Typical Personal Finances Already Devastated By Inflation

Thanks to inflation, life is increasingly difficult as prices rise but wages have stagnated.

Thanks to the Federal Reserve, since it's inception in 1913, prices have risen 2400%!  What a failure to maintain price stability!   I'm not sure that they have succeeded in thier other mandate to maintain full employment either.  It's seems to me that their "tinkering" with monetary aggregates has led to instability which hurts the economy and employment.  

The entire notion of maintaining ANY inflation is probably in error.  If there is a fixed monetary supply (without manipulation by a monetary authority), then as the economy grows, prices would fall or stay even.  Falling prices are good for most people!!  On the other hand, rising prices can actually benefit wealthy people who have investments in housing (using leverage of course) and in stocks. Yeah, falling prices caused by a burst financial bubble is not good, but steadily declining prices as a norm is good!  (The Fed causes the bubbles and the subsequent busts!)  How come people and especially bureaucrats can't get that message!  (It's that "religion" of Keynesianism that's causing this). Rising prices hurt the majority of the people!.

So calls by Bernanke and people like Paul Krugman to increase inflation when it's already 2% is incredibly stupid!  It hurts the majority of people!!  And it benefits the wealthy!   The Fed causes inequality of income!  Read below about people who are making a modest wage but can not make it our economy.  If you want to know why so many people are on Food Stamps, then you'll easily see why:

A Common Story of Financial Distress

I have single friends who only make $10 or $12 per hour in Texas, and now, due to ObamaCare, they can't work full-time.  So, many people are trying to scrape by on $1,500 to $2,000 per month--if they're lucky. They're not making it! Take a look below:

Gross Income: $1,500 to $2,000

Taxes: First, they are not going to pay any Federal Income tax but still are stuck with the 7% payroll deduction, so that leaves $1400 to $1850 after tax.
Rent: Rent in Houston used to be cheap up to the 1980s and early 1990s.  I moved to Houston in 1989 and paid $375 per month for a one bedroom apartment with all bills paid in one of the best areas to live.  Now that same apartment costs $750 to $800 per month to rent.  That's about 3.6 % rent inflation.
Gasoline: In 1989, gasoline cost about $1 per gallon.  Now it's $3.50 per gallon, meaning that you will spend $100 per month for fuel.  
Car Payment:  A car payment will typically run about $200 per month.  There is inadequate bus service in most cities like Houston.
Food prices have doubled in the past 10 years: that's food price inflation of 7%!  Ouch.  The minimum amount to spend on food, if you cook every meal at home is $250 per month for a single person.

Back to my friend's finances. So after taxes, car, fuel, food and rent, my "typical friend" has only $100 to $550 left.   If they try to buy a health insurance policy, there is either not enough money or too little money left for all other expenses.

Most people don't have health insurance--because the price is so inflated!

Health insurance prices are rocketing skywards at annual inflation rates up to 15% in the past 13 years thanks to the "push" from government spending and increasing demand from our aging baby boomers. You'll pay $350 per month for a high deductible policy to $700 per month for a bare bones policy with lower deductible.  High deductible policies will be outlawed by ObamaCare (Gee, thanks a lot Obama. With friends like that.....).

But we haven't added other expenses of dental, cable, electricity, entertainment, clothing, car maintenance, etc.

Making $2000 is not enough to survive these days thanks to inflation.  And that's if you're single!!  Costs are rising but wages are not.

Boston Bombers Ignored "Tough" Gun "Control" Laws

Background checks will reduce gun violence and massacres, right?  Maybe not so much.

From the Huffington Post reporting the fact the Boston bombers had no license for their weapons despite the Brady law requiring background checks:

The Boston bombing suspects engaged in a deadly firefight with police last week,possessing six bombs, handguns, a rifle and more than 250 rounds of ammunition. But the Tsarnaev brothers did not have proper licenses to possess the firearms, according to the Cambridge Police Department — a revelation that comes just days after the Senate voted against strengthening and expanding background checks for gun sales.

Cambridge Police Department spokesman Dan Riviello told The Huffington Post that neither Dzhokhar Tsarnaev, 19, nor Tamerlan Tsarnaev, 26, appeared to have a license to own a handgun.

“The younger brother could not have applied as he is not 21 years of age and the older brother did not have a license to carry and we have no record of him ever applying,” Riviello said.

Massachusetts supposedly has the toughest gun control laws in the country according to Boston Globe reporter Jeff Jacoby, who trumpeted just a few weeks ago that Massachusetts has "the toughest gun legislation in the country."

IN 1998, Massachusetts passed what was hailed as the toughest gun-control legislation in the country. Among other stringencies, it banned semiautomatic “assault” weapons, imposed strict new licensing rules, prohibited anyone convicted of a violent crime or drug trafficking from ever carrying or owning a gun, and enacted severe penalties for storing guns unlocked.

