The $1.1 trillion budget bill also adds about $5.4 billion for new labor, education and health spending in addition to billions more to meet a shortfall in Pell grants for low-income college students; $1.25 billion in spending related to health care reform; including 6,600 legislative earmark provisions where $8 billion within the bill should be spent.

Unfortunately this congressional mad hatter spending will not help get the country back on track with jobs or create an opportunity for business growth.  What it will do is create further drag on the economy as greater revenue is required to pay down the interest on the debt to finance these spending programs bought on Chinese credit.

We can hope the new congress will begin to rein in spending which will still require the president’s signature for passage.

There is no stimulus to come from a one year 2% payroll tax rate cut; There is no stimulus in raising the estate tax from zero to 50%; tax credits for ethanol help an industry already on federal life support, to mention a few.   However, what has in effect happened is that America will soon get a second $858 billion Stimulus over two years, lets not forget the first Obama $814 billion 2009 stimulus package.  This time Obama got the Republicans to offer to increase spending by $858 but $630 billion of the tax bill is earmark spending above and beyond extension of the Bush tax cuts.

This is not good economic news for a future forecast that the recovery is taking hold.  Just when we thought the reckless spending was over its damn the deficit, full speed ahead with spending more borrowed Chinese dollars.

While oil prices would have to go back to their 2008 highs to slow the economy the recent run-up towards $90/bbl is already doing its damage. Gasoline prices at the pump are now over $3/gallon in 20 states and the surge has effectively drained $40 billion out of household cash flow. So, a good part of that Bush tax cut extension is going to be siphoned into the gas tank.

Those now receiving unemployment soared 523,000 to 4.2 million the latest week and they will receive continuing payments of unemployment checks instead of standing in soup lines.

Imagine embarking on more fiscal expansion at a time when structurally the budgetary gap has breached 7% of GDP and the Fed going along the road of even more radical expansion of its balance sheet with quantitative easing II, and a congress that was just spanked for creating fiscal excesses is now tapping into the Social Security fund so as to stimulate consumer expenditures.

Now Democrats opt for the tax cuts they reviled in 2008 and the lame duck congressional leadership appears in line to run up the fiscal tab even more with a trillion dollar continuing resolution/omnibus spending bill to fund the federal government through next year; remember they did not pass a federal budget yet, and this resolution contains even more democratic pork barrel spending.

WHATS HAPPENING IN THE REAL ESTATE MARKET?

It’s perplexing that the latest down-leg in U.S. home prices has gone virtually unnoticed by the media and the markets. The Case-Shiller index is down in each of the past three months and there is still roughly two years’ of unsold inventory overhanging the market once the “shadow” foreclosure backlog is included.

Housing demand is dormant as home buying intentions slipped in December to a level that can only be described as anemic. Mortgage applications remain near decade-low levels and part of this reflects lingering caution among private lenders who are still maintaining fairly stringent credit guidelines.

A FEW OF THE LATEST HEADLINES FOR DECEMBER

Housing Wire – “Robo-signing hangover slows foreclosures in Western states” (12-14-10)

“Foreclosure sales in Arizona, California, Nevada, Oregon and Washington fell 38.7% in October and November, according to ForeclosureRadar.”

CNN - “Obama’s mortgage mod plan is still lacking” (12-14-10)

“Last April, the Congressional Oversight Panel found the program to be struggling to get off the ground despite having been in action for a year and a half. The latest evaluation of the Home Affordable Modification Program (HAMP) came out Tuesday and the result was — same deal.”

San Francisco Chronicle - “Loss of estate tax leaves hole in state budget” (12-14-10)

“The proposed tax deal in Congress would fail to deliver about $2.7 billion in estate tax revenues California was counting on receiving this fiscal year and next, but some say the state should never have expected those revenues in the first place.”

Housing Wire – “LendingTree survey shows 40% of homeowners took first loan offer” (12-14-10)

“Roughly 40% of current homeowners surveyed by the online lender exchange LendingTree obtained just one mortgage loan quote before purchasing their home. LendingTree and the Harris Interactive surveyed 1,317 homeowners online, and of those 96% said they compare prices when shopping for anything – except mortgages. This, according to LendingTree, explains why only 28% surveyed feel confident they got the best possible deal on their loan.”

Associated Press – “Fewer homeowners underwater in the third quarter” (12-13-10)

“About 10.8 million households, or 22.5 percent of all mortgaged homes, were underwater in the July-September quarter, housing data firm CoreLogic said Monday. That’s down from 23 percent, or 11 million households, in the second quarter.”

Housing Wire – “Zillow: Home values crater by $1.7 trillion in 2010″ (12-9-10)

“U.S. homes are expected to lose more than $1.7 trillion in value this year, 63% more than the estimated $1 trillion lost in 2009, according to Zillow.”

Housing Wire – “Double dip in some markets drag home prices down 5.8%: Clear Capital” (12-9-10)

“Home prices in November dropped 5.8% over the previous three months and are down 2.7% from a year ago, according to real estate analytics firm Clear Capital.”

Housing Wire – “Fannie Mae survey finds traditional homeownership changing” (12-9-10)

“51% of survey respondents said the housing crisis has not affected their overall willingness to buy a home, 33% said they would be more likely to rent their next home than buy. In January, 30% of Americans surveyed said they would rent a home the next time around.”

Housing Wire – “Fitch sees 10% drop in home prices in 2011, negative outlook for MBS” (12-9-10)

“Fitch Ratings expects another 10% decline in home prices in 2011, as the supply of distressed properties continues to weigh down the housing market. Accordingly, analysts maintained the agency’s negative outlook for the residential mortgage-backed securities space and said 53% of all investment-grade RMBS rated by Fitch have a negative outlook.”

HOW ABOUT THAT GOLDEN STATE CALIFORNIA!

Governor Re-elect Jerry Brown says California’s budget deficit may hit $28 billion, and last year it was a meager 19 billion that was apparently closed by Governor Schwarzenegger this past budget year, with gimmicks to reach the balanced budget requirement like trying to borrow $3 trillion in bonds all at once.

California’s Politicians are solely responsible for this fiscal mess from spending on programs when revenues were dropping and for not having any fiscal restraint.  They are also responsible for using borrowed money to pay for current expenses until they had borrowed more than they now seem able to pay back.

REVIEW OF CURRENT GROWTH, EMPLOYMENT STATISTICS AND AFFORDABILITY

Growth is down, unemployment is up and home prices are in the tank.  These are good times for purchasing homes and reselling them, and holding on to assets that will take off when the economy turns and inflation takes off.  Home mortgage rates are now trending upward and the bond market is following suit.  California will need funding from the federal government to stay afloat, raise taxes, cut spending and pay higher rates for borrowed money due to its terrible credit standing.  Raising taxes will not help the numbers on the chart above.

