Tuesday, June 28, 2011

A Model for Failed Liberal Policies: Newark, NJ

Newark, New Jersey is in fight with Detroit, Michigan to be the worst city in the United States. Both cities face high unemployment, decaying infrastructures, corruption, and high crime. Newark, like Detroit, used to be a thriving city that was home to many industries. After all, Newark is only 10 miles from the United States’ largest port and economic strong point – New York City. At its peak, Newark had a population of nearly a half a million people. Today, the city has a little more than a quarter of a million residents with only one supermarket and movie theater.

What happened? The liberal interpretation of the Civil Rights Act (CRA) in 1964 was the start of the demise of the both Newark and Detroit. The progressive view of the CRA was to design social equality polices that overcompensated minorities for years of oppression. Unfortunately, this made minorities dependent on the federal government without any personal responsibilities and accountability. The federal government decided Newark was a good place to build massive housing projects. This led to an influx of minorities, especially Puerto Ricans and African Americans. This was the beginning of the overcompensated liberal social policies that made not only poor minorities, but poor whites dependent on the federal government for their daily existence. At the same time poor minorities moved into housing projects, whites and affluent minorities began to flee the city. This also meant that jobs left the city as small and large businesses fled Newark. This left the city with a shrinking tax base to support infrastructure, education, and other necessities. By 1967, Newark was in complete chaos. Riots that year killed 26 and resulted in massive infrastructure damages to homes and businesses that were torched. From this point, Newark was in a steady decline. Newark’s city government has been predominately run by liberal minorities over the past several decades. However, they too have failed their people because many city leaders became corrupt and did little to solve Newark’s crime, drug, infrastructure, educational, unemployment, and poverty issues.

It is ironic that the decline of Newark started at the same time as the passing of the Civil Rights Act that was supposed to improve living conditions for minorities. The result of the passing of the Civil Rights Act lead directly to social equality policies such as welfare, low income housing, food stamps, Medicaid, and other progressive entitlement programs including affirmative action and quotas that has doomed the city of Newark and its citizens. Are the minority citizens of Newark better off today than they were 40 years ago? Absolutely not! They are segregated in ghettos facing addictions, crime, a poor education, and wretched living conditions. Today, there are more people living in poverty, per capita, than 40 years ago in Newark. Face it; social programs led directly to individuals becoming less accountable and responsible for themselves and their families. Hence, the family unit as well as moral values has virtually disappeared.

Is there any hope for Newark? There may be some hope. Newark’s new mayor Cory Booker may be able to stop the decline. Booker’s first objective has been to reduce crime and he has had some success. Under Booker’s watch homicides are down 28% and shootings are down 46%, while overall crime is down 21%. Booker understands to attract new home owners and businesses; he must first make the city safe again. Booker and Newark have a long way to go, but it is a good start.

My Book: Is America Dying? (Amazon.com, Barnes and Noble)

Trade Deficit Model

Below are the results of running a linear regression model on various economic data (obtained from the Bureau of Economic Analysis [BEA] government site) from 1947 to the present solving for the U.S. trade deficit economic variable:

n 64

R2 0.98
Adjusted R2 0.98
SE 33.95

Term Coefficient 95% CI SE t statistic DF p
Intercept -227.5 -377.7 to -77.2 74.80 -3.04 50 0.0037
Population 0.9905 0.1843 to 1.7967 0.40138 2.47 50 0.0171
Unemployment 12.56 1.38 to 23.75 5.569 2.26 50 0.0285
Inflation 2.745 -0.866 to 6.355 1.7976 1.53 50 0.1331
GDP 0.1939 0.0017 to 0.3861 0.09570 2.03 50 0.0481
Debt 0.1539 0.0876 to 0.2201 0.03299 4.66 50 <0.0001
Tax Receipts 0.1222 -0.2344 to 0.4788 0.17755 0.69 50 0.4945
Gov Spending -0.1355 -0.5305 to 0.2596 0.19669 -0.69 50 0.4941
Budget 0.4444 0.0062 to 0.8826 0.21816 2.04 50 0.0469
Consumer Spending -1.338 -1.595 to -1.082 0.1278 -10.47 50 <0.0001
State Deficit -0.8165 -1.8917 to 0.2587 0.53530 -1.53 50 0.1335
State Social Payment 4.607 2.484 to 6.730 1.0572 4.36 50 <0.0001
Gov Social Benefits -1.488 -2.259 to -0.717 0.3838 -3.88 50 0.0003
Personal Income 0.6272 0.3585 to 0.8959 0.13378 4.69 50 <0.0001


The economic parameters used to model the U.S. trade deficit over the past 64 (n) years are: the U.S. population, the unemployment rate, the inflation rate, the U.S. Gross Domestic Product (GDP), federal government debt, federal government tax receipts, federal government spending, the federal government budget levels, consumer spending, state government deficits, state government spending on social benefits, federal government spending on social benefits, and personal income. The intercept value in the above table is not a parameter – it is the value of the U.S. trade deficit (in billions of dollars) if all other parameters equal zero. These economic parameters are denoted in the above table.

The R² statistic illustrates how closely the linear regression model resembles a straight line (the ideal condition). If R² equals one then the model is 100% linear and the parameters correlate 100%. On the other hand, if R² is equal to zero then there is no correlation and the data in the linear regression model is completely random. T statistics reveal which of the economic parameters has the best correlation to the parameter being tested (Trade Deficit in this case). The higher the absolute value of the t statistic, the better the correlation the corresponding economic parameter has to the tested variable (Trade Deficit in this case). If a coefficient value of an economic parameter is positive then it trends in the same direction of the tested variable (Trade Deficit in this case). If a coefficient value is negative then the corresponding variable trends in the opposite direction of the tested variable (Trade Deficit in this case). It is time to do some math to prove higher taxes and government spending cripple economies. What economic parameters have the biggest effect on the U.S. trade deficit?

Increased U.S. population, unemployment, inflation, GDP, federal debt, federal budget levels, state social payments, and personal income have negative effects on the trade deficit. Consumer spending and government social benefit payments have the biggest impact to lower our trade deficit. As people and the government spend less money on exports – the trade deficit will decline.

My Book: Is America Dying? (Amazon.com, Barnes and Noble)

Sunday, June 26, 2011

Obama's Weekly Lowlights (6/26/11)

Economy – The International Monetary Fund reduced its forecast for U.S. GDP growth to 2.5% for 2011 and only 2.7% for 2012.

Transparency – The White House continues to keep meetings with campaign contributors and Wall Street execs off the President’s daily schedule released to the Press.

Maryland – Authorities shut down a lemonade stand run by a few youths and fined them 500 dollars. Half the profits from the business were going to a pediatrics charity.

DOJ – Attorney General, Eric Holder, continues to advocate for civilian trials for suspected terrorists jailed at Guantanamo Bay.

HHS – Health and Human Services has announced it will stop issuing waivers to ObamaCare come September 22nd.

Libya – Reports are surfacing that Obama ignored his top legal aides when he decided to use military force in Libya.

White House Economic Policies – Obama’s Chief of Staff, William Daley, referred to Obama’s regulatory policies as “bureaucratic stuff that is hard to defend”.

Climate Change – The Sea Level Research Group at the University of Colorado has been adding (fudging) 0.3 millimeters per year to sea level calculations.

Taliban – Afghan President, Karzai, claims the U.S. is negotiating with the Taliban. If this is true, it is bad policy to negotiate with drug dealers and terrorists. In other news, the National Journal reports the Taliban is now using children as suicide bombers. Still, Obama will start to scale down the war effort in Afghanistan reducing troop levels by 10,000 this year and removing the troop surge level by September of next year.

Charity – Charitable contributions were back on the rise in 2010 to nearly 300 billion dollars. This is equal to about 2% of U.S. GDP or about 1000 dollars for every man, women, and child. Americans continue to be the most giving country in the world, even in tough times.

New Jersey – Union employees will have to pay higher fees for benefits.

Supreme Court – The high court ruled in favor of Wal-Mart in a sex discrimination suit, blocked a climate change lawsuit, and will not hear the ACORN funding case.

