The Daily Switch

Posts Tagged ‘Economy’

New Era of Obama = Same Old Politics

Posted by maker on December 18, 2009

As much as this characterizes our government, it is also becoming a universal sentiment of an entitled society.

Last week, President Obama lashed out at the financial institutions on Wall Street, again.

When the President of the United States flippantly refers to private citizens and their businesses as ‘fat cat bankers on Wall Street’ there is a problem with the president. When the public sees nothing wrong with this, there is a larger problem with the public itself.

The irony of this particular instance of class warfare populism exhibited by Barack Obama, is that as he delivers these remarks, we learn that government employees are much better paid than private workers. This may seem unrelated at first glance, however, the president petulantly proclaimed these so called ‘fat-cats’ the architects of our current recession, seemingly excusing the federal government of any and all responsibility in the matter. I won’t get into all the intricacies and arguments here, but suffice it to say this is a more than generous revision on the president’s part. So the age old question ‘cui bono?’ does not reflect well on those ‘fat cats’ in D.C. if we understand their role in the unraveling of our economy compared to their ever increasing compensation.

The cycle is a vicious yet convenient one: Support and push policies that loudly proclaim help for the helpless while quietly destroying the free market, which action directly creates more ‘helpless’ to promise more for while also creating the circumstances in which people will more likely cede power to ‘the only people’ who can fix things. Oh, and they need to be better compensated for all the extra work of saving us.

In fact, USA Today reported the following:

  • On average, federal employees earned $71,206 per year, compared to $40,331 in the private sector.
  • From December 2007 through June 2009, average federal employee salaries increased by 6.6 percent, while average private-sector salaries increased by 3.9 percent. Federal employees at the top of the pay scale received pay increases of 8.6 percent during that period.
  • Federal employment is getting top-heavy. Federal employees making more than $100,000 increased from 14 percent to 19 percent of total government employment. In fact, the number of federal employees making more than $100,000 has more than doubled in less than two years. There are now more federal employees making more than $100,000 per year than $40,000 per year.

How could anyone say no to this face?

In light of these facts, how can any government employee begrudge any private citizen their salary? The fact is that these ‘fat cats’ on Wall Street are creating something. They are creating jobs and wealth for millions. The ‘fat cats’ in Washington are best known for creating hurdles for those that would create jobs and wealth.

Worse still, Obama warns that the ‘fat cats’ had better stop opposing government control of their pay and strict oversight of their day-to-day operations because, basically, they owe him for the bailout, which coincidentally many of them have paid back and others have been deterred from paying back.

Obama’s ignorance seems only matched and perhaps exceeded by his unmitigated arrogance. These comments were made just before the president was to meet with said ‘fat cats’ to persuade them to comply with his wishes.

Who says this guy isn’t smooth?


Posted in Capitalism, Conservatism, Culture, Economics, Liberalism, Liberty, Obama, Politics, The Daily Switch, War on Business | Tagged: , , , , , , , , , , , , | 1 Comment »

It’s been a while…

Posted by maker on November 6, 2009

Enraged Eloquence

In response to our current government or The Daily Switch for their long absence?

Things have been crazy and we’ve been away for far too long. The Daily Switch has an official stance on the matter: We apologize. This does not mean that we will be able to keep up the near heroic pace our readers had previously become accustomed to. We will, however, do better.

Let’s kick things off with some essential reading…

If you don’t know Sowell, you’ve got no soul, or so the saying goes now that I’ve said it.

Also, our friends over at TruPolitics have been going strong and even experienced a political victory in a local election. Congratulations Matt!

Guest author Edward Mahee has added a great tone to TruPolitics.

A nice summation of Obama’s actual successes…

Victor Davis Hanson has become for me as essential a read as anything out there. He doesn’t mince words nor seemingly miss a thing.

Anyway, that should keep you busy for a few minutes. Thanks for your patience and continued interest. ‘Til next time…

Posted in Conservatism, Economics, Health care, Liberty, Obama, Politics, The Daily Switch | Tagged: , , , , , , , , , , , | Leave a Comment »

Wal-Mart: Friend or Foe?

Posted by maker on March 16, 2009

(Special thanks to Emerson who contributed the bulk of this article)

Actual Image?

Actual Image?

It is increasingly rare to find a report in the media that shows America’s largest employer, Wal-Mart, or any large corporations for that matter, in a positive or even neutral light.  A loud minority have waged a cultural and public war against Wal-Mart, referring to and viewing it as an evil corporation, a burden on the economy, and even an oppressor of the lower class.  These viewpoints are erroneous and have been disproved by multiple studies showing that Wal-Mart’s existence is very beneficial to our country as a whole, while also providing benefits to millions of individuals, especially the lower class.  Despite what is shown in the media, Wal-Mart has gained the approval of the majority of Americans by being a consistently affordable supplier, employing well over one million Americans, thereby increasing their purchasing power, and (through its prosperity) benefiting the United States and its economy as a whole.