The definition of insanity doing the same thing over and over again expecting different results………Einstein



California Realtors say cutting mortgage interest tax deduction will devastate nation (11-12-10)

Home prices in the affluent California county increased roughly 6% to $699,174 in October, according to the association. Its up 11% from a year ago. The National Commission on Fiscal Responsibility and Reform, proposed two options in their efforts to overhaul the tax system. One was to reduce how much homeowners could deduct by 20%, and the other was to exclude second residences, home equity loans or mortgages over $500,000.

Removing the incentive to own a home by reducing or eliminating the mortgage deduction will drive the country into a greater economic crisis.  It is not clear if Preisdent Obama will pursue this tax reform but he should be urged to oppose it.

Freddie Mac says foreclosure problems may drain recovery (11-12-10)

Freddie Mac economists said recent problems in the banks foreclosure processes could slow what little momentum the recovery holds, and perhaps send the housing market down to a new low.

Freddie Mac, itself reported $120.1 billion in nonperforming assets in the third quarter, up 33% from a year ago, and more than $6 billion in REO that needs to be sold.

Even with the Federal Reserve’s plan to purchase $600 billion in Treasury securities through quantitative easing, Freddie still expects “sub-par” growth in GDP over the near term with a slow acceleration through 2011.

The sluggish nature of the recovery means the unemployment rate will likely remain at or above 9% through much or all of next year, with a decline in unemployment only gradually providing relief to the housing market, according to the report.

Barclays Capital expects Fed to buy Treasurys beyond 2Q (11-12-10)

Barclays Capital expects the Federal Reserve will continue buying Treasury securities past the second quarter, although it appears investors feel otherwise as there has been considerable sell-off in long-term bonds this week.

Excessive risk retention may throttle mortgage finance: ASF (11-12-10)

Under the sweeping reforms of Dodd-Frank, federal financial regulators are tasked with defining a qualified residential mortgage to determine which loans will be exempt from new risk-retention requirements. The American Securitization Forum wants the regulators to establish new standards for income and asset verification, minimum borrower equity, and debt-to-income ratios that its members believe significantly strengthen the mortgage pools and ‘ensures appropriate credit can resume flowing to American homebuyers.

D.R. Horton Sees Challenging Year as Home Sales May Decline (11-12-10)

D.R. Horton Inc., the second-largest U.S. homebuilder by revenue, expects 2011 to be a challenging year, the industry as consumer confidence and employment remain weak, Chief Executive Officer Donald Tomnitz said.

KBW says market overly pessimistic on Fannie, Freddie losses (11-12-10)

Analysts at investment bank Keefe, Bruyette & Woods said both Fannie Mae and Freddie Mac have enough in reserves to absorb losses from legacy portfolios and that market estimates of potential losses are ‘overly pessimistic.

Calif. borrowing $40 million/day for unemployment benefits (11-9-10)

California is Going Broke/ Jerry Brown and the Democratic Majority to the Rescue.  California is borrowing $40 million a day from the federal government to pay unemployment benefits.  That means California is borrowing $40 million a day from you and me to pay unemployment benefits.

The Los Angeles Times reports the state will have a $362 million bill for interest alone due on a total debt of $10 billion next fall.

Thanks to the recession and poor management, California is an economic disaster zone, with one in every eight workers unemployed. More than 1.2 million Californians have lost their jobs since the start of the recession, and they’re staying out of work for longer periods of time.  Plus in 2001, state lawmakers nearly doubled unemployment benefit levels without raising taxes. That was smart.

The result of all this is that if California keeps borrowing from the federal government, employers could face a steep hike in their unemployment taxes.

California is not alone here. 32 states in total have been borrowing from the federal government to pay unemployment benefits. The total is $41 billion. Some of these states are asking the feds for a deferral on repaying the loan until the economy improves.

Oil Prices Up thanks to Q2

Oil is now challenging the $90/bbl threshold and this is more a reflection of the Feds quest to weaken the U.S. dollar than any incipient global economic boom. The net speculative long position on oil contracts on the NY Mercantile Exchange has doubled since the Fed first started talking openly about QE2 in late August at Jackson Hole, to a near-record 208,228 contracts (1,000 barrels per contract).

When oil first tested the $90/bbl level back in October 2007, the U.S. economy slipped into recession, without anyone knowing it, including the Fed, and the long list of Wall Street economists, many of whom are still in their seats today.

WHO DO YOU TRUST, WHO DO YOU TRUST!

It is intriguing to see how Fed Chairman Ben Bernanke said for the record, just over a year ago, that the Fed had no intention of monetizing the debt.

Chairman Ben Bernanke, in response to a question during his June 3, 2009 testimony to the House Budget Committee, said, Either cuts in spending or increases in taxes will be necessary to stabilize the fiscal situation…The Federal Reserve will not monetize the debt.

Just the other day, Dallas Fed President Fisher said that this is exactly what the Fed has chosen to do. The U.S. does not suffer from a lack of low interest rates. Nor does it suffer from a lack of liquidity. What it suffers from is a lack of policy credibility.

For the next eight months, the nations central bank will be monetizing the federal debt.
…………………November 8, 2010,  Dallas Federal Reserve President Fisher

What does the change to the House of Representatives mean now that the GOP will be calling the shots instead of Pelosi et.al?

We are likely to see a pronounced slowdown in the pace of economic activity because outside of government financial intervention and inventory accumulation by companies, and layoffs to keep businesses afloat, there will be few catalysts for growth.  The Obama Administration with its big “European Style Government” and the GOP small government and “NO” government fiscal stimulus are headed for a big collision.

However, the economy much like the recessions of the mid-1980s and again in the mid-1990s,  today is on the brink of double dip recession. The new GOP led house has little ability to enact laws because the President will not sign any bills unless there is a government entitlement element.  This is the grid lock issue.  He has yet in his career to show the ability to compromise with his liberal agenda.

The Pelosi-Reid-Bush and Pelosi-Reid-Obama led congress have laid five trillion in debt on the backs of the taxpayer in the past five years.  Cutting government spending is another item on the GOP agenda and they will be able to manipulate the purse strings of the federal government  and the Obama Admiration will have to live within the budget that they send back to him for approval.