Keith Olbermann – He returned as a TV host last week on Current TV. The show is exactly same as the one he had on MSNBC.

Going Green – White House solar panels, which were promised to be installed by the President, still have not been completed in 9 months.

ObamaCare – A provision in the law would enable people earning more than 3 times the poverty rate to qualify for Medicaid. This could balloon Medicaid payrolls by tens of millions.

My Book: Is America Dying? (Amazon.com, Barnes and Noble)

Welfare (Part I)

Welfare is a social program that provides monies to poverty-stricken families who require assistance. It is another noble cause, but what do welfare policies actually accomplish to resolve poverty? Does it help improve education in impoverished areas so the poor have an opportunity to get out of poverty? Does it clean up inner cities to help influence corporations and small business to move into the area and generate jobs? The answer to these questions is no. The government pays monies to individuals that have no education and live in depressed areas where there is no prospect of work. Once again, if welfare were a temporary solution until the overall root cause of the problem was corrected, then it could be an acceptable social policy. Instead, the government continues to provide monies to one generation after another thinking the problem of poverty will correct itself. Is our government really helping people by supplying them a small sum of money to stay afloat? No. However, this never-ending social program is ideal for Democrats because it keeps minority and economically challenged individual votes in their back pocket. What if some of these social programs ended? How would Democrats be able to convince minorities and other economically challenged persons to continue to vote for them? It is advantageous for Democrats to keep minorities and the poor oppressed. Republicans are not doing anything to resolve the problem either. For the sake of an argument, let’s say an oppressed ghetto area was cleaned up and everyone in the area had jobs and a decent education through at least high school. Would there be any reason for this group of people to vote for a Democrat? Not necessarily under these new set of conditions. That is why Democrats and minority leaders want to keep minorities in poverty. Statistics indicate that African-Americans are more likely to side with Republicans as their education and wealth increases. That is correct. The more successful the African-American, the better the chance they will abandon the Democratic Party. It makes sense as they no longer want to be taxed to support social programs they do not need. Most of these African-Americans beat poverty, and know it can be done. So, many do not feel sorry for other African-Americans that are in poverty. I would not be the least bit surprised if minority leaders such as Al Sharpton and Jesse Jackson vote for Republicans. They generally do what is best for them, so this behavior would not surprise me in the least. Do not be fooled by Democrats and minority leaders that are always reminding the public that the separation between the rich and poor is growing as the amount of people living in poverty is increasing. This is true, but how does welfare solve the problem? It does not because it provides minorities a minimal amount of money that keeps them in poverty, and it does nothing to address the root cause of the problems that are keeping minorities oppressed and will continue to keep them oppressed for future generations.

One major problem with welfare is that monies are handed out, and nothing is expected in return. People do not need to find a job, help clean up the neighborhood, or even try to get a better education for themselves or their children. The government hands out money with no questions asked and receives absolutely nothing in return. The government does not even have a mandate on how the money is spent. It can be used to feed an alcohol or drug addiction while ignoring their children’s needs. In order to improve a neighborhood or a person’s education, those individuals need to want the same thing. Why not hand out government money to individuals when improvements are made to the area or the individual? In other words, set individual and community goals and dispense money for meeting them. Our nation is so polarized on these issues. Furthermore, being a white person like myself, I cannot make these suggestions publicly, as I would be deemed a racist or bigot.

My Book: Is America Dying? (Barnes and Noble, Amazon.com)

Thursday, June 23, 2011

The Afghan Blunder

There are some issues that cannot be politicized, and war is one of them. The consequences are just too dire because it puts our brave men and women in harm’s way. But Obama’s recent decision to withdraw the 33,000 troop surge, which he ordered just 18 months prior to this decision, is strictly a political decision. In my mind, Obama had one of two decisions he could have made about the war in Afghanistan. One, he could have opted to add as many troops as necessary to win the war (remember, he did not give the generals the number of troops they requested for the surge initially) or two, he could admit defeat and completely withdraw all troops. To be honest, I would have been okay with either decision for a number of reasons. Let’s face facts; Afghanistan is an extremely difficult place to win a war, especially without 100% support from our President and Congress. Afghanistan’s terrain is tough; the enemy blends in with civilians; it has a corrupt government; our enemies and allies are supporting the terrorists; it is a drug haven; and so many other reasons makes Afghanistan a tough place to wage a war.

Obama’s troop reduction decision is once again the use of half measures and not a full commitment to the conflict. This will ultimately not only lead to defeat, but the useless loss of American life. There is no doubt the Obama decision to scale back forces needlessly puts more Americans in harm’s way, not less. Let’s all understand the potential consequences of Obama’s decision to scale back forces because it comes during the “fighting season” (when it is warm), he is ignoring the advice of his generals, and less troops means less forces to protect each other.

The bottom line is we all know the true motive behind Obama’s decision. First, he is trying to please both the right and left at the same time (typical Obama - sitting on the fence). Secondly, his decision to end the surge by September 2012 is conveniently two months before the 2012 election (the time when campaigns and debates are in overdrive). In other words, Obama believes this is his best hope to win reelection. Thus, his decision to scale back the surge in Afghanistan is solely to help his prospects of being reelected. Make no bones about it; the Obama decision in Afghanistan is purely political and our brave men and women will have to pay for his selfish decision.

I am a true believer in Laissez Faire politics - meaning to stay out of foreign disputes unless it directly affects the safety of Americans. Our leaders felt the terroristic threats from Afghanistan were a direct threat to our national security. If that is true, then we should finish the effort since I doubt the threat to our national security has improved over the course of the war. Individuals, companies, and our government should not start a project or task without fully intending to meet the goals and objectives. We should not start something without fully intending to finish it. Obama started the surge strategy then he should have the conviction to see that strategy to its conclusion. It is that simple. After all, if the goal was to rid Afghanistan of terrorists 10 years ago, then that should be the goal today. Obama has once again showed his true colors as being an extremely weak leader who is more interested with his political career than doing what is right and necessary – regardless of the political backlash. If Bush succumbed to politic pressure then we would have lost in Iraq. But Bush had the fortitude to win when everyone else wanted to retreat and claim defeat. That is leadership, doing what is right even if it means committing political suicide.

Federal Government Budget Model

Below are the results of running a linear regression model on various economic data (obtained from the Bureau of Economic Analysis [BEA] government site) from 1947 to the present solving for the U.S. federal government budget economic variable:

n 64

R2 1.00
Adjusted R2 1.00
SE 21.1

Term Coefficient 95% CI SE t statistic DF p
Intercept -4.498 -106.370 to 97.375 50.7193 -0.09 50 0.9297
Population 0.06869 -0.46284 to 0.60022 0.264634 0.26 50 0.7963
Unemployment -1.457 -8.760 to 5.845 3.6357 -0.40 50 0.6903
Inflation -0.1558 -2.4562 to 2.1447 1.14532 -0.14 50 0.8924
GDP -0.02328 -0.14766 to 0.10109 0.061921 -0.38 50 0.7085
Debt -0.001651 -0.051092 to 0.047789 0.0246149 -0.07 50 0.9468
Tax Receipts -0.4659 -0.6457 to -0.2862 0.08948 -5.21 50 <0.0001
Gov Spending 0.6586 0.4970 to 0.8203 0.08049 8.18 50 <0.0001
Trade Deficit 0.1724 0.0024 to 0.3425 0.08465 2.04 50 0.0469
Consumer Spending 0.2863 0.0124 to 0.5603 0.13639 2.10 50 0.0408
State Deficit 1.382 0.821 to 1.944 0.2796 4.94 50 <0.0001
State Social Payment -2.45 -3.84 to -1.06 0.692 -3.54 50 0.0009
Gov Social Benefits 0.5422 0.0167 to 1.0677 0.26165 2.07 50 0.0434
Personal Income -0.02417 -0.22488 to 0.17654 0.099928 -0.24 50 0.8099


The economic parameters used to model Government Budget levels over the past 64 (n) years are: the U.S. population, the unemployment rate, the inflation rate, the U.S. Gross Domestic Product (GDP), federal government debt, federal government tax receipts, federal government spending, the trade deficit, consumer spending, state government deficits, state government spending on social benefits, federal government spending on social benefits, and personal income. The intercept value in the above table is not a parameter – it is the value of the Government Budget (in billions of dollars) if all other parameters equal zero. These economic parameters are denoted in the above table.