From American Spectator about statements made by Massachusett's Govenor, District Attorney and Gun Control activist after passage of the Brady Law back in 1998: 

“Today, Massachusetts leads the way in cracking down on gun violence,” said Republican Governor Paul Cellucci as he signed the bill into law. “It will save lives and help fight crime in our communities.” Scott Harshbarger, the state’s Democratic attorney general, agreed: “This vote is a victory for common sense and for the protection of our children and our neighborhoods.” One of the state’s leading anti-gun activists, John Rosenthal of Stop Handgun Violence, joined the applause. “The new gun law,” he predicted, “will certainly prevent future gun violence and countless grief.”

The problem: gun crime has only gone up----a lot!   From the same Boston Globe article from Jeff Jacoby:

Since 1998, gun crime in Massachusetts has gotten worse, not better. In 2011, Massachusetts recorded 122 murders committed with firearms, the Globe reported this month — “a striking increase from the 65 in 1998.” Other crimes rose too. Between 1998 and 2011, robbery with firearms climbed 20.7 percent. Aggravated assaults jumped 26.7 percent.

Only the criminals ignore the gun "control" laws.

Obama To Blame For Massive Gov't Fraud Case

Obama is responsible for a fraudulent scam that may cost the US taxpayers some $4.4 billion dollars.  If you're not part of the solution, you're part of the problem!

Class action lawsuits used to be the "lottery" where people could try their luck.  Now we have a new lottery in town---collecting "free money" from a government only too happy to redistribute your taxpayer money---thanks to Obama and fellow Democrats.

The Pigford case originated as a small case where several hundred African American farmers might have had some legitimate legal claims against the USDA (US Dept of Agriculture) for being wrongfully denied farm loans. This might have been true or it's entirely possible that the black farmers might have been denied loans because they had bad credit.  So even the original case is "suspect." Things snowballed from there.

From Investor's Business Daily:

The original Pigford settlement arose out of a 1997 class action lawsuit by Timothy Pigford and 400 Southern black farmers. They had apparently legitimate claims of discrimination against the USDA in its allocation of farm loans from 1983 to 1987.

In 2007, Sen. Barack Obama of Illinois, where 0.0012% of farms are operated primarily by blacks, began working to pass legislation providing even more money for new classes of claimants via Pigford II. These now included Hispanic and female farmers as well as American Indians and expanded by a decade the time that claims could be filed.

As president, he signed this bill in 2010.

Based on Census data reflecting the original period in question, the USDA first estimated only 2,000 claims would be filed. But in this age of victimhood and dependency fanned by demagoguery, "more than 90,000 people have filed claims" and the "total cost could top $4.4 billion," noted the Times.

Conservative crusader Andrew Breitbart, who sadly died recently, was one of the few people covering this increasingly fraudulent story. Now, suddenly, the New York Times surprisingly ran a big story about how egregious this scandal has become despite the fact that Obama's hands are all over it!  Has hell frozen over??

From the NY Times:

[A]n examination by The New York Times shows that [an effort to redress discrimination] became a runaway train, driven by racial politics, pressure from influential members of Congress and law firms that stand to gain more than $130 million in fees. In the past five years, it has grown to encompass a second group of African-Americans as well as Hispanic, female and Native American farmers. In all, more than 90,000 people have filed claims. The total cost could top $4.4 billion.

From the start, the claims process prompted allegations of widespread fraud and criticism that its very design encouraged people to lie: because relatively few records remained to verify accusations, claimants were not required to present documentary evidence that they had been unfairly treated or had even tried to farm. Agriculture Department reviewers found reams of suspicious claims, from nursery-school-age children and pockets of urban dwellers, sometimes in the same handwriting with nearly identical accounts of discrimination.

Yet those concerns were played down as the compensation effort grew. Though the government has started requiring more evidence to support some claims, even now people who say they were unfairly denied loans can collect up to $50,000 with little documentation.

As a senator, Barack Obama supported expanding compensation for black farmers, and then as president he pressed for $1.15 billion to pay those new claims. Other groups quickly escalated their demands for similar treatment. In a letter to the White House in September 2009, Senator Robert Menendez of New Jersey, a leading Hispanic Democrat,threatened to mount a campaign “outside the Beltway” if Hispanic farmers were not compensated.

Again from Investor's Business Daily:

the only "proof" required was a form stating the claimant had "attempted" to farm, perhaps planting tomatoes in the backyard, and to have a family member vouch for that assertion.

The government would then send the aggrieved "farmer" a check for as much as $50,000.

Remember Shirley Sherrod, the former (black) USDA official whose speech before an NAACP group revealing her angst about helping a white farmer got her fired?  Time magazine reported that $330,000 was "awarded to Shirley and Charles Sherrod for mental suffering alone," in their claim against the USDA.

The Times examined 16 ZIP codes in Alabama, Arkansas, Mississippi and North Carolina and found that "the number of successful claimants exceeded the total number of farms operated by people of any race in 1997, the year the original lawsuit was filed."

