Obama Ignores Constitution (again)

Obama must have forgotten that he was elected President; he still thinks he is a senator and has the authority to write laws.

Mr. Obama will say that he will be working on exact legislative language in the next few days.

The Constitution is quite clear in Article 1, Section 1.

All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.

China Hiding It's Investment

WIth all of the concern about China selling government bonds and causing the dollar to collapse, this story caught my eye.

China, a top owner of US government debt, appears to be secretly buying bonds via third locations to hide its importance as a major creditor to Washington, experts told a congressional forum.

At first, this does not appear to make sense. Why would China be buying so many government bonds in secret. It is concerned, with good reason about the U.S. debt load. Greece is already demonstrating the dangers that will confront us if we do not change our ways within the next couple of years. So why would China want to buy bonds if there is a risk of the U.S. devaluing the currency?

Frank Wolf suggests that this was bad for U.S. security because we will become beholden to China. The poor old Wolf just doesn't get it. China is publicly selling bonds while buying in private (or at least attempting to). The net effect of this is that China looses influence because it is still unclear whether they actually hold the bonds; as long as they hold them in public, we know they have them and then they have real influence.

So what is the real reason? Well that is speculative, but I figure they are hiding for a reason - there is a strategy that they are employing. We have known for some time that China has been upset with our spending and they are uncomfortable holding our bonds. However, they realize that they are in a Catch-22; if people see them start selling bonds, everyone will realize the party is over and the bond market will tank overnight. I believe they are trying to exit the room quietly. The first sell the bonds publicly, which we no they started in a big way in December - but they buy them in hiding, thereby preventing the market from collapsing and giving investors a false sense of security that there are other buyers in the marketplace. Once they have sufficiently divested their public holdings, they can begin to liquidate private holdings without being so conspicuous. If successful, they would be able to sell many of their bonds before the market fully realized what was happening.

Yes, this is a concerning development, but for entirely different reasons that Rep. Wolf does not seem to understand.

Frank Wolf Promotes More Spending

First Rep. Frank Wolf (VA-10) bailed on the commission to cut deficit spending. Now, he is proposing to spend even more money on going to the moon. Perhaps Mr. Wolf has not realized that the country is broke. Roughly one-half of this year's federal spending will be done through borrowed money. Greece is demonstrating to us what happens when countries do not control their spending. We must stop this spending NOW!

Perhaps after 30 years in Congress, Frank Wolf has simply forgotten what living within a budget means. We need new representation as soon as possible. Vote the Virginia Incumbent Party out on June 8th!

Tyranny Moves Forward

While everyone is focused on healthcare, the Obama administration is in the process of stealing more of our freedom - this time our freedom to contract. The Obama administration is now trying to ban all foreclosures until they are vetted by the government's Home Affordable Modification Program.

The proposal, reviewed by lenders last week on a White House conference call, “prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed,” according to a Treasury Department document outlining the plan.

This may sound good to people who are in trouble with their mortgage payments, but let's step back from the brink and consider the implications of this move:

• The administration is clearly proposing a change to current law, yet it is not even considering going through Congress to enact this law. This is a clear violation of the Constitution, Article I, Section 1:

• All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.

• The administration plans to overrule contracts between banks and its customers; it has already done this with the GM bailout, but the continual rejection of contract law will destroy confidence in doing business within the country
• These actions will further allow and encourage the mortgage holders to stay in the homes while not making payments; while this may sound good, it will also have the effect of not allowing the banks to sell the homes to recover their losses. Without this extra money, the banks will not have the capital to lend to other borrowers - thus the economy will continue to slow
• The report already is suggesting that the mortgage default rate could roughly double this year. The result will in a massive backlog, which will result in horrendous delays for banks trying to recover their money
• The administration does not have the authority to allocate additional spending to hire additional workers (Article I, Section 8 only gives Congress the power to authorize expenditures) and even if additional workers were hired, our national debt is too high for us to afford them.
  

We desperately need to return to the Constitution.

One Step Closer to Collapse

The government said Tuesday that foreign demand for U.S. Treasury securities fell by the largest amount on record in December with China reducing its holdings by $34.2 billion... [All] foreign holdings of U.S. Treasury securities fell by $53 billion in December, surpassing the previous record of a $44.5 billion drop in April 2009.

This is a massive story, but so far, the press seems to be downplaying it. It is not yet being reported on WashingtonPost.com, FoxNews.com, cnn.com, etc.

The debt is projected to increase by over $2 trillion this year (i.e., deficit plus "other adjustments"), but foreigners are starting to abandon our currency. So where will we get the money to finance this debt? The article appears to be too busy blaming the Bush administration for the problem to even bother answering the question.

The trillion-dollar-plus deficit have been caused by a deep recession, which has reduced government tax receipts, and the massive spending that has been undertaken to jump-start the economy and stabilize the financial system.