The R² statistic illustrates how closely the linear regression model resembles a straight line (the ideal condition). If R² equals one then the model is 100% linear and the parameters correlate 100%. On the other hand, if R² is equal to zero then there is no correlation and the data in the linear regression model is completely random. T statistics reveal which of the economic parameters has the best correlation to the parameter being tested (Government Budget in this case). The higher the absolute value of the t statistic, the better the correlation the corresponding economic parameter has to the tested variable (Government Budget in this case). If a coefficient value of an economic parameter is positive then it trends in the same direction of the tested variable (Government Budget in this case). If a coefficient value is negative then the corresponding variable trends in the opposite direction of the tested variable (Government Budget in this case). It is time to do some math to prove higher taxes and government spending cripple economies. What economic parameters have the biggest effect on the U.S. federal government budget?

Not surprisingly, government spending, state deficits, government social benefits, the trade deficit, and consumer spending have the biggest impact on the budget size. The only thing that will significantly lower the federal budget size is if states increase their share of social payments. If tax receipts go up, the government can also control the federal budget from going further into debt.

Obama's Weekly Lowlights (6/23/11)

The Economy – Obama gave a speech in North Carolina this past week where he says he stabilized the economy and added 2 million jobs, but he is still not satisfied. I hope not, unemployment is over 9% and the true rate is probably closer to 15%. In even more disturbing news, Obama held his first briefing with his economic team in over 50 days.

FEMA – Homes destroyed by the Alabama tornados have been deemed safe to live in by FEMA.

Puerto Rico – Obama visited the U.S. territory as yet another political stunt to attract Latino voters. Obama should be worried about the economy and not campaigning. After all, turning around the economy is the only acceptable way to win over voters.

Ethanol – The Senate voted to cut an ethanol subsidy credit.

United Nations – A U.N. report suggests that internet access is a human right.

Libya – House Speaker, John Boehner, has warned the president that he is in violation of the War Powers Resolution if he does not let Congress vote on our military involvement. In fact, 10 house members have a filed a suit against the President for violating the Constitution by going to war without congressional consent. The Obama White House has responded with a letter outlining why they feel they did not violate the War Powers Resolution.

Wisconsin – The state’s Supreme Court has upheld the new state law limiting the collective bargaining power of unions. This ruling reverses a decision made by a lower court that stopped the implementation of the state law.

Housing Market – The current decline in housing prices has reached 33% over the past 5 years. This decline is greater than the 31% decline of the Great Depression.

Operation Fast and Furious – This Obama White House operation is being investigated by the Congressional Oversight committee for the illegal trafficking of thousands of weapons to Mexico, which were used to kill hundreds of people. So far, all of the witnesses are denying who authorized this deadly program.

ATM Machines – Obama used ATM machines as an example of how technology is replacing jobs in the economy as to why the unemployment rate is so high. I agree that technology can replace workers, this has been going on since the industrial revolution, but this has to the worst example to make his point.

Bundlers – Bundlers are people who contribute 50 thousand or more dollars to political campaigns. As it turns out, over 50% of those that contributed 50 thousand dollars or more to Obama’s campaign received jobs in his administration. This is about 4 times higher than the Bush administration.

Google – They are denying giving the Obama campaign special favors such as access to new advertisement programs.

Greece – The country will need a second bailout and as the government is forced to cut social programs citizens are back on the streets protesting.

Extreme Islam – This past week, Lance Corporal Marine reservist Yonathan Melaku was arrested at the Pentagon for a suspicious vehicle left at the site. Melaku had a notebook filled with al-Qaida and Taliban references.

Sunday, June 19, 2011

Federal Government Spending Model

Below are the results of running a linear regression model on various economic data (obtained from the Bureau of Economic Analysis [BEA] government site) from 1947 to the present solving for the U.S. federal government spending economic variable:

n 64

R2 1.00
Adjusted R2 1.00
SE 24.29

Term Coefficient 95% CI SE t statistic DF p
Intercept -61.46 -177.20 to 54.27 57.620 -1.07 50 0.2912
Population 0.05713 -0.55371 to 0.66796 0.304115 0.19 50 0.8518
Unemployment 6.904 -1.266 to 15.075 4.0679 1.70 50 0.0959
Inflation 0.537 -2.102 to 3.176 1.3138 0.41 50 0.6845
GDP 0.1874 0.0546 to 0.3202 0.06612 2.83 50 0.0066
Debt 0.04197 -0.01357 to 0.09751 0.027650 1.52 50 0.1353
Tax Receipts 0.4687 0.2496 to 0.6878 0.10910 4.30 50 <0.0001
Trade Deficit -0.06938 -0.27169 to 0.13294 0.100727 -0.69 50 0.4941
Consumer Spending -0.11 -0.44 to 0.22 0.163 -0.68 50 0.5020
State Deficit -1.749 -2.360 to -1.139 0.3039 -5.76 50 <0.0001
State Social Payment -0.1523 -1.9367 to 1.6321 0.88841 -0.17 50 0.8646
Gov Social Benefits 0.1649 -0.4625 to 0.7923 0.31236 0.53 50 0.5999
Personal Income -0.1914 -0.4156 to 0.0328 0.11163 -1.71 50 0.0927
Budget 0.8692 0.6559 to 1.0826 0.10623 8.18 50 <0.0001


The economic parameters used to model Government Spending over the past 64 (n) years are: the U.S. population, the unemployment rate, the inflation rate, the U.S. Gross Domestic Product (GDP), federal government debt, federal government tax receipts, the federal government budget size, the trade deficit, consumer spending, state government deficits, state government spending on social benefits, federal government spending on social benefits, and personal income. The intercept value in the above table is not a parameter – it is the value of the Government Spending (in billions of dollars) if all other parameters equal zero. These economic parameters are denoted in the above table.

The R² statistic illustrates how closely the linear regression model resembles a straight line (the ideal condition). If R² equals one then the model is 100% linear and the parameters correlate 100%. On the other hand, if R² is equal to zero then there is no correlation and the data in the linear regression model is completely random. T statistics reveal which of the economic parameters has the best correlation to the parameter being tested (Government Spending in this case). The higher the absolute value of the t statistic, the better the correlation the corresponding economic parameter has to the tested variable (Government Spending in this case). If a coefficient value of an economic parameter is positive then it trends in the same direction of the tested variable (Government Spending in this case). If a coefficient value is negative then the corresponding variable trends in the opposite direction of the tested variable (Government Spending in this case). It is time to do some math to prove higher taxes and government spending cripple economies. What economic parameters have the biggest effect on U.S. federal government spending?

Tax Receipts! The more money the federal government receives the more money it squanders. Other factors such as increased GDP, federal debt, the federal budget, and unemployment play a big role in increased government spending. The only thing that significantly lowers federal government spending is if state governments’ are running higher deficits (spending more) and if personal income drops.

My Book: Is America Dying? (Amazon.com, Barnes and Noble)

Saturday, June 18, 2011

Obama's Weekly Lowlights (6/18/11)

ObamaCare – A study by McKinsley Quarterly estimates that 1 in 3 businesses will drop healthcare coverage for their employees for two reasons. First, it will be too costly and secondly, it will cost them a lot less to pay the fine than cover their employees.

GM – CEO Dan Akerson wants the federal government to raise the tax on gas by 50 cents to 1 dollar a gallon so it forces consumers to purchase their expensive hybrid vehicles.

TSA – The house voted to cut 270 million dollars from the TSA budget, which obviously did not go over well with Democrats and union leaders.

Delta Airlines – They welcomed home a group of military personnel, who flew on their airline, with a 2,800 dollar bill for their luggage.

Limos – Apparently the White House fleet of limos has increased by nearly 100% under Obama. This is our hard earned tax dollars at work.

The Economy – More dismal news, first time unemployment claims jumped again this past week.