It gets even worse!  The NY Times story reports that one family alone collected a half million dollars in “compensation” by having 10 extended family members file claims.

In another instance, the residents of an entire URBAN apartment building each received payments of $50,000, no questions asked.  Most of these claimants are pure fraud. Obama knows this to and doesn't care.

No wonder so many Obama voters were ebullient when Obama won in 2008.  Pigford is about pigs feeding at the public trough all at taxpayer expense.  Obama is one of the main enablers. Van Jones must be proud.

I support an impeachment trial for Obama.  Isn't stealing $ billions from taxpayers "high crimes?"

Welcome to the Police State of America

From KSDK.com, a TV station in Sacramento, recounts the fairly shocking story about an immigrant family having a run-in with the  excessive and over-arching State government apparatus and screwed-up medical bureaucracy in the police state that is now California.

The police state is coming to your town too.

The irony is that the family immigrated from Russia to try to find a freer place to live.  Maybe they made a mistake. The case involves a police raid (without warrants?) and guns, bureaucrats, strong-arm tactics, a dysfunctional and dehumanizing medical system, and an overzealous and militant CPS system. What ever happened to sitting down and talking to these people first in a calm setting?? The child had the flu!

This story exposes that almost everything is wrong in this screwed-up "culture" that is all about "attacking" our fellow citizens, the disregard for our fellow citizens and their rights to disagree and have their own opinions.  Furthermore California government bureaucrats assume guilt and then put the burden on this family to prove innocence!  Whatever happened to presumed innocent?? This incident is more reminiscent of strong-armed communist state than the US of A. I'm frankly disgusted by this.

The story from KSDK.com:

"SACRAMENTO, CA (KXTV) - A Sacramento family was torn apart after a 5-month-old baby boy was taken from his parents following a visit to the doctor.

The young couple thought their problems were behind them after their son had a scare at the hospital, but once they got home their problems got even worse.

It all began nearly two weeks ago, when Anna Nikolayev and her husband Alex took their 5-month-old boy Sammy to Sutter Memorial Hospital to be treated for flu symptoms, but they didn't like the care Sammy was getting.

For example, one day Anna asked why a nurse was giving her son antibiotics.

"I asked her, for what is that? And she's like, 'I don't know.' I'm like, 'you're working as a nurse, and you don't even know what to give to my baby for what,'" Anna explained.

According to Anna, a doctor later said Sammy shouldn't have been on the antibiotics.

Anna said Sammy suffers from a heart murmur and had been seeing a doctor at Sutter for regular treatment since he was born. After Sammy was treated for flu symptoms last week, doctors at Sutter admitted him to the pediatric ICU to monitor his condition. After a few days, Anna said doctors began talking about heart surgery.

"If we got the one mistake after another, I don't want to have my baby have surgery in the hospital where I don't feel safe," Anna said.

Anna argued with doctors about getting a second opinion. Without a proper discharge, she finally took Sammy out of the hospital to get a second opinion at Kaiser Permanente.

"The police showed up there. They saw that the baby was fine," Anna said. "They told us that Sutter was telling them so much bad stuff that they thought that this baby is dying on our arms."

Medical records from the doctor treating Sammy at Kaiser Permanente said the baby as clinically safe to go home with his parents. The doctor added, "I do not have concern for the safety of the child at home with his parents."

"So police saw the report from the doctors, said, 'okay guys, you have a good day,' and they walked away," Anna said.

Anna said the next day police and child protective services showed up on her doorstep. Alex Nikolayev said he met them outside a short time after they arrived.

"I was pushed against the building, smacked down. I said, 'am I being placed under arrest?' He smacked me down onto the ground, yelled out, 'I think I got the keys to the house,'" Alex said.

Then police let themselves inside.

On home video shot with a camera Anna set up herself, police can be seen entering her front door on Wednesday.

"I'm going to grab your baby, and don't resist, and don't fight me ok?" a Sacramento police officer said in the video.

"He's like, 'okay let your son go,' so I had to let him go, and he grabbed my arm, so I couldn't take Sammy. And they took Sammy, and they just walked away," Anna said.

When News10 spoke with police, they said talk to CPS; CPS did not say much about the case. Just before 6 p.m. Thursday, Anna said that a CPS social worker told her, the reason they took Sammy is because of severe neglect; however, the social worker didn't elaborate on that neglect.

Sutter Memorial was asked to comment on the story, but the hospital said the case was with CPS and law enforcement and they would have to comment on the case. CPS said they can't specifically comment on this case because of privacy law, but CPS spokesperson Laura McCasland said, "We conduct a risk assessment of the child's safety and rely heavily on the direction of health care providers."

"It seems like parents have no right whatsoever," Alex said.

On Thursday, Anna and Alex were allowed a one hour visitation with Sammy; he's currently in protective custody at Sutter Memorial Hospital.

"His smile, it's everything for me," Anna said. "I was so happy to see him."