After seeing all the slanted coverage, selective exposés, and ‘evil’ smiley stickers, it would be easy to fall under the assumption that all level-headed Americans must despise Wal-Mart.  However, the not so convenient truth is that the majority of Americans approve of this supposedly cancerous corporation.  A recent Rasmussen poll, revealing that 69% of the adult American public has a favorable view of Wal-Mart, indicates that the vast majority of Americans enjoy the benefits of the low prices and convenience that Wal-Mart provides.  A widely accepted criticism of Wal-Mart is the alleged mistreatment of employees, yet when the Rasmussen survey sample is narrowed to include only employees and family members of Wal-Mart employees, the favorable ratings increase to nearly 80% approval. Wal-Mart’s employees are satisfied with their jobs at a rate far above the average 47% of Americans nationally, as reported by Jenna Bryner of  Clearly, Wal-Mart is well loved, despite poor PR, because of its continued offering of an excellent shopping and employment experience.

The oft publicized notion that Wal-Mart is damaging low income workers, families, and communities across America is equally ludicrous.  Wal-Mart is the world’s single largest private employer, giving jobs to nearly two million people.  This alone challenges any notion that Wal-Mart might harm mid to low income people, as they provide these people with jobs to feed their families.  It is estimated that the lowest quintile of American households spend 26% of their income on groceries.  Wal-Mart’s food division posts an average of a 25% discount compared to other large supermarket chains; this percentage saved “is equivalent to a 6.5% boost in household income.” The aforementioned Rasmussen report also reveals that “lower and middle income Americans are more likely to have a favorable view of Wal-Mart than upper income Americans”, which suggests again that Wal-Mart does indeed benefit the lower and middle class.

Too often in today’s culture ‘wealth envy’ hardens society’s views of the successful. However, even with the prevalence of this growing sociological trend it seems odd that a company as universally beneficial as Wal-Mart might be hated.  Because Wal-Mart has been able to succeed, they are now in the position to give generously to various charities and community development programs.  Wal-Mart has given over two hundred and seventy million dollars within the US, making it the “country’s largest donor of cash.” (AP)  Wal-Mart can also be credited with much of the economic dominance that all of America has enjoyed over the past fifteen years, as Wal-Mart and corporations like it account for a large portion of our international financial activity.  Harvard economics professor, Kenneth Rogoff, claims that, “together with a few sister ‘big box’ stores (Target, Best Buy, and Home Depot), Wal-Mart accounts for roughly fifty percent of America’s much vaunted productivity growth edge over Europe during the last decade.”  It is difficult to imagine the privileges and luxuries we as American’s would forego if not for the contributions of Wal-Mart.

Because of innovation and resourceful development, Wal-Mart has been able to grow into a thriving corporation that serves as a haven for many Americans who rely on the company for its affordability, valued employment, and its advantageous affects on America as a whole especially the lower and middle classes.  With growing volatility in the economy, we should be thankful for corporations like Wal-Mart that give us so much for so little, allowing us to enjoy the luxuries we have grown accustomed to, with little sacrifice.  If Wal-Mart were to part from its current ways of operation, the effects on Americans would be difficult to stomach.  For the lower twenty percent the fall of Wal-Mart would effectively mean a 6.5% pay cut, while the adverse effects would ripple throughout the rest of America in varying ways.  It is easy to demonize a company with such incredible wealth and success; however, it is important to not be consumed by resentment or envy towards other’s triumphs.  We must, instead, view the accomplishments of others in a positive way, using them as inspiration for our own pursuits of success.

The Daily Switch

Posted in Capitalism, Culture, Economics, Media | Tagged: , , , , , , , | 6 Comments »

The Courageous Bobby Jindal

Posted by Ender on February 21, 2009

Bobby Jindal

Bobby Jindal

Yesterday Bobby Jindal the governor of Louisiana officially declined at least some of his state’s portion of the stimulus bill.  Jindal did not want to burden La’s businesses with the additional taxes that would come with the money.  One of the portions he rejected was the $98 million that was to be used to enlarge the unemployment benefits to people who under current law would not receive them.  He rejected the money because it would be a huge burden on business in his state after the Federal money ran out.