Today, income redistribution from those who make over $250,000 to those who want to be entitled to receive an enhanced standard of living (from them) will be a central issue on the economic recovery of this nation.  The GOP will stop the taxation into prosperity Keynesian mentality of government spending to facilitate economic growth.  But they will lack the leadership authority to actually implement changes to provide the private sector with tools that will facilitate private sector job growth.  They need to override a Presidential veto to obtain that authority.

Socialists tend to forget that the private sector is the plumb that all taxes are picked from.  After that there is mass redistribution to public agencies and their employees where dollars are again taxed and redistributed.  The common denominator rests on the value of the dollar, and that is in process of inflating by the Fed via quantitative easing.

QUANTITATIVE EASING II

The Fed announced on Nov 3rd that it would begin purchasing $600 billion treasury securities by the end of the second quarter of 2011.  They also intend to purchase $300 billion, over the same period to reinvest principal payments from mortgage backed security debt into long term treasuries.  The Fed intends to orchestrate the purchase of long term treasury securities of $850-900 billion through end of the second quarter.  This is roughly $110 billion per month.

This will do nothing to the already low interest rates we are now experiencing.  The Fed is attempting to slow the rate of deflation by creating an inflationary policy of one arm of the government  buying a trillion dollars from another arm of government.  This is the second time in two years the Fed has played this card.  The last time the Fed bought $1.5 trillion of Fannie and Freddie bad mortgage debt.

This policy will create international monetary ripples on costs of goods imported and exported to the United States.  Even with one financial arm behind its back America is still the single largest economy in the world and has a major influence on the currency policies of other countries that use the dollar as an international rate of exchange. Quantitative easing (inflation) will increase Americas trade deficit with other countries indirectly putting more debt on the backs of taxpayers.  Bottom line the Fed decision weakens the economy and sows the seeds of future inflation.

If you hold assets like gold or a home, these assets are set to take off in value as soon as the inventory of foreclosed assets are back in the hands of the private sector and job growth starts to show signs of a comeback.  If the president does not get with the program of private sector job creation and cutting public spending then he will be in for the same epiphany the outgoing house democrats are now beginning to realize, you’re unemployed!

The real economy as determined by the Leading Economic Indicators (LEI) when redundant  factors are stripped away shows that real LEI has fallen four months in a row.  This suggests that real GDP could slow meaningfully into this quarter and early next year.

Added to this fact, 150 million people will be facing a higher tax bill starting January 1. If Bush Tax exemptions are not passed, then 29 million Americans will fall into the Alternative Minimum Tax (AMT) trap (seven times as many as this year). If left untouched, the estate tax rate jumps to 55%. The Obama healthcare taxes are set to start as well.  Both will not help change the economic circumstances for everyday Americans or those who are unfortunately successful enough to make $250,000 per year.

Additionally, two million people are about to roll off the extended jobless benefits, with an annual US income drain estimated at $30 billion dollars, if not more.  This at a time when rising food and energy costs are bound to divert consumer spending away from discretionary and cyclical consumer spending.

BOTTOM LINE

There is nothing economically happening at the moment that will change the trend in consumer confidence and get people purchasing with a sense that America is under a recovery.  There are no apparent signs that the economy is changing, but more so that the economy is stagnating, it is not getting any worse and it is not getting any better.  There are two different economic worlds Wall Street and Main Street.  Wall Street has trillions in bail out dollars to invest in the market and those on Main Street have seen their nest eggs broken.

Back in the day Americans were using their home equity as a revolving credit card and stimulated the economy.  This chart from Bloomberg shows home equity accounted for 16.2 percent of net worth at the end of the second quarter, the Fed’s data showed. The first quarter’s figure, 15.4 percent, was the lowest in more than half a century.

“While the housing market’s ascent initially drove feelings of wealth during
the mid-2000s, that  relationship basically has broken down.”
………..Tobias Levkovish, Citgroup Inc.’s chief US equity strategist

]]> http://economictrendsjournal.com/blog/americans-vote-for-change-they-hope/feed/ 0 http://economictrendsjournal.com/blog/a-deeper-look-into-government-real-estate-programs/ http://economictrendsjournal.com/blog/a-deeper-look-into-government-real-estate-programs/#comments Thu, 07 Oct 2010 17:21:08 +0000 simon http://economictrendsjournal.com/?p=1232

GOVERNMENT IS THE ECONOMIC PROBLEM

Remember the Obama $8,000 home credit program for first time home buyers that ended April 30, 2010?  There were many who qualified for the credit but were turned away after following the process outlined by the IRS, only to find after having bought the property and signed up for the credit that they were ineligible due to a bureaucratic technicality.

There were many who did not have any technical problems but still received the credit, they did have one problem though, THEY WERE IN PRISON!  Believe it or not, 1,295 who applied and received the $8,000 first time home buyer credit were serving a prison sentence and 241 of those were serving a life sentence.  Combined they were able to amass $9.1 million in credits all because the IRS says its too difficult to keep track of these guys!

Well you can bet the IRS is not going to prosecute them with jail time!

Government involvement in the financial sector of the economy has done nothing but slow down any recovery, back log foreclosures, keep failed banks from showing their true balance sheets, and hide true GDP.  Government regulation has managed to allow default mortgagees to stay in their homes over  two years without a mortgage payment, allow prisoners to receive the $8,000 mortgage credit, hike taxes during the Great Recession, create monumental debt, and come up with a new bailout program – every few months to help build peoples addiction to the entitlement mentality, as lawyers fine loopholes to help owners keep the house and sue for removal of the loan from the property, lets not forget the taxpayers, those still paying their mortgages that are on the hook to pay for all the financial disaster debt.

The real estate news on the horizon is not promising in the near term, but for investors there are some bright spots, low home prices and more of them on the way.

HOUSING MARKET SET TO TAKE ANOTHER PLUNGE
The Wall Street Journal recently reported that the housing market will see another major plunge as the number of foreclosed upon properties will soon start being released into the market place by HUD and banks that can afford to show their losses.  There could be an additional 4.7 million units, a ten month supply to come on the market soon.  The estimate of distressed home re-sales could rise to 40 percent of all home sales through 2012, keeping the home values in the toilet through 2014.

Banks have been holding on to their bad mortgage inventory because of the government accounting rules that allowed mark to market only when the properties were brought to sale.  While the losses are known by banks the investment damage is not showing on their books.  These pretend profits help to pump up their balance sheets otherwise there would be many more banks underwater than there are now.  Banks can only parcel out the bad loans at the trustee sales if they keep a watchful eye on their bottom line and at the Fed regulators looking over their shoulder at the same time.