Anna and Alex have a court hearing scheduled for Monday.

"We did everything," Anna said. "We went from one hospital to another. We just wanted to be safe, that he is in good hands."

Ultimate Political Incorrectness: Black Americans Commit Majority Of Gun Murders. So Take Away the Guns From Black Men

African American Black persons, mostly young black men, commit the majority (57%) of gun homicides.  They also commit over 52% of all homicides.  The sensational massacres, as horrific as they are, are much less than 1% of gun homicides.

Blacks make up 13% of the population (both sexes) but commit 57% of gun homicides.  It's even worse since it's more like 6.5% of the population (males) committing 57% of the gun homicides.  Where is this discussion in the media?  Where is the program or plan to alleviate this problem?

Political correctness prevents ANY discussion of this fact.  What IS our plan to address this problem?  What,we don't have one??  If you can't correctly name your problem, you will be unable to solve the problem.  This is the problem with political correctness.  \

Instead we focus on relatively few sensational massacres.  Yes, it's horrible that several hundred people have gotten "mowed down" by psychos in public settings at Sandy Hook and Colorado, but there are about 11,000 people murdered by guns (2010) each year and, on average, about 57% of those are committed by black persons (mostly black men).  This means that something like 6,300 murders per year are committed by black persons (mostly young black men)!  

The sensational massacres are "peanuts" compared to routine gun murders committed in mostly impoverished inner cities by black men. There's almost no comparison!  See the data below.

Here's the raw data below from the BJS (Bureau of Justice Statistics) on Table 7 (click as usual to enlarge):

There were about 11,000 deaths in 2010 due to guns.  There were about 16,000 homicides by all means. See data from the CDC here (on table 10).  Since we have 315 million persons, gun deaths are about 3.5 gun homicides per 100,000 persons.  For all homicides, the rate is about 5.3 total homocides per 100,000 persons.    From the BJS (page 11),  in 2008, the offending rate for blacks (24.7 offenders per 100,000) was 7 times higher than the rate for whites (3.4 offenders per 100,000).

On average, Blacks committed 52% of all murders, 57% of the gun murders and committed 66% of the drug related homicides (1980 to 2008)

It's Dangerous to be Black in this Country!

But when you talk of day-in and day-out gun violence and murder, it is blacks (and mostly black men) who are the number one cause of murders (all) at 52%.   And 90% of their victims are other black people.   It's dangerous to be black in this country!  But it's because of their own community!  

But due to our "political correctness problem", all of this can't be uttered much less discussed.  Instead we chase other rabbit tails that are relatively insignificant.

Other data from the BJS:

Figure 1:  Black Homicides are 8 Times Higher Than Whites 
(25 murders per 100,000 population for Blacks vs 3 murders per 100,000 population for Whites)
http://en.wikipedia.org/wiki/Crime_in_the_United_States

Figure 2:  Blacks Victimized 6 or 7 Times Higher Than Whites

The majority of murders are committed with guns of some sort.

Figure 3:  Gun Use Comprise Most Homicides  http://en.wikipedia.org/wiki/Gun_violence_in_the_United_States

Argentina Economic Minister: "I Want to Leave"

This guy looks like a deer caught in the headlights, doesn't he?  What got him so flustered?  It was plain and simple questions from a Greek reporter asking 1) what is the rate of inflation in Argentina? and 2) the IMF has threatened sanctions against Argentina because of fraudulent economic statistics, what are you going to do about that?

From The Telegraph:

"I have a very simple question for you, which seems very complicated these days: How much is Argentine inflation at this moment?" the female interviewer asked.

"Official statistics show month after month the inflation and this is the only inflation possible," the minister responded in Spanish.

"But, how much is it?" she insisted.

The journalist then noted that the IMF has warned that it will impose sanctions against Argentina for putting out false statistics. "What will you do about that?"

"I don't know, I don't know. Can we turn off the camera a moment? I want to leave," Mr Lorenzino said.

Off camera, Mr Lorenzino can also be heard to say: “Talking about inflation statistics in Argentina is complex.”

Government Causing College Tuition Inflation

The main point of this post is that the government is primarily responsible for college tuition inflation over the past 14 years and has created a new bubble in college debt.  The reason?  The Federal government has explicitly backed and guaranteed a  flood of loans (easy money) from various institutions and has created a flood of money into for-profit educational businesses and public and private schools --- pushing up tuition prices.

Have a look at the following graph showing that college tuition has outpaced CPI inflation by a huge margin.

Figure 1
College Tuition and Fees Vs. Overall Inflation from 1985 thru 2011

The Real Reason For Tuition Inflation

From Inflation Data dot com, Gordon Wadsworth, who spent 19 years in college financial aid gives us the answer:

..the main reason tuition continues to rise is a dramatic change that took place regarding the Federal Stafford Loan more than a decade ago. When Uncle Sam opened the floodgates to government-backed student loans without parent income restrictions in 1992, colleges welcomed the news with open arms. The sudden injection of millions of additional aid dollars only furthered tuition increases. Add to that the government’s continued promotion of the Stafford Loan as a low-cost program, and you have the formula for hyper-inflationary costs.

