1928 election, was a bad idea from the start.

It was one of the biggest mistakes the Republican Party ever got involved with.

It seems modern day Democrats are now looking to make the same mistake as the Republicans did in Hoover's day and for the same reasons. Should they pull it off, the unintended consequences won't be the same as those back in 1930. Instead, they'll be far worse.

Perhaps it's time for Congress and the President to stop punishing American businesses for succeeding here. Who knows, maybe new jobs will be created here as a result.

Now They've Gone Too Far!

First, we had to worry about computer crackers going after our machines at work and home. Then, they went after our PDAs. Then our smart phones. Now we have to worry about them going after our cars.

At least my son doesn't have to worry about computer crackers going after his totally uncomputerized 1975 Jeep CJ5.

U.S. Blows It Again

Is it any wonder 'green' jobs haven't been created here?

With the US government spending far too much time trying to kill off traditional energy sources, they really haven't spent nearly as much time trying to promote production of green energy sources as they should. Could that be why a lot of potential American energy jobs have been heading to China instead?

It seems any time there are alternative energy projects that actually look like they may actually work as advertised, the government wants nothing to do with it, or worse, works to kill them. But they'll sink tons of money into questionable projects with little chance of return on investment, or that will require endless government subsidies to survive.

Despite the ABC report above that the government of China controls the economy from top to bottom, meaning they can make offers others can't, the reality is quite different.

According to report from Cornell University, China's free enterprise economy works from the bottom up.

Entrepreneurship is taking off in China and with little input from the government, reports a new Cornell study. It is the capitalism of the private sector -- not government -- that is powering China's huge economy, say the researchers, making the rise of capitalism in China very similar to the West's.

"The surprising finding is how little government actually is needed to enable entrepreneurial activities," said Victor Nee, Goldwin Smith professor of sociology and director of the Center for the Study of Economy and Society at Cornell, who led the study. "Where markets rule, profit opportunities naturally draw in new entrepreneurs, no matter how adverse the institutional environment may be initially. Once a critical mass of private firms operates in specific niches, social norms and networks fulfill many of the functions that textbook economics assigns to government and legal institutions."

So ABC says one thing, and a study from Cornell says just the opposite. Who am I willing to believe?

Cornell, of course.

Chinese entrepreneurship is echoing that of the US long ago. Entrepreneurship is an endangered species here in America, seeing that the government doesn't appear interested in keeping US innovation, ideas, and inventions here where they can create new jobs, if not entirely new industries. We are indeed becoming far too much like Europe, where the government has taken control of many aspects of the economy. They stifle innovation, either by making financing new ventures more difficult or less profitable, or burying them under an avalanche of regulations that all but prohibit new economic activity unless the government can exercise control over every aspect of it.

Is it any wonder US companies are finding China far more receptive to new ideas and new technologies than the US?

A Different Cap-And-Tax Bill

Since it appears that Cap-And-Tax is moribund (for now), the Democrats are trying a different piece of legislation to achieve the same thing, only a bit more piecemeal this time around.

The so-called American Power Act seeks to tax carbon emissions from “coal-fired power plants and other large polluters.”

A climate and energy bill being pushed in the Senate would cost American households 22 to 40 cents a day -- less than the cost of a first-class postage stamp, the Obama administration said Tuesday.

An analysis by the Environmental Protection Agency concluded that the Senate bill, sponsored by Sens. John Kerry, D-Mass., and Joe Lieberman, I-Conn., would cost households an average of $79 to $146 per year. A first-class postage stamp costs 44 cents.

Sounds great, doesn't it? But knowing government as we all do, we must ask about the hidden costs and the how the numbers were derived. As history has shown us again and again, government (and particularly Congress) have a tendency to underestimate the costs of new mandates and programs and overestimate the revenues or benefits derived from them. The fact that the cost estimates come from the EPA makes me skeptical the numbers are even close to being realistic. One must keep in mind that it will be the EPA regulating CO₂ emissions since it has now been erroneously classified a pollutant.

It would not surprise me to see all kinds of amendments to this bill, most of them intended to turn it into a stealth Cap-And-Tax law.