EPA – Cutting carbon emissions is not enough. The EPA is set to pass laws for corporations to cut sulfur dioxide and nitrogen oxide emissions. The EPA agues this will save the U.S. billions of dollars in medical costs, but economists also reveal it will cost the U.S. thousands of jobs in the coal business alone. Besides, the EPA should not have the authority to enact laws, under the Constitution, only Congress can enact such laws.

Wisconsin – Union workers picketed Governor Scott Walker’s new anti-collective bargaining law at the states Special Olympics. I have said this many times, it is hard to defend a cause when a group of people try to gain political points by disrespecting other groups of people, especially groups of people that are mutually exclusive from the cause.

Alabama – They are the latest state to sign a bill into a law similar to Arizona’s SB 1070 illegal immigration law. The ACLU is already planning on challenging the law.

Libya – The Financial Times is reporting that the U.S. cost for the conflict is already 274 million over budget.

Bill Clinton – The former President urged Anthony Weiner to resign. This is liberal hypocrisy at its best.

Palin – The liberal press hired volunteers to filter through some 25 thousand emails she sent as governor. Some Politico headlines about the emails indicate she distrusted the media, joked with President Bush, and overall found no bombshells.

The Olympic Torch – This is the latest issue to come under attack by environmentalists who claim the Olympic Torch for the 2012 games in London is not eco-friendly.

Anthony Weiner – The embattled Democrat would have been allowed to earn his salary while he is in sex rehab. Thankfully, he finally resigned.

My Book: Is America Dying? (Amazon.com, Barnes and Noble)

Friday, June 17, 2011

The Political Double Standard

In the wake of the Anthony Weiner sexting scandal, many liberals are on record stating: Since progressives do not hold family values as a top priority (as conservatives do), it is okay for Weiner to 1) exhibit questionable behavior and 2) to keep his job. I think this is a bunch of nonsense for numerous reasons – even if Weiner did not break the law. If Weiner’s own family can no longer trust him, then why should his constituents. Weiner lied, and once he did that – his reputation has been tainted and he cannot be trusted (Thus, he did the right thing by resigning). And, in my opinion, family values may be the biggest problem facing our nation. Study after study indicates that children who come from a strong family unit are more likely to succeed. For this reason, political leaders need to lead by example. However, if liberals want to play this game of “double standards” and insist that Republicans who violate their own moral values should step down, then why aren’t Democrats held to the same standard when they violate their own moral and ethical values?

For instance, Democratic moral values (as they claim) are to protect the poor and the environment. So why aren’t Democrats held to the same double standards as Republicans when dealing with these issues? Democrats may push legislation and laws, which they feel will protect the environment and help the poor, but do they live up to the same set of standards? Of course not! Progressives want the wealthy to pay more in taxes, but they are less likely to give their hard earned money to charities. After all, nobody is stopping our wealthy liberal politicians from giving more to charities or even to pay a higher sum in taxes (they do not have to claim all their deductions). When Democrats passed ObamaCare to provide health insurance to all poor Americans, they also voted against having to purchase the same healthcare policies that they are forcing on the masses. Aren’t these moral and ethical violations of the liberal ideology? Liberals expect their next door neighbors to do their job in cutting carbon emissions; meanwhile they are splurging on energy. Let’s evaluate the Al Gore double standard. Gore travels on his own plane and his mansion home can be seen illuminating energy from satellite images. But liberals proclaim this is okay because Al Gore buys carbon offsets. So it is acceptable for Al Gore to be a hypocrite because he happens to be wealthy enough to offset his wasteful polluting ways? Let’s say for argument that Gore is successful at offsetting his carbon emissions by purchasing offsets. But what about other pollutants, such as nitrogen oxide or sulfur dioxide, aren’t these emissions dangerous to our environment as well? These pollutants are just as dangerous and our liberal EPA is writing laws to limit the emission of these particles. Therefore, it begs to reason that Gore’s actions are a violation of the progressive moral view of protecting the environment. But the media and ignorant liberals are not going to hold him accountable the same way they will hold (and rightfully so) Governor Mark Sanford or Senator Larry Craig for their morally hypocritical and lewd behavior. Why is it morally okay for the President to keep his office at 80 degrees when he tells the rest of us to conserve energy? Why is it okay for government office buildings in Washington to cost the taxpayers tens of millions of dollars monthly on electric bills? Why is it okay for Pelosi to fly a private jet back and forth between DC and her home in California? It’s because they are not held to the same moral double standards as conservatives. After all, they are certainly not practicing what they preach.

The fact of the matter is liberals expect others to contribute to their moral and ethical ideology, and if people disagree with their ideology then they must be forced to conform through higher taxes and environmental laws and regulations. At the same time, these same progressive politicians fail to live up to their moral obligations time and time again. So the next time a Democrat politician is demonizing a conservative colleague for violating his family value core beliefs, consider if this same liberal politician has violated their own moral values of protecting the poor and the planet. People who are in positions of authority are the first group of individuals that feel they are entitled to break their own set of moral and ethical values. That is the bottom line and both parties are guilty of this practice.

My Book: Is America Dying? (Amazon.com, Barnes and Noble)

Minority Leadership (Part VII)

Another race issue that many take exception to is the double standard mentioned in the previous blog post on this subject. This is also the result of poor minority leadership. Why is it acceptable for blacks to treat women with disgrace, use racial slurs towards each other, and promote hip hop and rap music that advertises violence and bad behavior? But when Don Imus says a racially insensitive remark, he is a bigot. Why does it matter if the inflammatory comment comes from a white person or a black person? To treat your own race with disrespect, but expect others to treat your race with respect is simply the viewpoint of a hypocrite. If African-Americans do not want others to say derogatory comments, they should not say them. It is as simple as that. It goes with the motto of treating others the way you expect to be treated. If racial barriers are going to be eliminated, then African-Americans and their leaders need to influence their communities to stop all inappropriate behavior. If the behavior is wrong and insensitive, it needs to be wrong for everyone. Listening to music that supports violence, racial slurs, and bad behavior towards women and then say it is not right for other races to use the same language and behavior is not acceptable. If African-Americans really want to break down the race barrier, they cannot be hypocritical about the issue. In fact, minorities should be setting the example of how they want to be treated.

I truly believe the anger portrayed by black leaders such as Al Sharpton, Jesse Jackson, and even those by pastors such a Reverend Wright is real. I certainly do not know what it is like to be brought up black, but I do understand what it is like to have a lot of anger. I am sure these leaders have every right to be angry because they have witnessed countless terrible acts of racism and bigotry. However, nothing good will ever be accomplished by passing their anger on to their followers. And certainly nothing good will come from passing conspiracy theories and racism on to their followers. This only creates more racial friction, by instilling into their followers the same racism these leaders want to stop. A true civil rights leader is not a hypocrite and is peaceful with their protests. This is the style that Martin Luther King followed. Although, in his latter years of leading the civil rights movement, King’s anger and frustration could be apparent in some of his speeches. It is certainly understandable. I am sure he felt the inroad he was making was miniscule when compared to the effort he had put forth. No doubt, any minority leader is probably frustrated and angered with the lack of progress on racial divides. Although they have every right to be angry, nothing will be accomplished by passing anger on to their followers. It will only deter progress. There is never a good reason to take out one’s emotions such as anger on innocent people. I am certainly not insulted or offended by any actions of these minority leaders. However, I do believe they are going about solving one of society’s toughest issues in the wrong matter, and their efforts have only made the race situation in this country worse. This is certainly not to say that any white leaders have done any better to solve this issue. White leaders are complicit in not being able to resolve racial tensions.

As mentioned earlier, most people consider me a pessimist, and maybe that is true to a certain extent. And maybe that is why my outlook on the race issue is a very bleak one. Although I feel those that are prejudice is a very small number, the media and civil rights leaders continue to cover race issues as if all Americans are bigots and racists. This fanatical coverage of race only adds unnecessary fuel onto an already hot topic.

