A new bail out - TALF
Our elected representatives have now added an additional bailout provision. This new provision is Term Asset-Backed Securities Loan Facility (TALF). This new entity will lend $200 Billion. Its objective is to help households and small businesses meet credit needs by supporting the issuance of asset-backed securities (ABS) collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration (SBA). This is no different than sub prime loans with one exception, sub prime loans were backed by an actual structure. With the ABS the collateral is an education or some ones credit card purchase.
In addition, the Federal Reserve will purchase up to $100 billion in Government Sponsored Enterprise (GSE) debt using auctions.
Finally, the Federal Reserve will purchase up to $500 billion in mortgage-backed securities backed from the two white elephants that began this entire debacle GSEs Freddie Mac and Fannie Mae.
The total bailout numbers I have are now:
$2.053 Trillion in bailouts
$225 Billion in potential new bailouts
$3.906 Trillion in loans the taxpayer has agreed to guarantee
The total liability is over $6 trillion. The national debt was at $9.6 Trillion in August 2008!
Turkey Break is longer
It is getting cold and Turkey day is fast approaching. When I was in K-12, we had two days off, Thursday and Friday. However, this year once again, my children have Wednesday off as well. This is one of the contributing reasons why the school year started August 12 and why they will let out for summer break later.
I gave a presentation on Year Round Education in North Carolina. One of my slides supporting the traditional calendar was one of children playing at the beach. The day of the presentation was in April and it was a cold, wet and dreary day. Had YRE been in practice on that day, school would have been out. I asked how many people would trade a day in the summer “The beach picture” for this cold, wet and dreary day. The reaction of those in attendance was dramatic. No one would trade a sunny war day for a cold, wet and dreary day, yet for some reason our school boards seem to think this is what people want.
The bright side is Pokagon’s toboggan run is opening soon and my family will make its yearly pilgrimage to ride the icy steel slide.
I listen to WOWO in the morning on the way to work. I also listen to it in the afternoon (Pat White). It never ceases to amaze me how bad some information presented can be. A caller called in complaining about the bailout and suggested that the $25 billion being proposed for the big three be given to American families. She identified it as 335 million families and each one would get $325,000 each. First off, there are 300 million Americans and about 95 million households. Roughly speaking for every $1 billion, each household would get $10. Therefore, a $25 Billion bailout directed instead of the big three, but directed towards American households would bet roughly $250 with an exact amount of $263.16.
The point I am attempting to make is that simple mathematics of both the caller and the host of the show did not catch the blatant error being made. I have heard over the past month numerous obvious errors pertaining to simple math. In order to provide some assistance to those who needs some remedial math help, see the table below. In rough terms for each $1 Billion it costs the taxpayer $3 per individual American or $10.50 per household. So when someone it spitting out numbers about providing it to the individual or a household, one can roughly gage the accuracy of the callers values using these two values multiplied by the bailout amount.
| Taxpayer Funded Bailout | Total Population | Individual Amount | Total US Households | Household Amount |
| $1,000,000,000 | 300,000,000 | $ 3.33 | 95,000,000 | $ 10.53 |
| $25,000,000,000 | 300,000,000 | $ 83.33 | 95,000,000 | $ 263.16 |
| $700,000,000,000 | 300,000,000 | $2,333.33 | 95,000,000 | $7,368.42 |
County Council - pay raises?
Allen county Council will vote on increasing the salaries paid to about 50 elected officials. The increase is sizable. The last increase was in 1995. A basis for the increase comes from a comparison of other areas. I find this line of reasoning particularly bad, but it just goes to show that “keeping up with the Jones’s” has not died. It is not like we are hiring someone from outside Allen County and have to entice them to take this position. The last time I checked there were a number of candidates all bidding on the same position.
I would like to point out that due to the annexation by Fort Wayne of most of the county, the work load of the county commissioners should have been reduced. As the city gobbles up more of the county, the miles of road decreases, the number of residents in a way decreased since most in the city turn to the city council and not the county council when they need assistance. Besides, these are elected positions and they knew the pay rate when they campaigned for the office.