It doesn't help that the White House is using the oil spill in the Gulf as a rallying cry to choke off the supply of oil and other fossil fuels “for our own good.” Not that this bill will have any effect on the oil spill or its side effects. All it's designed to do is make energy more expensive all in the name of saving the planet even though no one can rightfully prove it needs saving. But that's never stopped the Left from doing it anyway.

Thoughts On A Sunday

It's the beginning of the 87th Annual Motorcycle Week here in the Lakes Region of New Hampshire. While the weather hasn't been great in regards to riding (rain and thunderstorms on and off) a large number of bike enthusiasts have made the best of it. At least the weather is supposed to be great the rest of the week, meaning we can expect a good turnout through next Sunday.

Hopefully BeezleBub and I will make it over to Weirs Beach later this week to partake of some sightseeing.

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David Starr explains the economics of energy and the costs of specific sources. As he writes:

Bottom line: We need conventional oil and gas unless we accept dropping back to a pre-industrial standard of living.

Of course if polywell fusion actually works all bets are off. (So far everything has been scaling just as Robert Bussard calculated they would.)

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Obama keeps telling us the government is doing everything it can to help mitigate the effects of the Gulf oil spill. But reports like this are telling an entirely different story.

So which is it?

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This is the only mention I'm going to make about Sarah Palin's boobs.

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Bogie disagrees with my take on the possibility of Obama and Congress killing mortgage interest tax deduction.

Rereading what I wrote, I realize I didn't adequately state my position, so let me state it more succinctly: Killing the mortgage tax deduction at this time would be the wrong thing to do. The last thing government should do is increase the taxes during a deep recession, particularly on an activity the government is trying to encourage. The last thing any family needs right now is an increase in their income taxes. Money is tight and some folks are hanging on by the skin of their teeth. How is it adding a higher tax burden is going to help anyone in that position?

I can see no harm in reducing or eliminating the deduction once the economy and the market have recovered, but now is not the time. (It would also break another one of Obama's campaign promises, again.)

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Like this is a surprise:

A majority of existing healthcare insurance plans won't be grandfathered.

And yet another Obama promise bites the dust. But then again, Pelosi knew this right from the beginning.

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Is yet another New England state seeing a shift from blue to red?

First it was the People's Republic of Taxachusetts with the election of Republican Scott Brown to fill the US Senate seat left open by the passing of Teddy Kennedy. Then Connecticut has a battle brewing for the Senate seat held by Chris Dodd, followed by a resurgence of support for GOP candidates for both House seats and a Senate seat in New Hampshire.

Now we're seeing a shift in voter attitudes in Maine, with a solid majority of them showing preferences for more conservative candidates and views.

(H/T Pirate's Cove)

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Cap'n Teach brings us up to speed on how things are done in Guilford County, North Carolina, where the chairman of the Forsyth County GOP was punched in the face during a protest. That's bad enough. But the victim has been charged with simple assault, despite a video showing the attack and the attacker. The attacker has had all charges dropped.

Gee, could it be because the victim is a Republican and the attacker is a Democrat that charges against the perpetrator have been dropped because the magistrate is a Democrat?

Naw, that can't be it.

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It turns out that biomass generated electricity is not carbon neutral like everyone believes it to be. In fact, it has a carbon footprint 3% larger than the amount of coal needed to generate an equal amount of electrical power.

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I'm not sure how the logic of this one figures, but somehow the Left believes that the Gulf oil spill will “sink the Tea party.”

Even after reading the linked op-ed piece I fail to understand the logic that leads Joshua Green to his conclusion. It's a pretty big stretch to tie the TEA party platform to the problems that led to the oil spill. It's as logical as Nancy Pelosi laying the blame for it at George W. Bush's feet.

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Bigfoot also has some interesting points about the BP oil spill in the Gulf, including a video that “gives a new meaning to an old song.”

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And that's the news from Lake Winnipesaukee, where the rumble of motorcycles will be heard for the next week, the weather will get better, and where yet again Monday has come to darn soon.

Will Congress Make The Mistake Of Killing The Mortgage Deduction?

Just when I think Obama and/or Congress couldn't come up with any more ways to delay or destroy economic recovery, he proves me wrong.