FALSE RECOVERY THE TRUE STORY
This under reporting by banks and the continued living in homes by defaulted owners is creating a false impression of a recovery.  A majority of defaulted owners continue to buy toys, new appliances and furniture because they don’t have to make a mortgage payment and banks are carrying this massive mortgage debt on their books but can’t afford to sell the property for fear of increasing their debt levels when the properties sell for a fraction of their value.

When government spending is subtracted from GDP, there is truly no recovery just increased debt and when federal spending is netted out of the GDP figure you can see the recovery for what it is, Todays Net GDP is back to 2004 levels, (the green line).

The above chart clearly demonstrates the effect of deficit spending and the alleged rebound in GDP, since deficit spending is unsustainable the GDP will come crashing back to earth when the stimulus stops.  Remember all government spending adds to GDP, it is just that government produces nothing from an economic standpoint.

Todays Real Estate market mortgage interest rates are at WWII levels, rates have not been so low for over 50 years and no one is buying property, why? Perhaps the equity that people will have after selling their homes at fire sale foreclosure prices does not leave enough equity, cash net to seller for them to qualify for a second home of greater value.

CASH NET TO SELLERS DECLINES

Granted home sales in 2004 were in higher value than they are today but the values are skewed now by the sale process, REO, Trustee Sale, or short sales and availability of home quality in a desirable area.  Additionally, the tax incentives of the period from 2005-07 and the lending policies have changed limiting the availability of people to qualify for funding under the new guidelines today.  In addition, growing unemployment is creating a fear in moving and taking on a higher mortgage, for those who can qualify, when the underlying uncertainty of the economy could impact anyone in the public or private employment sector.

AMERICANS ARE NOT IDIOTS
There is an intuitive feeling that the talk of recovery is an illusion especially in the light of monumental government deficit spending, and the healthcare tax increases and end of the Bush era tax cuts that were not extended by congress last week.  Not to mention that government stimulus for business loans have not provided an incentive for that sector to expand. Nor have tax credits or tax breaks. Deficit spending has not shown any real private sector job growth because the structural issues that created this recession have not been addressed by the elected representatives.

A FEW ECONOMIC STRUCTURAL ISSUES

• The US can no longer afford to be the world’s policeman. Military spending has to be reined in.
• Public unions have and will continue to bankrupt many cities and states. The long-term fiscal health of the country requires that Unions not taxpayers pay for their own retirement and be responsible for funding their retirees from investment growth not taxpayer bailouts.
• To stimulate hiring and reduce the cost of government expenditures, we need to scrap Davis-Bacon, a 1031 law that requires prevailing wages on public works projects.
• The corporate income tax structure that gives incentives to businesses to move jobs overseas the tax deferment incentive that allows businesses pay less tax overseas than in the US must be changed to promote hiring in the US.
• Health care is worse now than before the new act, it will bankrupt taxpayers and businesses alike unless it is repealed.
• The too big to fail bail-out policy must be eliminated.
• Fannie Mae and Freddie Mac must be eliminated.
• The Fed and other Federal Departments that provide superfluous services must be eliminated.
• Balance the f#@$ Federal budget!

These solutions and others that undoubtedly require a series of across the board sacrifices on the part of the Federal, and State governments is the only way to bring back prosperity to the US.   There have been no attempts to address the real issues that caused the fiscal crisis resulting in the loss of Americas credit standing in the world.  Only more borrowing to pay on an ever expanding debt for a government that is not responsive to the fiscal desires of the electorate.

“History suggests that capitalism is a necessary condition of political freedom” ……………..Milton Freedman

Bernake said that the zero interest rate policy (ZIRP) is unlikely to change in the coming months. He also doesn’t see any short-term risk of deflation. However, federal economic stimulus can only drive recovery temporarily. For a sustained expansion to take hold, growth in consumer spending and business fixed investment needs to come more into focus, he said.

Fannie Mae’s mortgage portfolio through July is up 4.1% from the year ago yet down somewhat from June, and the GSE issued nearly half the mortgage-backed securities during the month than in did last July. Fannie ended July with gross holdings of nearly $812 billion. That figure stood at $770.4 billion last year and $817.8 billion in June.

Bruce Norris, The Norris Group
Fannie Mae is planning to hire 1,000 REO agents in Southern California. This means that Fannie intends to release inventory; perhaps as soon as the 4th quarter. FHA has 73,000 REOs and 555,000 people that are 90 days late. There are a lot of properties that the bank has not released, but we also have to be concerned about the properties that the banks are not foreclosing on yet. There are probably 4 to 5 million homeowners that are behind on their payments.

Freddie Mac said rates for both 30-year and 15-year fixed mortgages dropped for the ninth time in the past 10 weeks. The mortgage giant’s weekly survey said the average rate that lenders were offering on the 30-year loan was 4.36% during the week that ended Thursday, down from 4.42% a week earlier and 5.14% a year ago. Borrowers would have paid 0.7% of the loan amount in upfront lender fees.

U.S. banks need more capital to withstand a renewed drop in the housing market, according to analyst Meredith Whitney. Banks aren’t prepared for a ‘double-dip’ in housing, which ‘it looks like we are having,’ Whitney said today on Bloomberg Radio.

Christopher Thornberg, principal of Beacon Economics indicates that rental vacancies typically stay high after a recession, but vacancies are actually starting to drop quite quickly, especially in California. Thornberg does not believe there will be enough inventory in California, so when the shadow inventory gets released, it will probably be easily picked up. Thornberg believes we will have a stronger housing market over the next couple years because of the inventory levels in relation to the population.

Thornberg does believe that we have a lack of overall supply. When you look at permits over the past 20 years, the numbers show that we have not built enough housing relative to the population growth since 1995. Even in the midst of the bubble, Thornberg believes we were only building an amount that was appropriate for our population growth. The builders do not have many vacant unsold homes right now, but their competition, which is an REO, is going to be much to competitive. This competition will force them to build smaller houses.

Local governments have a lot of pressure placed on them because of the down turn in revenues. Thornberg believes we will have crowded housing, because many people will not be able to purchase new property due to the excessive fees.  With a weaker U.S. dollar and cheaper housing, other things will begin to improve, despite our high unemployment rate, people are beginning to migrate back to California.

In a down turn, people tend to start living together rather than moving out. This is actually starting to change, which is part of the reason why apartment vacancies are going down. We are not in a strong recovery, but it has been a year since the recession ended. Things have stabilized, and fears are beginning to lift.

AUGUST CONTINUES WITH BAD ECONOMIC NEWS
Despite these somewhat optimistic remarks, August has shown several news reports that are quite concerning.  Nouriel Roubini, CEO of Roubini Global Economic indicted last Thursday that the likely hood of another recession stands at 40%.  There are 750 banks on the FDIC critical list, businesses are now retrenching  because there is no economic growth and the financial system is weak.  Labor Department numbers show initial jobless claims made their first decline in a month, to 473,000. At the same time, the government revised claims from the previous week upward, from the 500,000 initially reported to 504,000.