The Big Three Need a Business Plan
The big three auto companies are using and have been using a failed business plan. In many ways it is similar to the government’s plan for programs. These auto makers agreed to provide both retirement and health insurance to retirees. This is not a bad thing, but they way they implemented this agreed upon benefit was just terrible. The big three grew each year from WWII to about the 70’s. They were awash in money and were growing. In order to maintain the appearance of great profits they decided to pay for retirees benefits out of current operating cash flow. This worked well when few of the promised workers had retired. However, when ever more workers retired the cost began escalating exponentially.
The oil embargo along with foreign car makers gobbling up the car market, the big three saw their growth slowed and ultimately reduced. Making better cars increased the useful life of a car contributing to flat sales. All the time more and more workers were retiring.
Instead of setting aside a small portion of the profits decades ago and accruing the cost for these benefits in the year they were earned, the big three used cash flow accounting. Now they have no way to make a car at a low enough cost to pay both the worker and retiree’s benefits.
It would be a huge mistake to bailout the big three. Until the big three come back with a workable business plan, not one penny should be LOANED, not given to them. This may seem cruel, but the fact remains that there have been numerous business that have failed with workers losing much and they never received a bit of help. In fact it is not the purpose of taxpayer to assume every risk.
Many say the big three if allowed to fail will be devastating. I will say that there will be pain, but not devastating. The number of cars being built or the demand for cars will be no less than before. The demand for cars will fuel the remaining auto makers, suppliers of parts and dealers to produce and sell more. This will require more workers. These displaced workers from the big three will simply have to find other companies to work for, the same thing millions of us have had to do.
Are we about to hit bottom?
The economy is getting worse. Will we break the 7800 support level on the DJIA? If so will it then fall to 3800? There are some great buys out there, but will they go lower? Steal Dynamics (STLD)is down to $5 to $6 a share and it had earnings of $3.25 last year. It most certainly will see much lower profits this year, but in two to three years it could be back to producing over $3 a share in profits. This would be a great buy, but will it go to $3?
Sunpower (SPWR) makes solar panels and are know for having the most efficient panel around. There price has fallen to $13.42 from a high of $160. It has a high PE ratio still and the drop in oil prices makes alternative energy less attractive. Their largest buyers are Europe where Electrical costs are much higher. The companies goal is to produce panels that supply electricity that are competitive with other sources in five years. The raw material is silicon wafers. This certainly could go lower.
GE is now down to $13.37! I never thought I would see the day when this would occur.
Even the medical implant companies are doing poorly. People are putting of the elective surgeries as a result in the dramatic drop in equity prices.
Automobiles are not selling, but repair shops are doing much better.
The state of Indiana keeps saying they ran surplus budgets in the past two years. I only wish that were a true statement. They do not accrual costs if at all. The fire and police pensions prior to '77 still need to be funded. The unemployment fund is getting low just as unemployment is rising. The unemployment fund should be at its highest level now as we go into recession, not nearing a low. During good years you stash some away to get you through the tough years, but politicians just do not get it.
I am still hoping we are nearing the bottom. But if not watch out.
With the price of oil falling, Ethanol plants must be having a difficult time. Corn prices still hovering at $5.36 a bushel. This means the raw material cost per gallon of Ethanol is still over $2.75 a gallon and this is before the cost of fuel (~110 btu’s), labor, financing and credit for by products. I expect to see many of these newly built Ethanol plants go bankrupt.
If the auto industry (Big three) gets bailed out by the taxpayers, I would expect more industries such as Ethanol to ask for bailout money.
This bailout “mantra” is snow balling into a real mess. When I was asked by Bob Caylor of the News Sentinel my thoughts on the Bailout last September, I said it was a big mistake. It would set a terrible precedent. Congressman Souder was wrong to vote for the first bailout. The US Treasury is changing the original scope and intention of the bail out our representatives voted on. By doing so the congress should repeal the bailout legislation. Will Congressman Souder vote to bailout the Big Three?