First, there was the stimulus. Then Cash for Clunkers, followed by ObamaCare. Cap and Trade still lurks, waiting to make energy cost skyrocket. (Like that will help the economy). Then there was the first time home buyers tax credit, followed by a modified version that covered anyone buying a home. Now, to kill off the housing market entirely, they're looking to do away with the mortgage interest tax deduction, which will add thousands of dollars per year to the taxpayer's tax burden.

Do they really think this will help anything? Estimates predict elimination of the tax deduction will bring in $208 billion over the next ten years, but at what cost? What will the actual revenues be when all factors are taken into consideration?

Frankly, I doubt they'll collect anywhere near what they expect to because a lot of people that might have otherwise bought homes will decide it's no longer financially attractive to do so. What will that do to the housing values and the housing market? Two things that I can see.

First, housing values will drop, making an already shaky housing market even more so as an increasing number of homeowners will see their equity disappear. Some of those will find themselves upside down on their mortgages. This in turn means we'll probably see an increase in foreclosures and 'walk-aways', where people abandon their homes because they can no longer justify paying the mortgages even if they do have the money to pay them. Why should they when they'll end up with far less than they started with when they first bought their home? It will make more sense to let the home go into foreclosure rather than to keep paying for housing guaranteed to depreciate greatly in value. (In effect, it's like having your mortgage rate increase from 5.5% to 20%. Even if you can afford to pay it, you're really getting little in return for tall he money you spend.)

Second, the housing market will shrink even more than it has since the home buyer tax credits ended this past April. The only difference will be that the effect on the market will be semi-permanent. It could take decades for the market to recover and even when it does, there will a large stock of homes looking for buyers that don't exist.

In turn, all of this could affect the financial industry as people won't be taking out mortgages or equity loans. The banks won't be making any money because of the dearth of loans (and likely a large supply of foreclosed homes they can't sell at any price).

Again, Congress is getting ready to shoot itself (and the economy) in the foot by proposing legislation that will have the unintended consequence of killing off yet another part of the economy and ending up with even less revenue than they started with. If they really want to help reduce the deficit, then perhaps they should stop spending money we don't have.

If Congress were really interested in generating a little more revenue, then perhaps they could do away with the interest deduction for second homes. It's been done before and had little overall effect on the housing market as most activity on the market is for primary homes.

But they won't do that because, after all, it makes sense.

Laffer On Taxes And The Coming Revenue Crunch

Economist Arthur Laffer (he of the Laffer Curve) gives us a reminder and a preview of how tax policies can affect economic activity, sometimes for the better, but this time around for the worst.

People can change the volume, the location and the composition of their income, and they can do so in response to changes in government policies.

It shouldn't surprise anyone that the nine states without an income tax are growing far faster and attracting more people than are the nine states with the highest income tax rates. People and businesses change the location of income based on incentives.

People can also change the timing of when they earn and receive their income in response to government policies.

On or about Jan. 1, 2011, federal, state and local tax rates are scheduled to rise quite sharply. President George W. Bush's tax cuts expire on that date, meaning that the highest federal personal income tax rate will go 39.6% from 35%, the highest federal dividend tax rate pops up to 39.6% from 15%, the capital gains tax rate to 20% from 15%, and the estate tax rate to 55% from zero. Lots and lots of other changes will also occur as a result of the sunset provision in the Bush tax cuts.

Now, if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income will be lower than it otherwise should be.

Anyone believing people and businesses won't change their schedules or behavior due to tax increases or decreases or government mandates are either deluded or have no understanding of human nature or business. The upcoming tax changes will certainly affect the revenues collected next year as anyone capable of taking advantage of the existing tax rates will do so before the rates change next year. To do otherwise would be foolish. (I am also assuming that many of the same people who deride others for taking advantage of moving up income or other disbursements will do likewise, showing that they are hypocrites as well.)

Probably the biggest problem facing us is that, as a group, far too many liberals have a very poor understanding of economics. How do I know? Because Zogby tells me so.

Who is better informed about the policy choices facing the country—liberals, conservatives or libertarians? According to a Zogby International survey that I write about in the May issue of Econ Journal Watch, the answer is unequivocal: The left flunks Econ 101.