“Increasing taxes on our Louisiana businesses is certainly not a way to stimulate our economy. It would be the exact wrong thing we could do to encourage further growth and job creation”

“Our state is facing a serious budget situation, and it would be irresponsible to enter into an expansion of benefits right now that would ultimately increase taxes on the very businesses we are working to support during these tough economic times”

Jindal is exactly right.  It takes a lot of courage to not take the government hand out.  It reminds me of the Coldplay lyric from the song “Fix You” it says “When you get what you want but not what you need.”  I think most State Governors are so eager to get what they want, which is the easy money.  They completely ignore that what they really need is fiscal discipline and fiscal responsibility.  They need to find a way to promote business growth, investment and job creation without burdening future generations for decades with irresponsible subsidies.

Jindal is one of three Governors who are looking to reject some of the Federal stimulus package.  The other two are Gov. Mark Sanford (SC) and Gov. Sarah Palin (AK).

These three deserve our support.  We need Governors who will lead their states with Free Market principles.  We need them to show the rest of the country that it works and it is the only way to recover.

Article 1

Article 2

Update 2/22/09 8:14AM:

Mississippi’s Haley Barbour is also rejecting portions of the stimulus.

A few Governors are critical of the move to reject some of the funds.  Two of them are Crist from Florida and Schwarzenegger.  Now, seeing what Schwarzenegger has done to destroy the economy of California, do you think anyone should follow his advice on economic matters?  I didn’t think so.

Bobby Jindal will be debating his actions on Meet the Press this morning with Charlie Crist.

Stay tuned I will have a debate recap up sometime in the next two days.

Update 2/22/09 9:17pm:

Well, it turns out they weren’t really debating, which made it a whole lot less exciting. Jindal fielded several questions from the host.

I think he presented the conservative case well. Highlight of the interview was when Gregory tried to trap him with a La. senator’s (?) statement that the unemployment tax would be temporary. Jindal replied with something like “if you had read the portion of the bill that covered the unemployment tax you would have seen that the tax was listed as ‘permanent.'” Not temporary as the senator implied.

Posted in Capitalism, Economics, Politics | Tagged: , , , , , | 2 Comments »

The Cause of the Housing Crash

Posted by Ender on February 12, 2009

A recent post by our friends at covered the current financial crisis. The analysis brought up a point that has been bothering me for awhile. Whenever you hear about the housing bubble burst it is almost always being talked about as the market failing. You hear about the “greedy” investors on Wall Street causing the meltdown. It seems as though everyone is eager to buy into this theory. The problem with this explanation is that it just simply is not true. There is no market failure in this crash. The crash, as we will see, is the direct result of government intervention in the market.

In 1977, the Community Reinvestment Act was passed. The purpose of this law was to make housing affordable to anyone and everyone. As recent events have proven not everyone should be able to get a mortgage. The law “was used to pressure banks into making loans they would not otherwise have made and to adopt looser lending standards that would make mortgage loans possible for individuals who could not meet the down payment and other standards that had previously been applied routinely by banks and other housing lenders.” (Wallison)by Stanley Kurtz on ACORN and its ties to the CRA, Obama and the Democratic party go here.

A quick side note on the CRA. This Act was pushed for by the now infamous “community organization group” called ACORN. You may remember this group coming up during the 2008 campaign. For a very detailed and well written article

ACORN along with the new law were “able to delay and halt the efforts of banks to merge or expand until they had agreed to lower their credit standards.” (Kurtz) This is the most critical part of the whole operation. The US government “created the necessary conditions for a housing boom by directing investments into the housing sector, requiring banks to make mortgage loans they otherwise would never make.” (Wallison)

In 1993, banking regulators were aggressively attempting to reform the CRA laws. In 1994, Janet Reno said this “[W]e will tackle lending discrimination wherever and in whatever form it appears. No loan is exempt, no bank is immune. For those who thumb their nose at us, I promise vigorous enforcement.” (Wallison) Finally in 1995, the Clinton/Reno efforts came to fruition with a massive overhaul of the CRA. The new rules are the cause of the downturn we are feeling today.

The new and improved CRA took most of the decision making away from the banks when it came to who got loans. Basically, the evaluations were now results based. They looked at how many loans were given not at whether the banks were trying to find qualified customers. An economist writes “[This] can be thought of as a shift of emphasis from procedural equity to equity in outcome. In that, it is not sufficient for lenders to prove elaborate community lending efforts directed towards borrowers in the community, but an evenhanded distribution of loans across LMI [low and moderate income] and non-LMI areas and borrowers.” (Wallison) The banks were now forced to use aggressive or lax lending practices in order to comply with the law.