My Book: Is America Dying? (Barnes and Noble, Amazon.com)

Federal Tax Receipts Model

Below are the results of running a linear regression model on various economic data (obtained from the Bureau of Economic Analysis [BEA] government site) from 1947 to the present solving for the U.S. federal government Tax Receipts economic variable:

n 64

R2 1.00
Adjusted R2 1.00
SE 26.91

Term Coefficient 95% CI SE t statistic DF p
Intercept -16.14 -145.72 to 113.43 64.513 -0.25 50 0.8034
Population -0.03525 -0.71208 to 0.64159 0.336976 -0.10 50 0.9171
Unemployment -1.122 -10.425 to 8.181 4.6316 -0.24 50 0.8095
Inflation 1.511 -1.386 to 4.407 1.4421 1.05 50 0.2998
GDP -0.03242 -0.19065 to 0.12582 0.078782 -0.41 50 0.6825
Debt 0.03006 -0.03228 to 0.09240 0.031038 0.97 50 0.3374
Gov Spending 0.5752 0.3063 to 0.8441 0.13389 4.30 50 <0.0001
Budget -0.7547 -1.0457 to -0.4636 0.14492 -5.21 50 <0.0001
Trade Deficit 0.07679 -0.14733 to 0.30092 0.111584 0.69 50 0.4945
Consumer Spending 0.008488 -0.355196 to 0.372171 0.1810668 0.05 50 0.9628
State Social Payment 0.2803 -1.6954 to 2.2560 0.98365 0.28 50 0.7768
Gov Social Benefits -0.776 -1.437 to -0.115 0.3292 -2.36 50 0.0224
Personal Income 0.442 0.219 to 0.665 0.1108 3.99 50 0.0002
State Deficit 2.557 2.075 to 3.039 0.2402 10.65 50 <0.0001


The economic parameters used to model Tax Receipts over the past 64 (n) years are: the U.S. population, the unemployment rate, the inflation rate, the U.S. Gross Domestic Product (GDP), federal government debt, federal government spending, the federal government budget size, the trade deficit, consumer spending, state government deficits, state government spending on social benefits, federal government spending on social benefits, and personal income. The intercept value in the above table is not a parameter – it is the value of Tax Receipts (in billions of dollars) if all other parameters equal zero. These economic parameters are denoted in the above table.

The R² statistic illustrates how closely the linear regression model resembles a straight line (the ideal condition). If R² equals one then the model is 100% linear and the parameters correlate 100%. On the other hand, if R² is equal to zero then there is no correlation and the data in the linear regression model is completely random. T statistics reveal which of the economic parameters has the best correlation to the parameter being tested (Tax Receipts in this case). The higher the absolute value of the t statistic, the better the correlation the corresponding economic parameter has to the tested variable (Tax Receipts in this case). If a coefficient value of an economic parameter is positive then it trends in the same direction of the tested variable (Tax Receipts in this case). If a coefficient value is negative then the corresponding variable trends in the opposite direction of the tested variable (Tax Receipts in this case). It is time to do some math to prove higher taxes and government spending cripple economies. What economic parameters have the biggest effect on U.S. federal government Tax Receipts?

As personal income, federal government spending, and state government debt increase so does the amount of tax receipts received by the federal government. This, once again, proves the federal government will spend more if it receives more revenue. The federal deficit continues to increase even as the government receives more tax revenue. Interestingly, the only thing that will help reduce federal government tax revenues is to reduce the budget, and in particular, government social benefit spending. Our current government is following the opposite strategy.

My Book: Is America Dying? (Amazon.com, Barnes and Noble)

Monday, June 13, 2011

Obama's Weekly Lowlights (6/13/11)

Vivian Schiller – The former NPR CEO, who unjustly fired Juan Williams, has ended up at NBC – No surprise here.

Illegal Aliens – A Houston police officer, Kevin Will, was killed by an illegal alien gang member.
Yemen – Yemen’s president has stepped down after massive protests. The country is the latest to face Arab Spring protests.
Egypt - "Amid the upheavals in Egypt since January, reports have begun to emerge of a surge in disappearances of Christian Coptic girls," the Australian reports.
Debt Ceiling - If lawmakers cannot come to an agreement on the debt ceiling by mid-July, Moody's warns it may downgrade the United States' credit rating.
Hollywood - Hollywood executives have been caught on tape admitting to promoting a liberal bias in the media.
China - The Wall Street Journal reports some troubling news about China. "Google Inc. said Chinese hackers targeted the email accounts of senior U.S. officials and hundreds of other prominent people in a fresh computer attack."

Mandates and Regulation – If you do not like mandates, one report states the obvious: the way to avoid them is to earn less money. This is the new American way.

Peace Activists – Three liberal peace activists were arrested for feeding 40 homeless people in an Orlando Park without a permit. It is ironic when our liberal laws start preventing liberals from participating in their own causes.

The Party of “No” – That would be the Democrats – No plan on how to eliminate debt; no plan for releasing a budget; and no plan on how to create jobs (since the failed stimulus).

The Economy – Obama is now on record for blaming the Japan earthquake, local natural disasters, gas prices, and the European economy for the slow recovery in the U.S. I can only imagine if Bush blamed things like Katrina and gas prices for the recession and how that would have gone over with the media.

Debbie Wasserman-Schultz – The head of the DNC has been busy inserting her foot in her mouth – the latest rant suggests the GOP is dragging the U.S. back to the Jim Crowe era. I just do not understand the continual race analogies set forth by Democrats.

Dan Boren – The Oklahoma Democrat is going to retire and the GOP should win this seat in 2012.

Austan Goolsbee – Obama’s chief economic advisor is calling it quits after failing to turn the recession into a recovery.

My Book: Is America Dying? (Amazon.com, Barnes and Noble)

Sunday, June 12, 2011

Federal Debt Model

Below are the results of running a linear regression model on various economic data (obtained from the Bureau of Economic Analysis [BEA] government site) from 1947 to the present solving for the U.S. federal government Debt economic parameter:

n 64

R2 1.00
Adjusted R2 1.00
SE 121.5

Term Coefficient 95% CI SE t statistic DF p
Intercept 1376 941 to 1812 216.9 6.35 50 <0.0001
Population -3.83 -6.69 to -0.97 1.422 -2.69 50 0.0096
Unemployment -100.6 -131.4 to -69.8 15.33 -6.56 50 <0.0001
Inflation -26.64 -37.48 to -15.81 5.396 -4.94 50 <0.0001
GDP -0.7892 -1.4687 to -0.1097 0.33831 -2.33 50 0.0237
Tax Receipts 0.6127 -0.6578 to 1.8831 0.63251 0.97 50 0.3374
Gov Spending 1.05 -0.34 to 2.44 0.691 1.52 50 0.1353
Budget -0.0545 -1.6863 to 1.5773 0.81244 -0.07 50 0.9468
Trade Deficit 1.971 1.122 to 2.819 0.4225 4.66 50 <0.0001
Consumer Spending 1.742 0.176 to 3.307 0.7794 2.23 50 0.0300
State Deficit 2.745 -1.113 to 6.603 1.9209 1.43 50 0.1593
State Social Payment -0.6712 -9.5954 to 8.2530 4.44307 -0.15 50 0.8805
Gov Social Benefits 5.672 2.969 to 8.374 1.3455 4.22 50 0.0001
Personal Income -0.9377 -2.0603 to 0.1849 0.55891 -1.68 50 0.0996


The economic parameters used to model Debt over the past 64 (n) years are: the U.S. population, the unemployment rate, the inflation rate, the U.S. Gross Domestic Product (GDP), federal government tax receipts, federal government spending, the federal government budget size, the trade deficit, consumer spending, state government deficits, state government spending on social benefits, federal government spending on social benefits, and personal income. The intercept value in the above table is not a parameter – it is the value of the Debt (in billions of dollars) if all other parameters equal zero. These economic parameters are denoted in the above table.

The R² statistic illustrates how closely the linear regression model resembles a straight line (the ideal condition). If R² equals one then the model is 100% linear and the parameters correlate 100%. On the other hand, if R² is equal to zero then there is no correlation and the data in the linear regression model is completely random. T statistics reveal which of the economic parameters has the best correlation to the parameter being tested (Debt in this case). The higher the absolute value of the t statistic, the better the correlation the corresponding economic parameter has to the tested variable (Debt in this case). If a coefficient value of an economic parameter is positive then it trends in the same direction of the tested variable (Debt in this case). If a coefficient value is negative then the corresponding variable trends in the opposite direction of the tested variable (Debt in this case). It is time to do some math to prove higher taxes and government spending cripple economies. What economic parameters have the biggest effect on the U.S. federal government Debt?