2009 Deficit, will it be a record?
With the new president elect taking office in 2009, will we see the history making deficits? Who will get credit for the bailout deficit? Will it be Bush or Obama? Our economy is in the toilet and bailouts our be given out like lollipops at Halloween.
Best Buy has lowered expectations. Circuit City has filed for Chapter 11. Intel reduced forecasts by 20%. Mortgages are hard to come by. I learned for the first time that credit card companies sold financial instruments similar to commercial paper to operate. So as these commercial paper contracts come due, they are finding it more difficult to borrow money so that they can cover credit card purchases. Elective surgeries are being postponed. With the stock market falling everyone is tightening their belts.
Consumers are paying down credit, paying cash for goods and services. This is a good thing. However, the government does not like this because for the consumer to pay down debt, they must reduce spending. Their reduce spending reduces sales tax revenues, reduces economic growth, causes companies to layoff workers because of reduced sales. Unemployment funds are being depleted.
Keep in mind it is the last dollar of income above a particular threshold that get taxed. In simple terms those who get laid off in September or later will owe a lot less if any Federal or state income taxes.
When will it end?
Media Gets it wrong again!
On WOWO this morning Charlie Bucher was speaking with Tracy Warner about the economy. During this conversation Tracy Warner of the Journal Gazette stated that Clinton had a budget surplus. This is 100% incorrect. The Clinton Administration did not have one single budget surplus. Since I have run for office, I have found a great deal of errors reported by the media. You would think something as important and easy to verify as deficit Spending, a value, would be reported correctly.
If you would like to verify the deficit or surplus for any given year, all one needs to do is go to the U.S. Treasury Web site and look at the ending year’ National Debt Balance. The ONLY way a surplus can be obtained is for the national debt to have dropped during that given year. If the ending debt is greater than the previous years ending debt, then that year was in deficit.
| Date | National Debt Balance | Deficit |
| 9/30/1991 | $ 3,665,303,351,697 | $ (431,989,899,920) |
| 9/30/1992 | $ 4,064,620,655,522 | $ (399,317,303,825) |
| 9/30/1993 | $ 4,411,488,883,139 | $ (346,868,227,618) |
| 9/30/1994 | $ 4,692,749,910,013 | $ (281,261,026,874) |
| 9/29/1995 | $ 4,973,982,900,709 | $ (281,232,990,696) |
| 9/30/1996 | $ 5,224,810,939,136 | $ (250,828,038,426) |
| 9/30/1997 | $ 5,413,146,011,397 | $ (188,335,072,262) |
| 9/30/1998 | $ 5,526,193,008,898 | $ (113,046,997,500) |
| 9/30/1999 | $ 5,656,270,901,615 | $ (130,077,892,718) |
| 9/30/2000 | $ 5,674,178,209,887 | $ (17,907,308,271) |
| 9/30/2001 | $ 5,807,463,412,200 | $ (133,285,202,313) |
| 9/30/2002 | $ 6,228,235,965,597 | $ (420,772,553,397) |
| 9/30/2003 | $ 6,783,231,062,744 | $ (554,995,097,146) |
| 9/30/2004 | $ 7,379,052,696,330 | $ (595,821,633,587) |
| 9/30/2005 | $ 7,932,709,661,724 | $ (553,656,965,393) |
| 9/30/2006 | $ 8,506,973,899,215 | $ (574,264,237,492) |
| 9/30/2007 | $ 9,007,653,372,262 | $ (500,679,473,047) |
New Bailout Plan
Well the bailout passed is now being changed. No longer will it be used to buy the worthless properties. Instead, I saw that it might be used to help credit card, student and auto loans. Every “authoritarian” I have heard recommends paying down credit card/commercial debt. One way is to place cash in labeled envelopes identifying the category (groceries, mortgage, utilities, etc). The news has reported people are using less credit and more cash Now I may be just plain ignorant, if people are paying down credit cards, does this not increase the amount the credit card companies have to lend?