Earlier this week officials announced the lowest rate of new home-sales since record-keeping began in 1963. July sales dropped 32.4 percent, compared to July 2009. Is this any wonder when one considers a graph of the housing starts:

DECLINE IN HOUSING STARTS 60 YEAR LOW

New home sales sank to a record low of 276k units at an annual rate and June was revised down, to 315k from 330k. Just as resales undercut the 2009 depressed low by 15%, new home sales have done so by 19%. Imagine that even with mortgage rates down 100 basis points in the past year to historic lows, not to mention at least eight different government programs to spur home ownership, home sales have undercut the recession lows by double-digits.

HOME PRICES WILL CONTINUE TO DROP

The high-end home market, in particular, is fast becoming non-existent. NOT ONE home in the  price above $750k managed to sell in July for the second month in a row, this from David Rosenberg, Chief Economist & Strategist for Gluskin Sherff.

Despite the $787 billion stimulus bill, that is more than the US government spent on the entire Iraq war, that promised to keep unemployment under 8% and create a summer of recovery, second quarter GDP fell drastically.  The 3.7 percent first quarter GDP due to government spending billions fell to a meager seasonally adjusted rate of 1.6 percent from April to June.  All the economists that have been reporting a recovery as mentioned in the main stream media are now raising concerns about the sustainability of the recovery.

Slowing growth and a growing risk of deflation prompted the Federal Reserve this month to decide to reinvest proceeds from maturing mortgage-backed securities into U.S. Treasurys to keep its balance sheet from shrinking. The move is aimed at kick-starting the economy by helping to keep borrowing costs low.  Funny that low rates have not started anything but saving by the astute taxpayer for the economic storm ahead.

The following graph is the banks best estimate of the amount it will not be able to collect on its loans and leases based upon current information and events.  The concern is that banks already have insufficient funds to cover the loan loss provisions banks are to keep on their books and why banks are reluctant to lend.

BANKS ARE IN DEFAULT THANKS TO MARK TO MARKET

The economy has not recovered because the incentives have been given to the too big to fail corporations and financial institutions, the government motors unions and 9000 special earmarked projects in the stimulus bill resulting in a meager rise in first quarter GDP.  That blip is over and the Keynesian economists that proclaim that every dollar of government money spent results in $1.50 coming back to grow the economy now have salmonella egg on their faces as the above charts and news facts show.

Washington lent and spent $13 trillion and this just put a dent in the recession and the GDP nose dive from January 2009 to January 2010.  What does a double dip recession look like before it happens, well take a look:

RECESSION OF 2010 AHEAD WITHOUT CHANGES TO CONGRESS!

“As every driver knows, in the moment before a collision there’s a gap-a split second- between recognition of the crash to come and the impact.  In economic terms, that gap was the period between August 2007 and now…August 2010″                                                                                         ……………..Gerald Celente

As the US economic GDP growth figures continue to be marked downward to 2.5 percent estimate for the 2010 fiscal year, this is not a rate that can sustain or promote a job recovery.  To promote job growth requires tax incentives not tax hikes.  Given the failed $860 billion in combined government stimulus spending with a debt price tag to be paid through taxation and continued fiscal deflation the economy cannot recover.  Americans must be given the tools to get back to work.  Capitalism is the water that sustains green shoots of economic activity and government controls its flow and direction.  Governments redistribution of wealth and agenda for selective capitol growth and increase in taxation will mark the end of American prosperity as we have known it, and as current economic indicators are trending.

The coup de gras to any economic recovery is taxe increases.  The Bush tax cuts will expire at the end of the year and the Obamacare Health taxes will start both resulting in lowering GDP, stopping business development and further deflation and greater unemployment since taxes are a disincentive for job creation.

The Bush Tax Cuts came in 2001 and 2003 and will expire at the end of 2010.  All taxpayers will see a sharp rise in their 2011 tax bills unless Congress acts to maintain the cuts and President Obama signs the bill.  There is an excellent chance that President Obama will not approve maintaining the existing tax cuts considering his continued expansion of existing and creation of new government programs.  This economic philosophy will destroy any economic recovery and extend unemployment and reduce economic activity by the American consumer who is responsible for 70% of domestic spending.

OBAMAS TAX PLAN TO MODIFY BUSH TAX CUTS

Obamas Plan To Cut Taxes
President Obamas plan, if passed this year, would extend the 2001 and 2003 tax relief for taxpayers
making less than $250,000 a year and hike taxes on small businesses and families earning more than $250,000.

OBAMAS PLAN TO RAISE TAXES

Tax Cuts That Create Jobs
The 2001 and 2003 tax cuts that help small businesses create jobs include lower top marginal income tax rates and lower tax rates on capital gains and dividends. Each of these growth promoting policies will expire.

Extended Tax Cuts for Some
Policies that the President wants kept include the 10% tax bracket for low levels of income, the doubling of the Child Tax Credit from $500 to $1,000, marriage penalty reductions, and the 25% and 28% marginal income tax rates. The standard deduction will no longer be doubled for married couples relative to the single level.  The dependent care and adoption tax credits will be cut.

No Job Creation with Select Extensions
While each of these policies lowers taxes, none will encourage job creation, because they do not increase the incentives for individuals and businesses to work, save, invest, or take on new risk.

Tax Hikes Will Not Create Jobs
Tax hikes on high-income earners will cause the most productive small businesses that provide jobs for the vast majority of workers to cut back on hiring. Higher taxes on high-income earners will also slow investment, which will further inhibit job creation.

The return of the Death Tax
This year, there is no death tax.  For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million.  A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.

Higher tax rates on savers and investors

The capital gains tax will rise from 15 percent this year to 20 percent in 2011.  The dividends tax will rise from 15 percent this year to 39.6 percent in 2011.  These rates will rise another 3.8 percent in 2013.

Personal income tax rates will rise
The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed).  The lowest rate will rise from 10 to 15 percent.  The 25% bracket rises to 28%, the 28% bracket rises to 31% and the 33% bracket rises to 36%.  Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates.

Backwards Plan to Stimulate Growth
The tax relief Obama wants to keep doesn’t create jobs, while the ones he intends to get rid of do.

Plan Fails Cost–Benefit Analysis
The tax revenue from pro-growth policies that would help small businesses and create jobs pales in comparison to the revenue from the tax relief policies that spread the wealth around.