Yes, the Republicans were irresponsible, but Obama says the recession is over and yet our deficit this year is projected to be even larger than last. The reality is that both the Republicans and Democrats are responsible for selling our children into financial slavery.

Determining who bought the debt required a separate research effort. According to CNBC, 80% of the new debt released in 2009 was purchased by the Federal Reserve. What does that mean? It means that we are effectively just printing money. This always leads to inflation. Of course, they keep saying that they are going to withdraw this "stimulus", but it does not take an expert to realize that any attempt to withdraw this support will result in an immediate recession, at best - yet the whole argument for taking action was to avoid a recession; so why bother?

A 40 year history of deficits has shown us the truth. The stimulus is never fully removed. For 40 years, we have had deficits (at least when you ignore Social Security surpluses that should be accounted for separately). The result is that people have stopped buying our debt because they do not think that we will repay the money. It is telling that our government has increasingly relied upon on shorter and shorter term treasuries. At the time, it was argued that this would save us interest payments, just like changing from a 30-year mortgage to a adjustable rate mortgage. The problem is that it also introduces the same risk - namely that when interest rates spike, the payments become too expensive and the borrower has to default. In other words, the U.S. is moving ever closer to complete financial collapse.

In the meantime, our politicians talk about freezing a small portion of our budget that was not projected to increase anyway - and play other political games. Frank Wolf (VA-10), had suggested the formation of a SAFE commission, but then bailed on the idea as soon as Obama endorsed the idea. It is clear that the current set of politicians will not change our path; we need new leaders.

Throw Them All Out

Predictably, Rachel Maddow points out the hypocrisy within the Republican Party. However, I thought this video provided a nice balance to my post yesterday about the hypocrisy from Obama and the Dems.

The bottom line is this: Virtually all of the incumbents are hypocrites and are more interested about protecting their jobs than they are about doing what is right or about being honest with the American people.

In a way, I even understand. Frank Wolf has been in office for 30 years. If he resigns, what would he do? Being the Representative gives him a level of fame and power, but most of all it is comfortable for him because he has been there for 30 years. Anyone who has held a job for that long is going to be somewhat fearful of the unknown and hesitant to change. I understand. But that does not mean his continual service is what is best for him or for our district. People may dislike change, but change is not necessarily a bad thing; we need new blood in Congress - people who are willing and able to lead.

If we do not change our ways, we will soon be in the same position that Greece is in, but we will not have a bigger organization to lean on to bail us out. If you look at the numbers below, you'll see that we are only about ten years behind Greece - assuming that we have a healthy economy over the next decade without any unforeseen complications. In practice, I suspect that we have less time than that.

Comparison of American and Greek Financial Conditions

Country	U.S.	Greece
Total Nat’l Debt (2009)	83.3%2	112.5%4
Projected Nat’l debt (2020)	106%2	237%4
Publicly Held Nat’l Debt	69.1%1	113.2%1
2009 Deficit	10.6%2	12.7%1
Total Societal Debt	242.2%1	243.8%1
Unemployment	10.0%2	10.6%3

¹ Barrons - http://online.barrons.com/article/SB126584181497144099.html?mod=BOL_hpp_dc
² President’s Budget - http://www.whitehouse.gov/omb/budget/fy2011/assets/tables.pdf
³ Reuters - http://www.reuters.com/article/idUSLDE61A1AD20100211
⁴ Absolute Return Letter - http://www.docstoc.com/docs/23992608/ARP

Voting the incumbent out does not mean voting the other party in. Vote the incumbent out in the primary, then you can have a fair election in the fall.

Obama/Dems Break More Promises: Patriot Act, Cell Phone Tracking, Taxes, Iran

In one day, Obama and the Democrats have reversed themselves on a number of issues (of course this hardly gets any media attention)

• When Bush was in office, the Democrats thought that the Patriot Act was a horrible bill; not only have they not made any effort to "fix" it, now they are trying to renew it.
• When Bush was in office, the Democrats were incensed about Bush's "warrant-less wiretapping," even though this was only don on international calls where any foreign government would be able to wiretap. Not only have they not stopped this practice, they now appear to have no problem with government agencies tracking your cell phone. The Obama administration has even argued that Americans enjoy no "reasonable expectation of privacy" in their whereabouts.
• During the campaign, Obama said he would not raise taxes on the middle class by "a single dime." Today, he declared that he is agnostic about raising taxes on households making less than $250,000.
• During the campaign, Obama complained that we were not doing enough to stop Iran from becoming a nuclear country. Today, Iran has now declared itself to be a nuclear country and Obama's response is to suggest that we need stiffer sanctions on a few Iranian guards.

And people wonder why we don't trust our politicians...