When the government made it exceptionally easy for students to borrow massive amounts of money, the colleges followed the lead by increasing their tuition rates. This combination led to record-level borrowing. Today the average undergraduate student loan debt is nearing $20,000. Those who go on to graduate school often end up with an additional $30,000. Law and medical students report an average accumulated debt from all years (undergraduate and graduate study) of $91,700.

Student Loan Bubble and Upcoming Bailouts 

In my blog Student Loan Bubble and Bailout, I detail how the amount of college debt has risen dramatically since 2000 and now that debt has become unsustainable with rapidly rising default rates. This is a direct result of rising costs and a depletion of credit-worthy borrowers. There's no one credit-worthy left!

The amount of student debt outstanding is now $1 Trillion vs $250 billion just 10 years ago.  This flood of easy money is likely to end in another bubble bursting with more bad debt bailed-out by the Federal Government.

Remember, it was a flood of easy (under-priced) money caused the housing inflation and subsequent bubble with the government, including Fannie Mae and Freddie Mac and government tax incentive at the epicenter of that bubble. The collapse of that bubble created a huge crisis and surge in government deficit spending.

Expect More Crises

Expect more crises caused by clueless and/or disingenuous people in Congress.  It won't end until these people are voted out of office and the Federal Reserve is ended.  But that's another upcoming blog post.

Obama Deliberately Disrupting Air Travel

Obama is deliberately trying to amplify the effect of the ever-so-small sequester spending cuts. His strategy has been to portray small 4% spending cuts as "draconian," so his genius administrators and him have decided to maximize air traveler inconvenience and then blame it on the Republicans. I hope the public can see how despicable this is.  It also exposes how poorly the government is managed and argues loudly for less government, not more.

Obama is determined to "prove" that big government is better and that there is zero room for ANY spending cuts.

It's time to run this guy out of town on a rail.   Tar and feathers would be equally suitable.

Air travelers already pay the majority of the FAA budget through air fare fees, so the 'damage' should be limited, right?.   There's where you're wrong thanks to our affirmative action President!  People, you're getting what you deserve!  Here's the Wall Street Journal exposing the sorry state of affairs.

Flyers directly fund two-thirds of the FAA's budget through 17 airline taxes and fees—about 20% of the cost of a $300 domestic ticket, up from 7% in the 1970s. Yet now the White House wants to make this agency that can't deliver what passengers are supposedly paying for even more dysfunctional.

The sequester cuts about $637 million from the FAA, which is less than 4% of its $15.9 billion 2012 budget, and it limits the agency to what it spent in 2010. The White House decided to translate this 4% cut that it has the legal discretion to avoid into a 10% cut for air traffic controllers. Though controllers will be furloughed for one of every 10 working days, four of every 10 flights won't arrive on time.

It Gets Worse

From the same WSJ article,

Legally speaking, the sequester applies at a more general level known as "accounts." The air traffic account includes 15,000 controllers out of 31,000 employees. The White House could keep the controllers on duty simply by allocating more furlough days to these other non-essential workers.

...the FAA is even imposing the controller furlough on every airport equally, not prioritizing among the largest and busiest airports. San Francisco's Napa Valley airport with no commercial service will absorb the same proportion of the cuts as the central New York radar terminal, which covers La Guardia, JFK and Newark International, as well as MacArthur, Teterboro, New Haven, Republic and other regional fields.

Like most government work, productivity continues to decline. Staffing of air traffic controllers has remained the same but the number of flights have dropped 23% since the late 1990s, so there's an overstaffing issue and a PUBLIC UNION issue as well.

More Federal Government Incompetence

For more than a decade the FAA has promised to modernize and make the civil aviation system more efficient and reliable, but the only things it has reliably generated are delays or cost overruns or usually both. The project, known as NextGen, is four years off schedule with no end in sight.

The FAA's troubles are the result of bad management and a lack of oversight, according to multiple Department of Transportation Inspector General audits. A 2011 investigation found that one part of NextGen ran $330 million over budget—or half of the FAA sequester—and then the FAA paid the contractor responsible $150 million in bonuses that were supposed to be an incentive for making the budget targets. The overruns are now approaching $500 million, and that's merely one item.

This administration is a shining example of why the government deserves LESS of your tax dollars and LESS of a role in the economy not MORE as Obama and Democrats insist!  As as many functions of the Federal Government as possible should be devolved to The States because everything the Federal government touches is mismanaged to the Nth degree.  See How to Cut $450 Billion in Federal Spending.   See Healthcare Law Shows Obama's Inability to Govern.  

It's time to reverse course and seriously reduce government expenditures.  The sequester cuts are peanuts compared to the task required.