OBAMACARES NEW AND HIGHER TAXES JANUARY 1, 2011

The Tanning Tax
This went into effect on July 1st of this year.  It imposes a new, 10% excise tax on getting a tan at a tanning salon.  There is no exemption for tanners making less than $250,000 per year.

The Medicine Cabinet Tax
Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).

The HSA Withdrawal Tax Hike
This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

Brand Name Drug Tax
Starting next year, there will be a multi-billion dollar tax assessment imposed on name-brand drug manufacturers.  This tax, like all excise taxes, will raise the price of medicine, hurting everyone.

Economic Substance Doctrine
The IRS is now empowered to disallow perfectly-legal tax deductions and maneuvers merely because it judges that the deduction or action lacks “economic substance.”  This is obviously an arbitrary empowerment of IRS agents.

Employer Reporting of Health Insurance Costs on a W-2
This will start for W-2s in the 2011 tax year.  While not a tax increase in itself, it makes it very easy for Congress to tax employer-provided healthcare benefits later.

The Alternative Minimum Tax and Employer Tax Hikes
When Americans prepare to file their tax returns in January of 2011, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired.  These major items include:

The AMT will ensnare over 28 million families, up from 4 million last year
Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families—rising from 4 million last year to 28.5 million.  These families will have to calculate their tax burdens twice, and pay taxes at the higher level.  The AMT was created in 1969 to ensnare a handful of taxpayers.

Small business expensing will be slashed and 50% expensing will disappear
Small businesses can normally expense (rather than slowly-deduct, or “depreciate”) equipment purchases up to $250,000.  This will be cut all the way down to $25,000.  Larger businesses can expense half of their purchases of equipment.  In January of 2011, all of it will have to be “depreciated.”

Taxes will be raised on all types of businesses
There are literally scores of tax hikes on business that will take place.  The biggest is the loss of the research and experimentation tax credit, but there are many, many others.  Combining high marginal tax rates with the loss of this tax relief will cost jobs.

Tax Benefits for Education and Teaching Reduced
The deduction for tuition and fees will not be available.  Tax credits for education will be limited.  Teachers will no longer be able to deduct classroom expenses.  Coverdell Education Savings Accounts will be cut.  Employer-provided educational assistance is curtailed.  The student loan interest deduction will be disallowed for hundreds of thousands of families.

Charitable Contributions from IRAs no longer allowed
Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA.  This contribution also counts toward an annual “required minimum distribution.”  This ability will no longer be there.

In a recent Investor Intelligence Newsletter it was reported that America will head into a double dip recession when the Bush Tax cuts are eliminated and new Obamacare taxes come into effect.  These taxes have not yet hit the American public or businesses and when tax day April 15, 2011 comes, the reality of Americas economic situation will be evident.  To a society debating political rhetoric, the true consequences of the greatest tax hikes in history during the “Great Recession” will be a stark reality as 1930’s style deflation from Keynesian economic policy causes the American Standard of living to reach levels not seen for 80 years.

Congress may change hands and pass new tax law to lessen the economic severity of these indicated tax increases, but the pen of approval or threat of veto is in the hands of the President.  We can only HOPE he will do the right thing and CHANGE economic policy to the one that is presented to him by a new congress in 2011!

Note: Information on tax policy found from several sources; The Heritage Foundation, Report by the Joint Committee on Taxation by Congress, and Ryan Ellis article on Wednesday, July 7, 2010 – The Largest Tax Hike In History .

“In this world nothing can be said to be certain, except death and taxes.”

…………………Benjamen Franklin

Fannie and Freddie hold or guarantee more than $5 trillion worth of mortgages. That is approximately one-third of U.S. GDP. Because of their federal backing, Fannie and Freddie provide capital and guarantees to the mortgage market at lower prices than private financial institutions can offer, which ultimately transfers risk from the two entities to taxpayers.

VOLKER RULE

Public policies were enacted by congress to promote home ownership to those who could not afford to purchase a home but due to relaxation of the Fannie and Freddie guidelines the fox was let into the henhouse. Now this massive reform bill is trying to remodel the hen house and they know it will work if, when the fox gets kicked out, he makes less of a profit from lending.  This will be done by reducing and eliminating the financial market manipulation from banks and financial institutions from derivatives trading, purchasing and selling stocks, bonds, options, commodities, termed the Volker rule in the new legislation.

MORTGAGE QUALIFICATION ADDRESSED

This bill will also get mortgages back to an affordability realm such that the loan qualification by both equity and credit are adequately addressed as was the case before government pushed the market into making bad loans under the illusion that everyone should own a house so government via Freddie and Fannie reduced the guidelines for qualification of what they would buy from lenders.  The qualification aspect of the mortgage crisis has been addressed but in many cases the new mortgage guidelines are so restrictive that only those with golden credit are able to qualify.

This converts to less mortgage financing than in the past and consequently less new development especially when factoring in the growth in unemployment and the shadow inventory of homes still on the balance sheets of banks and financial institutions still left to be sold over the next two years.  All indicators are bad signs for the real estate market.  Don’t believe the indexes on the real estate recovery there is a distortion to the data.  The homes being sold are at lower prices in the worst neighborhoods which pulls the median prices down which distorts the pricing being used in touting a home sale recovery.  Half of the homes sold have been foreclosed upon verses in 2005 when that was one-percent of the market sales.

CONGRESSIONAL IRONY

How ironic to have the august body of congressmen who authorized relaxation of loan rules to take place, by Fannie and Freddie’s underwriting policies, which in turn led to the financial melt down.  Now these same congressmen are reforming the system which they were in charge of and due to their  short sightedness were responsible for the mortgage debt crisis in the first place.  Congress did not enhance protections to regulations in the mortgage system but allowed Fannie and Freddie to take steroids and looked the other way when indicators of a melt down were starring them in the face.

Under the new reforms, loans will not be sold to Fannie and Freddie in the same old way but banks will be required to retain at least five percent of the mortgage liability and if there is a bad loan that five percent is the first amount that goes to pay the default such that the bank shares the risk. Not a bad concept but the big question is the unfunded Fannie and Freddie liability from the other 95 percent that they hold. How are they protecting the taxpayers risk? Why is congress doing nothing about that?