Some commenting on the Zogby piece claimed the questions asked didn't include enough specifics, but the poll was supposed to cover generalities, not definitive economic principles. Zogby wasn't polling economists, but members of the general public, giving us a decent snapshot of economic knowledge and attitudes across America, including some of our politicians. And with a majority in Congress, the left has been making some major economic blunders in their ignorance.

Need we say more?

Thoughts On A Sunday

The weekend weather hasn't made it easy to get any work done outside The Manse. It seems every time it got sunny and I'd start to had outside the clouds would quickly move back in a drop some rain. I couldn't even hang any laundry out to dry yesterday because the passing showers came by far too often.

A day off from yard work now and then isn't a bad thing...as long as now and then doesn't occur every day!

A line of thunderstorms came through this afternoon, causing damage in a number of places in New Hampshire, though not here, thank goodness.

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The weather has also kept the weekend traffic to a minimum. A perfect example: BeezleBub had a driving lesson this morning and the traffic in downtown Laconia was almost non-existent. Even our favorite breakfast joint wasn't all that busy, meaning we didn't have to wait to get a table at a time we usually would have to wait 15 or 20 minutes.

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As Jennifer Rubin writes in regards to the reactions to Israeli interdiction of the Gaza-bound flotilla, “While the Turks call for a 'final solution' Obama says nothing.”

I have to say that Dubya had it right.

(H/T Instapundit)

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I wonder how many more disincentives Congress will heap upon businesses before they realize they are one of the main reasons the economy isn't recovering?

The best thing they could is get out of the way.

Yeah, like that will happen.

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Speaking of disincentives, Cap'n Teach tells us about one of the unintended consequences of things like ObamaCare and other government mandates: more new jobs are coming without benefits.

Many of the jobs employers are adding are temporary or contract positions, rather than traditional full-time jobs with benefits. With unemployment remaining near 10%, employers have their pick of workers willing to accept less secure positions.

In 2005, the government estimated that 31% of U.S. workers were already so-called contingent workers. Experts say that number could increase to 40% or more in the next 10 years.

Cap'n Teach writes, “Why would employers want to hire employees they have to either give health benefits to or pay a fine on? Quite a bit smarter to make them temporary or contract workers.”

I have no doubt this will be the trend unless the 112th Congress repeals ObamaCare next year. All this shows is that Obama and the Democrats in Congress are masters at ignoring the Law of Unintended Consequences. It also shows they have no understanding of economics and the effects mandates have on economic decisions.

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One of my favorite bloggers, Bruce MacMahon of No Looking Backwards is hanging up his blogging keyboard.

It's not that he's tired of blogging. Instead, he's putting his efforts into running for representative to the New Hampshire House.

The days of sitting on the sidelines are over. It's time for me to stop talking about the good, the bad, and the ugly - where our state (and federal) government is concerned - and start doing something about it. It's time to put my money where my mouth is, so to speak. Time to live up to the name "No Looking Backwards" and set my sights forward.

New Hampshire is at a crossroads, with our future and our children's future dependent upon which road we choose to travel.

I'm choosing to continue in my efforts to rescue New Hampshire (and our country) from the destructive forces of big government, runaway taxation, special interest-driven politics, and reckless spending.

He's not just talking the talk, he's also walking the walk.

As someone who's run for office on more than one occasion, I can say “Welcome to the club, Bruce!”

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Just like John Edwards claimed, there are two Americas, just not the ones he claimed.

It's broken down into these two categories: private sector and government sector. At the moment it's far more lucrative and better paying to be the latter. The former actually does something and pays the taxes that make the second possible. But as the first group shrinks the second will find it harder to maintain their pay and benefits. And if the first group fails, so does the second.

(H/T Maggie's Farm)

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Bogie and her Wondeful Spouse have a new addition to their home: a 46” Samsung LCD HDTV. It replaces their old dead TV.

They did the right thing by wall mounting it, which allows them a little more flexibility as far as arranging their furniture.

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I have to ask this question, too: “What part of illegal don't you understand?”

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And people wonder why California is such an economic basket case.

With all the economic problems the state is suffering you'd think California legislators would be focusing on them. Instead they're debating the pros and cons of paper versus plastic bags in grocery stores.

California is doomed.