Bailout, bailout, bailout........
Does anyone have any idea how much money the government has loaned or given to companies this year? If you have information on the bailout amounts, please provide it so we can keep an update of just how much of our money our representatives are giving away.
| Date | Amount (billions) | Description | Source of Funds | Accumalated | Potential | Total |
| ? | $ 85 | AIG Bailout | New | $ 85 | $ - | $ 85 |
| July | $ 125 | Fredi Mac Bailout | New | $ 210 | $ - | $ 210 |
| July | $ 125 | Fannie Mae Bailout | New | $ 335 | $ - | $ 335 |
| September | $ 25 | Auto Industry | New - Loan | $ 335 | $ - | $ 335 |
| 10/3/2008 | $ 810 | Bank Bailout | New | $ 1,145 | $ - | $ 1,145 |
| 11/10/2008 | $ 100 | Fredi Mac Bailout | Potential | $ 1,145 | $ 100 | $ 1,245 |
| 11/10/2008 | $ 100 | Fannie Mae Bailout | Potential | $ 1,145 | $ 200 | $ 1,345 |
| 11/10/2008 | $ 50 | Auto Industry Bailout | Potential | $ 1,145 | $ 250 | $ 1,395 |
| 11/11/2008 | $ 25 | AIG Bailout | New | $ 1,170 | $ 250 | $ 1,420 |
| 11/11/2008 | $ 40 | AIG Bailout | $700 Billlion Bank Bailout | $ 1,170 | $ 250 | $ 1,420 |
Your thoughts on Big Three Bailout.
Would it be so bad if we let the big three auto makers go under? What is the cost to keep them going? If no one is buying their cars and trucks, then what good is it for them to be making anything? Would it be cheaper to pay unemployment benefits or is it cheaper to build something that is not selling? So what are your thoughts?
Mini Nuclear Reactors!
I saw on the News at lunch a mini nuclear reactor proposal. It is a "throw-a-way" or one time use. It is slightly taller than a man. After looking for information I find they are 100 times smaller than current commercial reactors. They weight 15 ton and get buried in concrete. They have no pumps, use 4.9% enriched uranium, cost $25 million and have a power output of 25 - 30 MWe.
My question is "throw-a-way", where on earth are we going to throw these things away? What is the cost of disposal? This is the same question we have not answered for our current generation of Nuclear Reactors.
I did not want to discuss the 2,172 potential registered voters in both Allen County and Florida until after the election. This is not anything new. In fact it is something that has been known about for decades. The Indiana Voter ID Law came about with the intention of curing voter fraud, but now the truth is out that in just one county there could be 2,172 voters who could vote twice.
However, Indiana uses a central registry that makes keeps duplicate registrations in the state of Indiana from happening. Does the Voter ID Law help with this registry, no? The Voter ID Law actually hinders more people in voting than it would curb in fraudulent votes.
The State of Indiana could maintain and most likely improve the voter ID Law by not relying on the Social Security Number that is used to obtain a driver's license or State ID. This one identification is the most misused number in the world and the state of Indiana is relying on it to identify you.
Tod Roquita needs to take another look at this Voter ID Law before the next election.
Wind Power in Ohio
The Journal Gazette’s article on wind farms stated “Like ethanol plants, wind farms require multimillion-dollar investments but create relatively few jobs.” Do we need to energy sources to add jobs to make the economy good? If so we could easily build the most expensive power plants such as Coal and Nuclear and create hundreds of jobs operating them. However, these types of jobs only increase the cost of energy which is passed on to the rest of us. High energy costs reduce the standard of living of workers. The four things that affect the ability of US companies to compete abroad our: taxes, material costs, energy costs and labor costs. This means the cheaper the electricity up front, the more likely a company can compete abroad and higher US citizens here at home. Productivity improvement means that we produce the same amount with fewer people or more with the same number of people. This frees up labor to provide other goods and services.