INTERNATIONAL CONSPIRACY CAUSES MORTGAGE MELTDOWN

Let us consider the implications of this Fannie and Freddie problem from not being addressed in the bill by our elected officials in congress. At the time of the fiscal crisis, as reported by then Treasury Secretary Paulsen, in mid 2008 Russian officials approached the Chinese government and suggested that both dump the securities of the Fannie and Freddie to put pressure on the U.S. to fully back them. The Chinese apparently demurred but, according to the federal register, they still sold nearly $50 billion during 2008 while the Russians liquidated their entire holdings of over $170 billion. This episode put enormous pressure on Fannie and Freddie, increasing the spread between Treasuries and Fannie-Freddie debt enormously and practically killing the repo market. In the end the U.S. was forced to put Fannie and Freddie into conservatorship.

As indicated in this example government participation in the debt market having packaged Freddie and Fannie debt to international buyers without adequate checks and balances provided a conduit for fiscal disaster.  Let us just consider the trillions of US debt that is now being sold on the open market to finance the Keynesian economic model of government stimulus to promote private sector growth, an issue now being discussed at the G20 summit in Toronto Canada.  The American $860 billion in combined stimulus spending is not reducing unemployment as it was promised to do, on the contrary unemployment is headed back up and the President is calling for more stimulus spending to keep the phantom economic recovery from dematerializing.

Considering it is not in the realm of impossibility for nations that view America’s fiscal situation as a means to their own distorted ends with unmerciful intentions, how is congress protecting taxpayers from the type of economic terrorism that occurred two years ago?  An America not protecting itself from the onset of an international monetary crisis will lead to another fiscal disaster given the amount and ownership of debt by countries that are hostile to America’s prosperity while the Keynesian ponzi scheme by government officials continues unabated.

ALTERNATE SOLUTION

To protect itself from the future bursting debt bubble, followed by an impending depression, government should privatize the Fannie and Freddie debt slowly over time and take government out of the mortgage business.  If the Keynesian economic model, Obamanomics, cannot stimulate private sector growth without continued government subsidies and stimulus then government should be taken out of the capitalist operating model.  Simply put, if the private sector cannot function without government guarantees and subsidies then these should be made explicit and priced accordingly and removed from the economy over time.  Make government the referee not participating in the ring as a player where it has always shown its ineptitude and take the tax payer off the hook as a backstop for the too big to fail bailouts.

Let us quickly look at the Obama administration’s flagship effort to help people in danger of losing their homes in the Home Affordable Modification Program (HAMP).  This program was to assist those close to foreclosure by participating in a government run program designed to lower borrower’s monthly payments from mortgage companies which would get government incentives to reduce borrowers monthly payments.

As of today, more than a third of the 1.24 million borrowers who enrolled in the $75 billion HAMP have dropped out because they cannot make the payments.  The Obama administration initially pressured banks to sign up borrowers without insisting first on proof of their income. When banks later moved to collect the information, many troubled homeowners were disqualified or dropped out.  Requiring homeowners already financially underwater to provide documentation of income has turned people away from enrolling in a program because  they know they cannot qualify for funding.

HAMP AND RAFS BOTH BAILOUT PROGRAMS

HAMP has worked so well that a similar and modified provision is included in the new RAFS act where failing corporations can go to the Fed and be bailed out.  Only under the RAFS act the debtor can remain anonymous and the Fed can make these loans under guidelines that they deem appropriate for the circumstances which they encounter and deem feasible.  To accomplish more bailouts, a $50 billion fund was provided in the Senate Bill, and a $4 trillion in “secured loans” bailout fund in the house bill.  This bailout provision has been termed crony capitalism because the Fed is directly responsible for financially rewarding firms that fail while the taxpayer remains on the hook for the bailout.

House Financial Services Committee hearing, Sept. 10, 2003:

Rep. Barney Frank (D., Mass.): I worry, frankly, that there’s a tension here. The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. I think we see entities that are fundamentally sound financially and withstand some of the disaster scenarios. . . .

Americans will be made to bow submissively to her domestic captors, and pay tax to a new ruling class that uses bribes, lies and treachery to maintain control over their subjects.  The national nervous progressive fever will not exempt them from the disease that caused its infected followers to willingly gave up liberty and free choice for government mandates.

The repudiation of freedom on the part of the prudent and imprudent political ruling class to adopt a policy directed against the very nature of man, all to gain a part of the financial excess that they themselves wish to distribute in accordance with the dictates of their fascist nature is a plague that will kill the host.

Progressives have deceived themselves into the unmistakable declaration of submission to a higher authority because their instinct as a people whose nature is too feeble and uncertain to stand up for the very freedom that made their country the greatest nation in the world has again been chained into submission by an socialist oligarchy.

Those infected with the government disease have left their faith and virtue in the hands of men found holy by stature but not by principal, or character.  In following the character of their ideologue captors, who have proven they have no morals only brute force mob control to shackle the all-to-naïve people who believe in men, they have lost touch with their humanity and traded in their liberty.

Let us speak of the progressives as a race of men easily wiped out and extinguished by a stronger race therefore they seek a political overseer to hold the power of their liberty when they themselves cannot find the inner strength to provide for their families by their own efforts and therefor seek government enforced fairness in the name of equality and freedom.

There is another race of Americans who beyond all doubt are the strongest, not by expecting entitlements  from bureaucratic bosses and subjecting themselves to domination but who know how to succeed under the worst conditions by means of virtues now termed vises yet they are Americans who do not need to be ashamed before the new modern ideals of progressive statists.

The genius of America was not in the expansion of government control but in the protection of basic human rights and liberty to pursue innate individual demands to create lives without the manacles of financial burdens mandated by the statists. Yet those have inculcated the institutions of education with training to be intellectually and financially subservient to big government when it suits their needs.  They have a history of subservient following fearful as a deer in the gaze of a capitalist lion seeking refuge in being controlled by the herd rather than using the herd to maintain its liberty.

Whether they are too big to fail seeking bailouts from financial ruin or empowering government dictators to infringe upon liberty in the name of fairness and equality, Americans have allowed themselves to be dominated and controlled once again after 244 years of freedom modeled after the failing form of a Teutonic European Empire.

America’s is about to lose its AAA bond rating.  The debt service to fund the entitlement society, the governments majority ownership of financial and health insurance industry, auto and banking as well as the expansion of government employment necessary to control this massive enterprise is causing a financial implosion to an already weak and unemployed society.

Currently, 46 if 50 states could file bankruptcy in 2010, states are running out of money and their bills and tax refunds owed to the citizens will go unpaid.  Banks will not make any more bad loans and the Fed cannot possibly support another two trillion dollar State bailout.

With no loans, and States out of cash 2010 marks the end of the United States as we have known it.  No State has ever filed for bankruptcy protection but the taxpayers are out of work, out of cash and out of patience with unprincipled government spending.