European "Austerity" Is All About Tax Increases--Not Spending Cuts

Lower taxes and less government help the economy.  Higher taxes and more government hurt the economy.  These statements you can take to the bank.

The Economy is Facing some Tough Headwinds  (You think??)

In my blog, Austerity? What Austerity? I note that government (public) expenditures in Europe are mostly going up and, in the few countries where spending is going (slightly) down, it's just a reversal of spending gains in prior years.  Here's the evidence (unfortunately I can't find data for 2011 and 2012):

European Austerity is All About Tax Increases

Most of Europe is in recession.  This shouldn't be a surprise, but don't believe that it's from government austerity!   It's because taxes have been going up and because many peripheral countries are trapped in the euro but need a much lower, devalued currency instead.

Nearly all of the "austerity" in Europe is due to raising of taxes; especially on highest earners and VAT increases.  From Daniel Mitchell at RealClearPolitics:

The PIIGGS imposed no austerity at all on the public sector in the past five years. Government spending on bailouts, subsidies, grants, salaries and entitlements commands a much larger share of these economies than it did just a few years ago.

European austerity has been focused on the private sector — namely, taxpayers with high incomes. That is the second thing the PIIGGS have in common. The highest income tax rate was recently increased in every one of the troubled PIIGGS except Italy (where it was already too high at 43%). The top tax rate was hiked from 40 to 46.5% in Portugal, from 41 to 48% in Ireland, from 40 to 45% in Greece, from 40 to 50% in Great Britain, and from 48 to 52% in Spain.

I’ve already discussed their unfortunate propensity to hike value-added tax rates. Alan explains that they’re doing the same thing for income tax rates. 

In other words, Veronique de Rugy is correct. The “austerity” in Europe generally has been in the form of higher taxes, squeezing the productive sector to prop up the public sector. 

Budget Cutting and Reducing Government Works

History is full of examples where government expenditures were drastically reduced but the private economy boomed:  government spending dropped drastically in the US after World War II and after the Korean war.

So, listening to Democrats and Paul Krugman their biggest cheerleader, austerity is a "dirty word."  He wants even bigger deficits!   Here's some other examples from Daniel Mitchell at RealClearPolitics (with some quotes from Alan Reynolds at RealClearPolitics and IBD)

In Iceland, which did not throw taxpayer money at the banks, government spending was slashed from 57.6% of GDP in 2008 to 46.5% in 2012. The deficit fell from 12.9% of GDP to 3.4%. The economy began to recover in 2011. Iceland’s economic boost from fiscal frugality was neither unorthodox nor unique. After all, the U.S. economy boomed in the late 1990s when federal spending was cut from 22.3% of GDP in 1991 to 18.2% in 2000 [government spending NEVER actually declines but, instead, GDP boomed]. In Canada, total federal and provincial spending was deeply slashed from 53.2% of GDP in 1992 to 39.2% in 2007 with only salubrious effects.

 Compare the tax raisers to tax reducers (from the same article):

It is enlightening to compare the depressing performance of these tax-and-spend countries to the rapidly-expanding BRIC (Brazil, Russia, India and China) and MIST economies (Mexico, Indonesia, South Korea and Turkey). Government spending is frugal in these countries, averaging 32.1% of GDP in the BRICs and 27.4% for the MIST group. Rather than raising top tax rates, all but one of the BRIC and MIST countries slashed their highest individual income tax rates in half; sometimes lower. Brazil cut the top tax rate from 55 to 27.5%. Russia replaced income tax rates up to 60% with a 13% flat tax. India cut the top tax rate to 30% from 60%. Similarly, the top tax rate was cut from 55 to 30% in Mexico, from 50 to 30% in Indonesia, from 89 to 38% in South Korea, and from 75 to 35% in Turkey.

Baltic Countries Had Real Austerity and are Back to Growth

Latvia, Lithuania and Estonia imposed real government spending cuts and are recovering nicely now.  Estonia's president Toomas Hendrik Ilves recently rebuffed Paul Krugman in HuffPost of how horrible government spending cuts are there by saying:

Ilves, a strong austerity advocate, told Bloomberg News in May that the EU should implement austerity in order to boost economic expansion. “You can achieve growth through austerity. Estonia has done that.”

Other quotes from that article say:

Estonia, which in 2011 became the latest country to join the eurozone, has been heralded by some as an austerity success story. That year, it clocked a faster economic growth pace than any other country in the European Union, at 7.6 percent. Estonia is also the only EU member with a budget surplus, and had the lowest public debt in 2011 -- 6 percent of GDP. Fitch affirmed its A+ credit rating last week.

Climate 'Change' Update

It's a fact that the earth's atmosphere has been slowly and gradually warming (about 1.6 degrees F in 100 years). But, intriguingly  the warming has apparently "paused" in the past decade or two. Meanwhile carbon dioxide levels, although still quite low at 380 parts per million, have continued their gradual ascent.