The trade deficit has the biggest negative impact on our debt (importing oil) as does both federal and state government spending (in particular spending on government social benefits). Increased inflation and GDP can drive the federal government debt lower. The odd statistic is that increased unemployment tends to lower debt and increased tax receipts raise the debt. Actually, this is not that odd since the federal government tends to spend money than it receives regardless as to whether or not they raise more tax revenue. Thus, the federal debt continues to go up even when consumer spending is high.

My Book: Is America Dying? (Amazon.com, Barnes and Noble)

Saturday, June 11, 2011

A Debate with Liberals over Taxes, Spending, and the Debt

When one of my old high school buddies posted (Facebook) his liberal philosophy to increase the taxes on the wealthy, I felt compelled to intervene with the results of my model (posted over the last several days). My model says that by increasing the taxes on the wealthy from 35 to 39.6%, it will result in 200 billion dollars more in federal tax revenue, but 700 billion dollars less in consumer spending, and the federal deficit will continue to increase. In other words, taxing the wealthy and obtaining more tax revenue does not help the federal deficit and it could cost millions of jobs by slowing consumer spending. Here were some arguments from my liberal friends about my model results.

First, they accused my model of being inaccurate because it incorporated my conservative biases. I assured them that all the data in the model was from government sites such as the census bureau and the bureau of economic analysis. I told them I will not only post the entire model, but I will post the calculations – this is something that other pundits refuse to do. I explained that I have nothing hide. I have no agenda because I am not paid for my work.

They next claimed that my model did not represent the real world. However, they indicated their judgment on the subject was a real world analysis. This argument had me dumbfounded because if 20+ years of historical data is not real, I do not know what is real. History is real, judgment is fiction. I would have liked to have gone back further on my model data, but the availability for some data variables was nonexistent.

They were skeptical about my model, which they should be. They did not think I used enough variables. I explained a good model does not necessarily correlate to the number of variables used. I also asked if they were just as skeptical of models used by climate scientist whose results show global warming is happening (another liberal philosophy they adhere to). To this I got no response. They also seemed to be skeptical about my background and my qualification on the subject of economic analysis and creating an accurate mathematical model. I provided them with my background, but off course they provided no background on their qualifications to argue the opposing point of view on this subject.

One argued that they heard on the radio, from an unknown pundit, that tax relief for the rich does not result in more consumer spending, but it results in more consumer savings. I had to explain that even money saved in banks, mutual funds, and stocks, can trickle down. It allows banks to loan more money and for healthy companies to buy more goods and services and even buyout other struggling companies. At this point, I was warned that my tone and word choice was offensive. I apologized because that was certainly not my intention. But still I got no answer to my questions.

I was called unreasonable because I called their left wing sources (the NY Times, NPR, Huffington Post, MSNBC, etc.) drivel, but I explained I do not use right wing sources (Fox News, the Weekly Standard etc.) either in my reasoning. But I am the unreasonable one. In the debate, for some reason, Beck was called evil, but one idea they brought up was from Alan Grayson. So, let me get this straight, I was offensive, Beck is offensive, but they brought up philosophies from the least civil congressman in the past several decades.

Their opinions and judgment were obviously formulated from what they read and watched. They had no unique ideas of their own. They had the philosophy that all writings and models that agreed with their positions were right and the converse point of view was false. I never gave them my view on taxes, but they assumed I was for giving the wealthy tax breaks. In fact, I believe in a fair tax and giving everyone tax relief. I never said my model was right, I merely asked that they be as vigilant when evaluating all models, even those that agree with their philosophy. After all, as I explained further, that although my views on many conservative issues are the same as Limbaugh, Hannity, and Beck – but how we got to the same conclusion is vastly different. And more times than not I disagree with the path they have taken to draw the same conclusions.

My Book: Is America Dying? (Amazon.com, Barnes and Noble)

Minority Leadership (Part VI)

African-Americans should listen to other leaders like Colin Powell, Bill Cosby, Clarence Thomas, Juan Williams, Oprah Winfrey, Star Parker, Charles Barkley, and even Marion Jones. Although I disagree with almost all of his policies, Barack Obama has said the right things about race. Cosby, Parker, and Williams have been adamant in their message to fellow black citizens about using the “race card”. Williams has authored a good book on the subject entitled Enough that condemns the use of the “race card”. These authors continue their fight despite being labeled as “Uncle Toms”. They not only speak against using the “race card”, they urge blacks, especially males, to be more responsible. They want to decrease the extremely high percentage of poverty stricken black children being raised only by their mothers because their fathers abandon them. A father figure is critical because it builds a better environment for families and their kids to succeed. This may be the single most important issue that is being preached by Bill Cosby, Star Parker, and Juan Williams. They believe a father figure is essential for young minority children to succeed. In the family, the father is the disciplinarian and helps make sure their kids stay out of trouble and excel in schools. Statistics indicate that any children, regardless of race, have a better chance of being successful if they are brought up with correct family values. This is especially true with African-American families. Those agreeing with Cosby, Parker, and Williams will have Jackson, Shartpton, and other black leaders calling them a racist. This is sad. Cosby, Parker, and Williams’ intentions are to make the world colorblind. Jesse Jackson has multiple children from affairs held outside of his marriage. Hence, he is essentially the worst role model for African-Americans to follow for parenting and family values. Star Parker grew up in poverty and was addicted to drugs before turning her life around. She not only talks about the importance of the family, but speaks of dismantling entitlement programs such as welfare. Clarence Thomas has been a Supreme Court Justice for sixteen years, and Jackson and Sharpton have routinely criticized him for not supporting the civil rights movement. Simply because he does not necessarily agree with them on all issues, they say he has turned his back on his race once he gained success. Although Thomas is a conservative, he would be the first person to tell anyone that abortion should be decided by the states because it is not in the constitution. Therefore, he does not always follow Republican or conservative agendas and beliefs either. This only demonstrates he is a man with character and will do what he thinks is right, and not what is best for politics. Regardless of what Sharpton and Jackson think, Thomas is a role model for their community just by what he has accomplished in his life. Any person regardless of ethnic background should strive to have the success Clarence has had.

Oprah Winfrey has supported Bill Cosby on her show, as well as spoken against the double standard created by rap music lyrics. Marion Jones was a track superstar who originally lied about taking steroids and performance enhancement drugs. However, Jones came clean and took one hundred percent of the responsibility and blame for her actions. It is extremely rare in this day and age when someone tells the truth, and they do not blame someone else for their actions. She could have played the “race card” claiming the pressure for black athletes to succeed forced her to make bad decisions, but she did not. It is rare these days when anyone regardless of race says they are wrong. Her actions will hopefully teach others to be responsible for their actions. Hopefully, her bravery will promote good sportsmanship and force others to see that winning is not the most important thing. Charles Barkley is very opinionated, but he is objective and does not side with an issue for racial reasons.

My Book: Is America Dying? (Barnes and Noble, Amazon.com)

GDP Model

Here is another set of models I ran on economic indicators which support my earlier claims from previous posts.