As Washington continues its massive socialist agenda with higher corporate taxation through cap and trade and shifting the burden of its unfunded mandates for illegal immigrants on already cash strapped states, Government is in process of financially imploding America and in this emergency will grab for more power and control from a naïve, believing and unsuspecting progressive public.

The economy of this nation cannot climb out of depression when the leader of the free world speaks with forked tongue in attempts to pass legislation that will destroy the economy by adding explosive new debt bombs set to go off in the future through policies put in place by the current Marxist-fascist regime.  Federal mandates with no corresponding automatic cost reduction is like giving a license to steal while promising to fund a police force to arrest the criminal.

Obama isn’t lying he is just using deception, corruption, and detrimental reliance on his words, all tools to create and enforce a fascist state upon Americans.

Does He Lie?

By Charles Krauthammer
Friday, September 18, 2009

You lie? No. Barack Obama doesn’t lie. He’s too subtle for that. He . . . well, you judge.

Herewith three examples within a single speech — the now-famous Obama-Wilson “you lie” address to Congress on health care — of Obama’s relationship with truth.

(1) “I will not sign a plan that adds one dime to our deficits — either now or in the future,” he solemnly pledged. “I will not sign it if it adds one dime to the deficit, now or in the future. Period.”

Wonderful. The president seems serious, veto-ready, determined to hold the line. Until, notes Harvard economist Greg Mankiw, you get to Obama’s very next sentence: “And to prove that I’m serious, there will be a provision in this plan that requires us to come forward with more spending cuts if the savings we promised don’t materialize.”

This apparent strengthening of the pledge brilliantly and deceptively undermines it. What Obama suggests is that his plan will require mandatory spending cuts if the current rosy projections prove false. But there’s absolutely nothing automatic about such cuts. Every Congress is sovereign. Nothing enacted today will force a future Congress or a future president to make any cuts in any spending, mandatory or not.

Just look at the supposedly automatic Medicare cuts contained in the Sustainable Growth Rate formula enacted to constrain out-of-control Medicare spending. Every year since 2003, Congress has waived the cuts.

Mankiw puts the Obama bait-and-switch in plain language. “Translation: I promise to fix the problem. And if I do not fix the problem now, I will fix it later, or some future president will, after I am long gone. I promise he will. Absolutely, positively, I am committed to that future president fixing the problem. You can count on it. Would I lie to you?”

(2) And then there’s the famous contretemps about health insurance for illegal immigrants. Obama said they would not be insured. Well, all four committee-passed bills in Congress allow illegal immigrants to take part in the proposed Health Insurance Exchange.

But more important, the problem is that laws are not self-enforcing. If they were, we’d have no illegal immigrants because, as I understand it, it’s illegal to enter the United States illegally. We have laws against burglary, too. But we also provide for cops and jails on the assumption that most burglars don’t voluntarily turn themselves in.

When Republicans proposed requiring proof of citizenship, the Democrats twice voted that down in committee. Indeed, after Rep. Joe Wilson’s “You lie!” shout-out, the Senate Finance Committee revisited the language of its bill to prevent illegal immigrants from getting any federal benefits. Why would the Finance Committee fix a nonexistent problem?

(3) Obama said he would largely solve the insoluble cost problem of Obamacare by eliminating “hundreds of billions of dollars in waste and fraud” from Medicare.

That’s not a lie. That’s not even deception. That’s just an insult to our intelligence. Waste, fraud and abuse — Meg Greenfield once called this phrase “the dread big three” — as the all-purpose piggy bank for budget savings has been a joke since Jimmy Carter first used it in 1977.

Moreover, if half a trillion is waiting to be squeezed painlessly out of Medicare, why wait for health-care reform? If, as Obama repeatedly insists, Medicare overspending is breaking the budget, why hasn’t he gotten started on the painless billions in “waste and fraud” savings?

Obama doesn’t lie. He merely elides, gliding from one dubious assertion to another. This has been the story throughout his whole health-care crusade. Its original premise was that our current financial crisis was rooted in neglect of three things — energy, education and health care. That transparent attempt to exploit Emanuel’s Law — a crisis is a terrible thing to waste — failed for health care because no one is stupid enough to believe that the 2008 financial collapse was caused by a lack of universal health care.

So on to the next gambit: selling health-care reform as a cure for the deficit. When that was exploded by the Congressional Budget Office’s demonstration of staggering Obamacare deficits, Obama tried a new tack: selling his plan as revenue-neutral insurance reform — until the revenue neutrality is exposed as phony future cuts and chimerical waste and fraud.

Obama doesn’t lie. He implies, he misdirects, he misleads — so fluidly and incessantly that he risks transmuting eloquence into mere slickness.

Slickness wasn’t fatal to “Slick Willie” Clinton because he possessed a winning, nearly irresistible charm. Obama’s persona is more cool, distant, imperial. The charming scoundrel can get away with endless deception; the righteous redeemer cannot.

Two Million March On Capitol to Protest Government Spending

Americans have woken up!  They are mad as Hell and “Just Won’t Take it Anymore!

Up to two million people marched to the U.S. Capitol today, carrying signs with slogans such as “Obamacare makes me sick” as they protested the president’s health care plan and what they say is out-of-control spending.

The line of protesters spread across Pennsylvania Avenue for blocks, all the way to the capitol, according to the Washington Homeland Security and Emergency Management Agency.

People were chanting “enough, enough” and “We the People.” Others yelled “You lie, you lie!” and “Pelosi has to go,” referring to California congresswoman Nancy Pelosi.

Demonstrators waved U.S. flags and held signs reading “Go Green Recycle Congress” and “I’m Not Your ATM.” Men wore colonial costumes as they listened to speakers who warned of “judgment day” – Election Day 2010.

Richard Brigle, 57, a Vietnam War veteran and former Teamster, came from Michigan. He said health care needs to be reformed – but not according to President Barack Obama’s plan.

“My grandkids are going to be paying for this. It’s going to cost too much money that we don’t have,” he said while marching, bracing himself with a wooden cane as he walked.

FreedomWorks Foundation, a conservative organization led by former House of Representatives Majority Leader Dick Armey, organized several groups from across the country for what they billed as a “March on Washington.”

Organizers say they built on momentum from the April “tea party” demonstrations held nationwide to protest tax policies, along with growing resentment over the economic stimulus packages and bank bailouts.

Meanwhile, Comrade Obama, acting like the Alinski-Marxist-fascist he truely is   “kept up a steady weekend drumbeat of cheerleading for his health care plan in a campaign-style rally, on the radio and Internet, and on network television. He planned to continue the pace with more events designed to seize control of the health care debate following his address to Congress last week in which he urged Democrats and Republicans to come together.”