In my blog "Global Warming Made Easy" I've presented data about the extent of warming and the extent of sea-level change. The post is mostly raw data but I make a point that warming and sea level change is very gradual (1/10th inch per year) and does not appear to be catastrophic. I also mention there that the cost of mitigating the effects of sea level change is orders of magnitude cheaper than attempts at carbon capture and sequestration. See here. In subsequent blogs, I've indicated that molten salt Thorium reactors may be the carbon-free answer to the future of global energy. Thorium reactors are being tested commercially in Norway and soon in China---even though America invented the technology.

The real danger to earth's inhabitants is the extreme cost burden of trying to capture carbon dioxide spent to avoid fairly mild consequences. Worse, so-called "cap and trade taxes" and "carbon trading" schemes are all about taxing and thereby ruining the world's economy and that these 'measures' won't do anything to reverse the warming.  As you've surmised, global politicians are the biggest danger to the health and well-being of earth's inhabitants!!

Not only are politicians the biggest danger to earth's inhabitants, but the climate scientists are slowly discrediting themselves by their inability to "process" actual data that global temperatures are not increasing recently (appear to have "paused") and that their models are wrong.  Worse, the scare-mongering continues but is thankfully receding.

But Al Gore, nearly a US president, is continuing to spout his extreme climate-change scare tactics despite the fact that global temperatures are failing to confirm the dire and direst predictions. Here are some quotes from a speech at Harvard in February 2013:

Gore stated that consequences of global warming are compelling and devastating...

“The dangers we face are almost unimaginably dire,” Gore said. “My hope is based on the history of our experience as a species.”

Gore said that the warming climate has destructive effects on human health. He noted examples of climate change that have influenced insect behavior and, therefore, the spread of diseases such as West Nile virus.

Gore continually stressed the urgency of the current situation, appealing to the audience with analogies.  “We’re using the atmosphere as an open sewer and it’s functionally insane,” Gore quipped.

Now global warming is helping to spread the West Nile virus??  Oh my God! Worse, Harvard is supposed to represent our best and brightest intellects, but Al Gore's nonsense gets an audience?

Actual Climate Data Vs Climate Models

Here's some recent data about global temperatures compared to the climate model predictions. Mind you, billions and billions of dollars have been spent (invested??) at academic institutions to fund 'scientists' who are trying to develop the climate models. I guess when job security is on the line---that could explain the reluctance of scientists to admit partial failure after billions and billions have been spent!  A small amount of modesty and humility is also indicated as the climate is quite a complex thing and defies easy prediction. Humility is a quality that you will find from true scientists---people who will admit that they don't know everything.

Figure 1 Global Temperatures Versus Various Climate Models

Figure 2 IPCC Climate Model Predictions Versus Recent Measurements

Figure 3
Upper Troposphere Temperatures Were "Supposed" to Rise and Create a Runaway Temperature Scenario. The Earth's oceans were predicted to "boil." There is no evidence of that "theory."

I support continued research in the area of "climate change." It would be incredibly foolish to NOT study these issues. I also call on our nation's scientists, our nuclear industry and our government to re-invigorate our research and to test commercially the intrinsically-safe Molten Salt Thorium reactors as a path forward since we have decades of Thorium fuel already stock-piled.

Islam: Making a Difference, One Body at a Time

"Mohammed is God's apostle. Those who follow him are harsh to the unbelievers but merciful to one another."  Quran 48: 29

"O ye who believe! Fight those of the disbelievers who are near to you, and let them find harshness in you, and know that Allah is with those who keep their duty"  Qur'an, Sura 9:123

Let's be clear, Islam is the only religion (ideology) in the world that prescribes violence against other people who are "unbelievers". There are some 109 verses prescribing violent "war" against those who oppose Islamic "rule."  In fact there are few counterbalancing views of tolerance or peace in the Quran. There's no "turn the other cheek" in Islam!  Yes, the Old Testament has violence but it is confined to the specific historical situation, not an open-ended prescription of violence.

Mohammed himself was a violent man in a violent time which is amply reflected in the Quran. This is the source of centuries of blood and tears caused by Islamic violence. Since 9/11 alone, there are over 20,000 deaths attributed to Muslim jihadists (not including war deaths in Afghanistan and Iraq).  To read more about Islam and the Quran, see the website called Religion of Peace.  

Recent worldwide Islamic Terrorist Acts:

• In the past week alone: April 6 to April 12, there were 49 Jihadist attacks killing 195 persons with 468 injured.
• In the last month alone, March 2013, there 189 Jihadist attacks killing 988 and injuring 2093 persons.

For a very good and complete list of Islamic terror since Sept 11, 2001, check out this very detailed list.

Outrageous Muslim Violence In Thailand

In my blog "One Day, 5 Murders By Islamists in Thailand", I describe that over 4000 persons (Buddhists) have been mowed down by Islamic murderers in southern Thailand since 2004.  The reason?  Oh there are made up reasons including separatist feelings, but the truth is that these people are ignorant, useless and desperately unhappy and lash out at anyone in murderous rage----a rage supported by they religion!  These people are criminals plain and simple.