Below are the results of running a linear regression model on various economic data (obtained from the Bureau of Economic Analysis [BEA] government site) from 1947 to the present solving for the Gross Domestic Product (GDP) variable:


n 64

R2 1.00
Adjusted R2 1.00
SE 48.2

Term Coefficient 95% CI SE t statistic DF p
Intercept 27.19 -205.03 to 259.42 115.619 0.24 50 0.8150
Population 0.3053 -0.9047 to 1.5152 0.60240 0.51 50 0.6146
Unemployment -9.103 -25.583 to 7.377 8.2047 -1.11 50 0.2725
Inflation -0.04267 -5.29017 to 5.20484 2.612572 -0.02 50 0.9870
Debt -0.1244 -0.2315 to -0.0173 0.05331 -2.33 50 0.0237
Tax Receipts -0.1041 -0.6123 to 0.4041 0.25301 -0.41 50 0.6825
Gov Spending 0.7386 0.2151 to 1.2620 0.26060 2.83 50 0.0066
Budget -0.1211 -0.7680 to 0.5258 0.32208 -0.38 50 0.7085
Trade Deficit 0.3913 0.0034 to 0.7793 0.19314 2.03 50 0.0481
Consumer Spending 0.9912 0.4034 to 1.5790 0.29265 3.39 50 0.0014
State Deficit 1.486 -0.019 to 2.990 0.7491 1.98 50 0.0528
State Social Payment 0.9698 -2.5630 to 4.5025 1.75886 0.55 50 0.5838
Gov Social Benefits -0.897 -2.120 to 0.326 0.6088 -1.47 50 0.1469
Personal Income 0.3691 -0.0767 to 0.8150 0.22198 1.66 50 0.1026

The economic parameters used to model GDP over the past 64 (n) years are: the U.S. population, the unemployment rate, the inflation rate, the federal government debt, federal government tax receipts, federal government spending, the federal government budget size, the trade deficit, consumer spending, state government deficits, state government spending on social benefits, federal government spending on social benefits, and personal income. The intercept value in the above table is not a parameter – it is the value of GDP (in billions of dollars) if all other parameters equal zero. These economic parameters are denoted in the above table.

The R² statistic illustrates how closely the linear regression model resembles a straight line (the ideal condition). If R² equals one then the model is 100% linear and the parameters correlate 100%. On the other hand, if R² is equal to zero then there is no correlation and the data in the linear regression model is completely random. T statistics reveal which of the economic parameters has the best correlation to the parameter being tested (GDP in this case). The higher the absolute value of the t statistic, the better the correlation the corresponding economic parameter has to the tested variable (GDP in this case). If a coefficient value of an economic parameter is positive then it trends in the same direction of the tested variable (GDP in this case). If a coefficient value is negative then the corresponding variable trends in the opposite direction of the tested variable (GDP in this case). It is time to do some math to prove higher taxes and government spending cripple economies. What economic parameters have the biggest effect on GDP?

Consumer spending has the biggest positive impact on GDP and economic growth. Government spending can increase GDP as well, but increased tax receipts have a negative effect. Unemployment, deficit spending (Debt), government expenditures for social benefits, and increased federal budgets all have a negative effect on GDP. An increased trade deficit also increases GDP – it means consumers and both the federal and state governments are spending more money to import products including oil (our biggest import). These results are not surprising and support conservative fiscal claims for decades.

My Book: Is America Dying? (Amazon.com, Barnes and Noble)

Tuesday, June 7, 2011

Obama's Weekly Lowlights (6/7/11)

New Jersey – Governor Christie is pulling the state out of the regional cap and trade program.

Illegal Immigration – The Supreme Court upheld the Arizona Immigration law from 2007, which can punish employers who knowingly hire illegal aliens. This sets a good precedent for the 2010 Arizona Immigration law that is currently being contested by the DOJ.

Michele Rhee – The former head of the DC school system, who is a Democrat, has recently come out praising the GOP voucher system that was recently rescinded by the President.

Patriot Act – The legislation was extended by the Democratic Senate (remember these are the same people that voted against it when Bush was President).

The National Science Foundation – I like science, but why are spending billions to study shrimp running on a treadmill or to build a robot that can fold laundry. These are just a few of the outrageous projects they are working on.

The Budget – We are approaching 800 days since Senate Democrats last passed a budget.

Libya – The house overwhelming passed an order to prohibit ground troops in Libya. And what’s even more disturbing is NATO refuses to provide a timeline for the conflict, however, those timelines were demanded for both the Afghanistan and Iraq wars.

USDA – They spent a few million dollars to replace the food pyramid with a pie chart. I am glad that got cleared up.

Litigation – Texas is trying to adapt a system where the loser pays for the court costs. About time!

Anthony Weiner – The New York Democrat finally admitted he took and sent lewd photos of himself to interns. However, Weiner first lied about the action for the better part of the week before coming clean. And here is the big surprise, he will not resign – typical Democrat.

Greece – The socialistic nation has decided to cut taxes in order to spur economic growth.

Debt Ceiling – The House defeated an Obama backed measure to raise the debt ceiling by 2 trillion dollars with no strings attached – in other words, without any budget cuts.

Economy – The private sector only added 38 thousand new jobs in May. April’s private sector job growth was adjusted from 179 thousand to 177 thousand. Thus, unemployment is up to 9.1 percent. And in another bad sign, auto sales also stalled in May.

Van Jones – He is claiming that Paul Ryan’s budget plan does more damage than what al-Qaeda can ever create.

New York Times – Editor, Bill Keller, is stepping down, but they will replace him with another far left liberal.

My Book: Is America Dying? (Amazon.com, Barnes and Noble)

Monday, June 6, 2011

What Caused the Financial/Housing Meltdown (Part II)

Here are the model results for the economic indicators when modeled against commercial banks, saving institutions, credit unions, government sponsored, agency and government sponsored, asset backed, finance corporations, non-agency MBS, and total U.S. government MBS mortgages.

Foreclosure Rate

R2 0.99
Adjusted R2 0.98
SE 0.087

Term Coefficient 95% CI SE t statistic DF p
Intercept 0.8404 -0.4088 to 2.0896 0.55222 1.52 9 0.1624
Commercial Banking -0.001989 -0.004591 to 0.000613 0.0011501 -1.73 9 0.1178
Savings Institutions 0.0006746 -0.0014666 to 0.0028159 0.00094655 0.71 9 0.4941
Credit Unions 0.009413 -0.008600 to 0.027427 0.0079630 1.18 9 0.2674
Government sponsored -0.0006434 -0.0022507 to 0.0009639 0.00071051 -0.91 9 0.3888
Agency and Government Sponsored 0.0003073 -0.0006934 to 0.0013079 0.00044233 0.69 9 0.5048
Asset Backed 0.001188 -0.000392 to 0.002768 0.0006984 1.70 9 0.1231
Finance Corporation -0.0007006 -0.0031269 to 0.0017257 0.00107256 -0.65 9 0.5299
Non Agency MBS (B) -0.001926 -0.003387 to -0.000465 0.0006458 -2.98 9 0.0154
Total U.S. Gov MBS (B) 0.0004141 0.0000832 to 0.0007451 0.00014629 2.83 9 0.0197

Home Ownership Rate

R2 0.96
Adjusted R2 0.93
SE 0.5043

Term Coefficient 95% CI SE t statistic DF p
Intercept 57.73 53.61 to 61.85 1.850 31.20 10 <0.0001
Commercial Banking 0.000874 -0.013267 to 0.015015 0.0063465 0.14 10 0.8932
Savings Institutions 0.005253 -0.001309 to 0.011815 0.0029451 1.78 10 0.1048
Credit Unions -0.04506 -0.10476 to 0.01464 0.026793 -1.68 10 0.1235
Government sponsored 0.0001896 -0.0080783 to 0.0084576 0.00371069 0.05 10 0.9602
Agency and Government Sponsored 0.004247 0.000013 to 0.008480 0.0019002 2.23 10 0.0494
Asset Backed -0.001434 -0.006488 to 0.003621 0.0022685 -0.63 10 0.5416
Finance Corporation 0.004906 -0.008873 to 0.018685 0.0061841 0.79 10 0.4460
Non Agency MBS (B) 0.001022 -0.004012 to 0.006056 0.0022593 0.45 10 0.6606
Total U.S. Gov MBS (B) -0.001057 -0.002855 to 0.000740 0.0008066 -1.31 10 0.2192