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And that's the news from Lake Winnipesaukee, where now that the weekend is ending the weather is clearing, the weekenders are heading home, and where lake residents will once again have the lake to themselves...until next weekend.

Housing Slump - Round Two

Gee, where have we seen this before?

First it was Cash For Clunkers, an Obama program that helped spur auto sales for a couple of months. But once the program ended, auto sales slumped and were even lower than before the program started, just as many economists (and a few non-economist bloggers, like yours truly) predicted. All the incentive program managed to do was shift the purchase of vehicles forward a couple of months, meaning that people that were inclined to buy new cars or trucks regardless of any program moved up their purchases a couple of months. But there were no follow on purchases meaning the sales plummeted once the program ended. There was no net gain of sales.

Now were seeing the same thing in the housing market, with a sales slump following the end of the tax breaks given for buying a new home, first for first time home buyers, and then for anyone buying a new home. Once the program ended in April, there were no follow on purchases. All the program managed to do was shift the sales forward a few months. There will be no net gain in sales. The folks buying homes would have done so anyway.

And then came May, traditionally the height of the spring housing season.

Mortgage applications to purchase a home began to sink. Now, four weeks later, mortgage purchase applications are down nearly 40 percent from a month ago to their lowest level since April of 1997. Yes, you can argue that a larger-than normal share of buyers today are all cash, but those are largely investors.

That means real organic buyers are exiting in droves.

"With another week of historically low mortgage rates, the trend from the prior three weeks continued, as refinance applications increased while purchase applications dropped. Purchase applications are now almost 40 percent below their level four weeks ago, while the refinance share, at 74 percent, is at its highest level since December," said Michael Fratantoni, MBA's Vice President of Research and Economics.

So the low mortgage interest rates have been driving a lot of refinancing, but not a lot of mortgages for the purchase of homes. Color me surprised. NOT. Even with the lower interest rates the demand isn't there, having been exhausted by the end of April due to the tax incentives.

How much have those incentives cost the American taxpayers? The obvious answer is more than if there had been no tax incentives at all, and it was all for nothing. The temporary bump in home sales has passed and the slump has taken its place.

Way to go Team Obama!

Beating The Crowd

It's nice weather at the moment, though the Weather Guys™ have us under a Tornado Watch the rest of the day. That means that once the nasty weather appears I'll be pulling the plug on the computers here at The Manse.

Deb, BeezleBub and I made it out on to Lake Winnipesaukee late yesterday afternoon, before the weekenders showed up. The conditions were perfect, with few boats and no wind. It made for a nice 2-hour jaunt, the first of many this season.

On our way back to our slip we noticed boat traffic picking up quite a bit, showing the weekenders had arrived and were getting at least one run in before the less then great weather arrived (meaning today).

There are advantages of living at the lake!

The Progressive Blind Spot - Human Nature

As I was heading out during my lunch break I made the mistake of listening to the Diane Rehm show on NPR, where guest host Frank Sesno had author/sociologist Juliet B. Schor as a guest. Schor's book, Plenitude talks about the need to make profound changes in how we live. As I listened I came to realize that while her goals may be laudable, those goals have ignored one thing that she, being a sociologist, should understand: human nature.

How many times over the decades have utopian/progressive/socialist plans for this country or for the world tried to make it sound that if people would only change how they look at things that we could create a perfect society/world? The problems is that people tend to resist change, particularly when they see little return for all the effort that will be required. They have higher priorities, such as providing for their families. Unless people can be shown up front such changes will benefit them and their families directly, they will resist those changes. To rely on altruism to fuel such changes is foolish and a waste of time. As I and many others have come to realize, altruism is something we feel from time to time. It cannot be sustained 24/7/365. Unfortunately far too many of the Left have chosen to ignore that one little truth. Most of there utopian ideals demand altruism from is all day, every day. It's the only way their world will work.

If people like Schor want to see those kinds of changes they shouldn't waste their time appealing to people's better nature. They may not have one, particularly when it comes to their families or businesses. Those are the most important things in their lives. If someone tries to convince them they should sacrifice the well-being of either in the name of some nebulous cause, the response they get will likely be “Screw you and the horse you rode in on!”