In addition, the farmer can earn $2,000 to $4,000 per year for leasing a tiny amount of land. Sure the lease drives up the cost of electricity, but it is still cheaper than paying for fuel and labor over the life of a power plant.
So how cost competitive is Wind Power? The article states it will provide enough electricity to power 120,000 to 195,000 homes. This is a pretty wide range. It identifies the power rating as 400 to 650 megawatts. The estimated cost is $800 million to $1 billion. This cost must then include site preparation as well.
Fossil fuel plant construction costs, as of 2004, were about $1,300 per kilowatt, or $650 million for a 500 MWe unit. This is similar to wind farm costs, but they (fossil) have the added cost of fuel which is volatile, labor and pollution.
WOWO
Charlie bucher on WOWO this morning was comparing the economy during President Carter’s transition to President Reagan’s to our present economy of President Bush’s to President Elect Obama’s transition. He gave a few facts, but they were one dimensional without insight or background.
Unemployment during during Carter’s last years was reported as over 7% while he was saying today is 6.5%. Is there a difference between comparing just the unemployment rates of two time frames, yes? During Carter’s last years, unemployment benefits were extended from 26 weeks to 52 weeks. This is not the case today. The current unemployment rate does not include the 20 million workers who have exhausted unemployment benefits and have not found work.
Inflation was another factor that Bucher identified as being higher under Carter. I cannot recall the exact values he used, but the CPI index and SSA Average Wage for each year are identified below.
| Year | CPI (January) | Inflation | SSA Average Wage | Wage Growth |
| 1977 | 58.500 | 6.3% | $ 9,779.44 | 6.0% |
| 1978 | 62.500 | 5.0% | $ 10,556.03 | 7.9% |
| 1979 | 68.300 | 6.4% | $ 11,479.46 | 8.7% |
| 1980 | 77.800 | 8.5% | $ 12,513.46 | 9.0% |
| 1981 | 87.000 | 12.2% | $ 13,773.10 | 10.1% |
| 1982 | 94.300 | 10.6% | $ 14,531.34 | 5.5% |
| 1983 | 97.800 | 7.7% | $ 15,239.24 | 4.9% |
| 1984 | 101.900 | 3.6% | $ 16,135.07 | 5.9% |
| 1985 | 105.500 | 4.0% | $ 16,822.51 | 4.3% |
| 1986 | 109.600 | 3.4% | $ 17,321.82 | 3.0% |
| 1987 | 111.200 | 3.7% | $ 18,426.51 | 6.4% |
| 1988 | 115.700 | 1.4% | $ 19,334.04 | 4.9% |
In addition manufacturing was a much larger part of the economy then than now. This means we had a better trade balance. Oil imports were less than 50% and now are greater than 70%.
I have also heard Obama state he favors extending unemployment benefits to 52 weeks. This will certainly increase the number of unemployment claims that dictate the unemployment rate. I hate to be a pessimist, but I think we are facing a more difficult economic period than the transition between Carter and Reagan.
2008 Results
I still have not found the total votes cast, but according to the new media, we received ~5.4% of the votes. In a highly contested race, we did twice as well as past libertarian candidates.
| 2002 |
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| Rigdon, Jay | (Democratic) | 50509 | 34.5% |
| Donlan, Mike | (Libertarian) | 3531 | 2.4% |
| Souder, Mark E. | (Republican) | 92566 | 63.1% |
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| 2004 |
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| Parra, Maria M. | (Democratic) | 76232 | 30.8% |
| Souder, Mark E. | (Republican) | 171389 | 69.2% |
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| 2006 |
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| Hayhurst, Thomas E. | (Democratic) | 80357 | 45.7% |
| Souder, Mark E. | (Republican) | 95421 | 54.3% |
US Library of Congress
It is official, the United States Library of Congress is coping my website www.justsayno.50megs.com to be archived on their website. I am honored that they deem my website worthy.