I say in that blog:  "As in all other parts of the Muslim world, this violence continues because no citizen informs the authorities of sons, friends, brothers or cousins that are making bombs, buying grenades, hiding guns and plotting attacks.

Because no citizen stands up for what is right, the entire community is complicit in the violence!

It's not just the "radical element" as the "politically correct" would like you to believe.  The violence is supported by Muslim scripture, teachings and many religious leaders everywhere and tolerated by the entire Muslim community.  The entire Islamic culture refuses any self-examination since they blame everyone else for their problems."

Boston Bombers

I'm listening to the media coverage of the Boston marathon bombers and the subject of Islam hasn't come up much at all.   Very few reporters would even know how to handle such a topic.  In case you haven't heard, both suspects were Islamic from Chechnya and/or Russia.

One of the bombers is reported to have said that "I don't have any American friends. I don't understand them."  I find this telling and it reminds me of the few occasions that I've been around Muslims in America.  Usually Muslims that I've met (since I was in engineering field and met mostly engineers) were reasonably prosperous but unhappy to be here.  They'd rather be back in their home countries regardless how impoverished or violent.  I've noticed that Muslim women (wives), in particular, do not integrate well into the community. To a great extent they choose this (of course) by separating themselves due to their attitudes, social awkwardness, low confidence and their choice of clothes (wearing scarves or Hijab headgear).  Muslims are not so common in America but those that are here seem to integrate somewhat better in this country and in Canada compared to other places.  In Britain, for example, Muslims create entire "Islamic" neighborhoods where "nonbelievers" can face intimidation by thugs or punks.

Back to the Boston Bomber deaths.  Don't expect any condemnations of such violence by any Islamic leaders.  There won't be any.

World Central Banks Facilitating Huge Deficits

Central Banks Facilitating Huge Deficits 

World Central banks are making it easy for governments to spend huge amounts of money that they don't have. There is no need for any spending reforms or restraint while the Central banks are printing money ad infinitum.

The Central banks all over the world are also limiting the rise of interest rates and interest payments on their debts.  Zero interest rates are limiting the cost of servicing the rapidly rising debt.

The US's cost for interest payments back in 2008 was $451 billion, when interest rates were "normal" but the national debt was about $10 Trillion. In a few more years, we'll have $20 Trillion in debt---double the debt of 2008.  So, if interest rates were "normal" than interest payments on the debt would be DOUBLE the amount in 2008 or $900 Billion!!  Mind you, our current defense budget is $680 billion.  Our entire Federal tax collection is only $2400 billion, so $900 billion is a huge number.

What happens if inflation picks up sharply (the last thing anyone is expecting at the moment) and/or the bond market revolts and demands 10% on government bonds?  Interest payments could jump to about $2,000 billion per annum!  The debt that we're creating doesn't go away!  Debt is like a stone around your neck!

A worse example: take Japan, with 230 percent debt-to-GDP ratio, a rise of interest rates from about 1.0% currently to just 2 % would consume half of their annual budget.. The Japanese are already borrowing 10% of their GDP per annum, so debt is already accumulating rapidly.  In terms of debt sustainability, they are rapidly moving up the time when they reach a point of no return.  It's getting close.

More details about the Japanese budget situation from Forbes,

In the FY 2011 ordinary budget expenditures total JPY 92.4 trillion. Of this, JPY 28.7 trillion (31.1 percent) is expenditure for old age social security programs, and JPY 21.5 trillion (around 25 percent) is debt service. A doubling of interest rates would double debt service costs to 50 percent of budget. Is this feasible? Obviously not.

But the situation is actually direr still, as we see by looking at FY 2011 budget “revenues.” Of the JPY 92.4 trillion in revenues, only JPY 48.1 trillion has come from taxes. The remaining JPY 44.3 trillion has come from additional government debt issuance.

Huge Japanese QE Program

The Japanese Central bank recently has embarked on a HUGE quantitative easing (money printing) program that is 3 times the magnitude of the US QE program in relation to the size of their economy.  They aim to go from -0.5% deflation to 2% inflation.  If they succeed and investors demand 2 or 3% for holding government bonds (as opposed to the 0.5 to 1% range of yields currently), they are deep, deep budget trouble.  One might expect their rates to rise to Italian or Spanish levels of about 5% when their situation is "distressed."

It's entirely possible that the Japanese will trigger an unmanageable crisis in their debt markets.  Already the Japanese bond market is in turmoil already---having huge and unprecedented price swings that are triggering circuit breakers nearly every day.   I've said for 3 years now that Europe will be the epicenter for the next leg of the financial crisis.  I believe it's still true, but now Japan is in contention for that prize.

The flood of free money in Japan may fund a carry trade to other Asian countries---precisely what caused the Asian crisis of 1997.   Like I've said, free money and zero interest rates create bubbles on top of bubbles.