More than once during the show Schor lamented the “greed” that seems to drive the Western world and tried hard to guilt us into giving up everything everyone has worked so hard to achieve. I had a hard time figuring out exactly how she defined greed. Was it overweening avarice? Was it profiting from the misfortune of others? Or was it simply making money at one's job or business and having a little left over to do something other than buy necessities? (I get the feeling she didn't differentiate between them at all, with the last one being the worst of the three.) More than once she played the leftist egalitarian card, implying no one should have [place name of item or possession here] unless everyone can have one. But that's a straw man argument because by that logic no one will ever be able to have whatever it is because no one has them. Someone has to be first. Call it the Lowest Common Denominator premise, which always turns out to be false, unrealistic, and impossible to achieve.

One of her favorite targets was the oil companies. Another target was big corporations. While I have no love for either, her remedy (smaller innovation driven companies to replace them) isn't something that can be forced. For one thing, who decides and on what basis? Some things can't easily be done by smaller companies, if at all. Does that mean they shouldn't be done at all? Again, who decides?

I guess the point I'm trying to make is that Schor and those like her seem to think that someone should be making these decisions for us rather than letting things develop on their own. Forcing the issue, either by heavy government intervention or outright government control, never works out and always causes far more problems than such changes were meant to fix. History is rife with examples of how and why we should not to do such things. Yet the Left sees the previous failures not as a flaw in their theories but as poor execution of them. They'll explain that this time they'll get it right...but they never do.

These 'Experts' Are Anything But

One thing that has always bothered me about the folks in Congress is their incredible ignorance and arrogance when it comes to technology and science. Very few members of Congress have the background or expertise to make law or policy on science and technology matters. Far too often they get it wrong, meaning the nation and the economy suffer for it. After all, what do they know?

The answer, in a word, is obvious: they know pretty much nothing. What's worse is that they don't feel that ignorance should preclude them from talking until there is an initial technical investigation, done by some technically qualified people (from various reputable organizations). (We saw this same rush to judgment by the know-nothings after the Space Shuttle Challenger explosion in 1986.)

To me, all this is just another manifestation of the sad, ironic reality that engineers have made the incredibly difficult look way too easy. Everyone thinks it's all no big deal and not very hard, so it's easy to be an expert. It's happened in nearly all engineering and scientific disciplines.

People in general have little or no understanding of the technology they use every day, but at least they know they don't understand it and are willing to admit they don't understand it. All they know is that they can use it. Unfortunately Congress doesn't know that they don't know, and that's the problem. This false belief means they will, more often than not, come to the wrong conclusions about some scientific or technological issue. It also means that the rest of us will pay the price for their decisions, one way or another.

I'm not saying that Congress shouldn't get involved with such issues. But they should be more willing to take the time to learn about them well before deciding anything. There are very few science or technology issues that require immediate action by Congress. Unfortunately Congress doesn't realize this, or worse, they don't care. It's all about posturing and politics and power and not about the actual issues.

Internet Explorer 6 - Well Past Its Prime

OK, dear readers, how many of you out there are still using Internet Explorer 6? If you are, why?

IE6 has to be the most targeted web browser for hacker exploits, even with the security patches provided by Microsoft. If you're still using it, it's time for a change. Just about any modern browser will be more secure than IE6.

We here at The Manse use Firefox 3.6.3 and we update it as soon as new updates are available. Microsoft has IE8. There's Opera, Chrome, Safari, and a whole host of other browsers out there. Pick one, try it, ands if you don't like it, try another one. But get rid of IE6 now.

Note: For full disclosure, at work we use both Firefox and IE6. The decision about IE6 is not ours, but that of our corporate IT folks. About the only thing we (meaning Engineering) use it for is some internal applications (Oracle, Microsoft Project Web Access, and one or two other corporate applications), but never for URLs outside the corporate proxy server.

Was It Only A Year Ago?

As Paul Ingrassia reminds us, today was the first anniversary of the GM bankruptcy. You know the one, where the White House subverted the Constitution, stiffing the bond holders and debtors and giving the proceeds to the UAW, who were in no way a debtor. What it was was a payoff to the unions for backing Obama, plain and simple. There's no other explanation I can find that makes any sense.