Now some may say there were not enough defaulting CRA mortgages to cause the industry to implode. This is true. However, Wallison states,”The key question, however, is the effect of relaxed lending standards on lending standards in non-CRA markets. In principle, it would seem impossible—if down payment or other requirements were being relaxed for loans in minority-populated or other underserved areas—to limit the benefits only to those borrowers. Inevitably, the relaxed standards banks were enjoined to adopt under CRA would be spread to the wider market—including to prime mortgage markets and to speculative borrowers. Bank regulators, who were in charge of enforcing CRA standards, could hardly disapprove of similar loans made to better qualified borrowers.” In short, the poison of the CRA spread into non-CRA areas and even into non-housing areas. Wallison goes on to say,”Interest on consumer loans of all kinds—for cars, credit cards, or other purposes—is not deductible for federal tax purposes, but interest on home equity loans is deductible no matter what the purpose of the loan or the use of the funds. As a result, homeowners are encouraged to take out home equity loans to pay off their credit card or auto loans, or to make the purchases that would ordinarily be made with credit cards, auto loans, or ordinary consumer loans. Under these circumstances, homeowners are encouraged not only to borrow against their homes’ equity in preference to other forms of borrowing, but also to extract equity from their homes for personal and even business purposes.”

As if the CRA wasn’t enough government intervention Fannie Mae and Freddie Mac also played a role. These are government sponsored companies, meaning if anything goes wrong with them the taxpayer pays for it. Fannie and Freddie started to purchase the subprime and Alt-A loans (the high risk loans). In 2004, they increased their purchasing of these loans, which caused non-government run businesses to lose market share. This created a large demand for the loans by all the mortgage dealers. Because of “the increased demand from the GSEs and the competition with private-label issuers drove up the value of subprime and Alt-A mortgages, reducing the risk premium that had previously suppressed originations. As a result, many more marginally qualified or unqualified applicants for mortgages were accepted, and these loans joined the flood of junk loans that flowed to both the GSEs and the private-label issuers.” (Wallison)

When the bubble started to burst and home values dropped “about half of all home loans being made in the United States were non-prime loans.” (Wallison)

Due to the government intervention of the CRA, Fannie Mae and Freddie Mac the economy is in the gutter. If the government hadn’t forced the market to make high risk loans there would not have been a problem. If the government hadn’t falsely driven up the value of the sub-prime loans there would not have been a problem. This is the root cause. You cannot attempt to manipulate the market through government regulation without consequences. The free market works for a reason. It calculates value and risk. When you socialize any aspect of process it skews the market. Prior to the CRA, the market knew it should not loan to high risk individuals.

This is why we cannot let people get away with calling this whole mess the result of Wall Street greed. It is the result of people trying to socialize the market. This is also why I was strongly against John McCain running against Barack Obama. McCain did not make this argument once. If there had been someone out there who could articulate the true cause of the economic crisis the outcome would have been different. But instead we sent someone out there who doesn’t even believe in the Free Market. This whole problem is directly tied to the policies the Democrats have been nurturing for about 30 years, the policies of socialism.

Posted in Capitalism, Economics, Socialism | Tagged: , , , , , , , , | 4 Comments »

History in the making

Posted by Ender on February 11, 2009

In case you missed it, President Obama had a press conference dealing with the Economy on Monday.  If you are wondering why history was made you came to the right place.  2/9/09 marks the first time in recorded history that the AP asked Obama a real question.

I’ll let that sink in…

The first time the Associated Press asked Obama a real question was not during the campaign, but nearly a full month after he took office.  Here’s a link to the transcript. If you want to jump to the question it is the very first one after he ends the speech.

I’d summarize his response, however, it’s hard summarize 10 minutes of non-answer.

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A Speech for the Ages…

Posted by maker on February 7, 2009

“In other countries the banks are too big for the countries. They’re bigger than the sum of the country…Literally the bank’s bigger. They make up about 2 percent of our GDP. Other countries are 35 to 40 percent. Anybody can remember a time when that’s happened before? Can anybody remember a time when, uh, we found ourselves in a recession that, worldwide, that both relates to the way it was generated it started here with the way we have this sort of sclerosis in our, in our, in, you know the blood stream and flow of capital. Anybody remember a time when we’re talking about, if we don’t make some real changes, deficits that are a trillion two hundred billion dollars a year for as far as the eye can see, if we don’t, ah, get it right, which you guys have already?” -Joe Biden 2/6/09

Over the past few days we have seen a much different Obama than previously marketed. The Obama we now see is aggressively partisan and even tempermental in his frustration over not getting his bill passed without opposition. Perhaps in light of this recent change, Joe is doing his damnedest to make Obama look like the well-spoken, level-headed cherub we have been told he is. In that case, Joe, you’re a friggin’ genius.

The Daily Switch

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