Home Vacancy Rate


R2 0.98
Adjusted R2 0.96
SE 0.0846

Term Coefficient 95% CI SE t statistic DF p
Intercept 1.161 0.470 to 1.853 0.3103 3.74 10 0.0038
Commercial Banking 0.001398 -0.000973 to 0.003770 0.0010643 1.31 10 0.2183
Savings Institutions 0.00136 0.00026 to 0.00246 0.000494 2.75 10 0.0204
Credit Unions 0.001868 -0.008143 to 0.011879 0.0044930 0.42 10 0.6863
Government sponsored -0.001912 -0.003298 to -0.000525 0.0006223 -3.07 10 0.0118
Agency and Government Sponsored -0.0006303 -0.0013403 to 0.0000797 0.00031864 -1.98 10 0.0761
Asset Backed 0.0006792 -0.0001684 to 0.0015268 0.00038041 1.79 10 0.1045
Finance Corporation -0.002279 -0.004590 to 0.000032 0.0010370 -2.20 10 0.0527
Non Agency MBS (B) -0.0009889 -0.0018330 to -0.0001447 0.00037887 -2.61 10 0.0260
Total U.S. Gov MBS (B) 0.0005488 0.0002475 to 0.0008502 0.00013525 4.06 10 0.0023

Mortgage Delinquency Rate

R2 0.93
Adjusted R2 0.87
SE 0.239

Term Coefficient 95% CI SE t statistic DF p
Intercept 3.886 0.459 to 7.313 1.5147 2.57 9 0.0304
Commercial Banking -0.003408 -0.010544 to 0.003729 0.0031548 -1.08 9 0.3082
Savings Institutions 0.003294 -0.002580 to 0.009167 0.0025964 1.27 9 0.2364
Credit Unions 0.007254 -0.042158 to 0.056665 0.0218426 0.33 9 0.7474
Government sponsored -0.002348 -0.006757 to 0.002061 0.0019489 -1.20 9 0.2590
Agency and Government Sponsored 6.1360E-05 -2.6834E-03 to 2.8061E-03 1.2133E-003 0.05 9 0.9608
Asset Backed 0.002569 -0.001765 to 0.006903 0.0019158 1.34 9 0.2128
Finance Corporation 0.002907 -0.003748 to 0.009563 0.0029420 0.99 9 0.3489
Non Agency MBS (B) -0.004429 -0.008436 to -0.000421 0.0017715 -2.50 9 0.0339
Total U.S. Gov MBS (B) 0.001141 0.000233 to 0.002049 0.0004013 2.84 9 0.0193

These are strong predictions models with high R² values and they are consistent with the results in Part I of this blog. The strongest correlation exists between Non Agency MBS and Total U.S. Gov. MBS with the economic indicators. While Non Agency MBS works to drive down foreclosure rates, home vacancy rates, delinquency rates, and increase home ownership rates; Total U.S. Gov. MBS works to do the opposite. This would lead me to believe that toxic mortgage assets from the government were the prime culprit in the meltdown and not so much those toxic assets from the private sector. In these economic indicator models savings institutions and credit union mortgages had a positive effect on economic variables; whereas commercial banking and finance corporations were mostly negative. The results for government sponsored and agency and government sponsored mortgages were mixed (in some cases improved and in other cases decreased results) on the economic indicators.

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Saturday, June 4, 2011

A Tax Formula

The current federal government income tax rates are not only very high, but it is also debatable as to their fairness. Everyone is in agreement that the federal income tax should be implemented on a progressive scale. In other words, the wealthy should pay a significantly higher percentage in income taxes than the poor. The million dollar question is what percent should the wealthy pay in income taxes? And is it fair that 50% of all Americans pay no income taxes because they do not make enough money? Based on the results from the previous blogs showing a direct relationship in consumer spending, income, and taxes, it is fair to surmise the method for calculating income tax rates must be altered.
Some feel the wealthy should pay a high percentage of their income in taxes (over 50%). However, there are many points that say this is a bad economic maneuver by the government. First, the more money the government takes from the wealthy the less money they have to spend on goods and services to keep the economy thriving. In 2010, the top 10% of income earners in the United States consisted of 40% of all consumer spending and had about 50% of the wealth. Secondly, it is wise to consider the economic phenomenon called the Laffer Effect. The Laffer Effect determines what income tax rate produces the highest revenues for the federal government. After centuries of data, most people feel the highest tax rate should be around 33% to 36%. Higher taxes only reduce the incentive for people to work harder to earn more money. This effect can be seen as populations are fleeing states with high tax rates, such as New York and New Jersey, to states with lower tax rates.

Finally, is it fair that low income earners are exempt from federal income taxes? No, it is not. It eliminates any responsibility and accountability they have towards making a positive impact on society. Secondly, a reward of paying no income tax provides no incentive for people to earn more money. Hence, everyone should pay some taxes, even if it is a low percentage.

In 2010, below are the estimates for consumer spending and the corresponding income earned by percentile:

Percentile Consumer Spending (CS) (%) Income (I) (%) Tax Rate (TR) (%)

90-100 40 50 30

60-90 35 30 19.5

30-60 20 15 12

0-30 5 5 4.9

In other words, the top 10% of income earners (indicated by the 90-100 percentile) make up about 40% of our economy, while they earn about 50% of the total income in our economy. To calculate the tax rate for the 4 tax brackets created above, the formula is as follows:

TR = I / (1 / (1 – CS))

This formula takes into account how much income people have and how much they are spending in the economy. Thus, it rewards people that are putting money back into the economy with lower taxes. If consumer spending in the top bracket (90-100) dropped to 25%, but they still account for 50% of the income, their tax rate would go up 37.6% because they are not spending as much money in the economy. On the other hand, if the bottom 30% bracket increased consumer spending to 20% and still only earned 5% of the wealth their taxes would drop to 4%. The IRS can make up tax brackets based on economic data from the previous year data. They can even toggle the tax rate +/-3% based on projections. In other words, in the above example, the top tax rate can be anywhere from 27 to 33%, meanwhile the bottom tax rate can be reduced to under 2%.

My Book: Is America Dying? (Amazon.com, Barnes and Noble)

Minority Leadership (Part V)

About one thousand people died from Hurricane Katrina. Our national government was scalded for its response (while the state or local governments were given a pass). The media convinces the public that our national government is evil and does not care about it citizens (especially African-Americans). We really need to think about what information the media is feeding us. Would you or the media prefer to live in Myanmar or China? Think of their government’s response to its citizens after a devastating cyclone and earthquake hit those countries and killed nearly 200 thousand people. Thousands died in the aftermath from disease because of their government’s incompetent response. Their governments also failed to take in humanitarian support from the United Nations and other countries that could have saved thousands of lives. The next time the media tries to fill our brains with propaganda; it will serve us well to think of the big picture so as not to be easily influenced by their agenda. The media wants you to believe our government is failing its citizens and will not report stories fairly. This is especially true if they have personal vendetta against the President. I am sure the medias response would be different had this occurred under Obama’s watch. If we look at the big picture, we are extremely lucky to be living in this country and nobody should forget that.

Rebuilding New Orleans is problematic at best. Is it wise to rebuild a city that is below sea level that will be hit by another hurricane in the future? No, it makes absolutely no sense because another disaster is waiting to happen. Secondly, the wide range of scandals and fraud that have cost the government billions of dollars has exasperated the slow rebuilding rate. It is somewhat ironic that most of the fraud and scandals are associated with New Orleans. The Mississippi Gulf shoreline took a direct hit from Katrina. However, New Orleans, obtained most of the damage because the levies broke. They were only designed to withstand a category three hurricane. It should not come as a surprise that the levies could not withstand the water surge since they got hit with a category four hurricane. The Mississippi coast got hit with the highest winds, and there was significant damage. However, Mississippi got cleaned up with very little scandals and fraud. Mississippi certainly had its issues during the clean up effort, but it did not get the press that New Orleans received. Granted it should have been cleaned up faster, since New Orleans had much more damage. Also, the potential for fraud and scandal is higher in New Orleans since they received most of the funding. But we should not have to make excuses for New Orleans and their handling of the clean up effort.

Even before the Katrina scandal, Louisiana seemed to have a scandal in the news every six months. Their police force had been labeled as the nations most corrupt, and one of their House of Representative members, William Jefferson, is currently being investigated for racketeering and fraud. In fact, newly elected governor Bobby Jindal’s main objective is to clean up Louisiana’s image from corruptions and scandals. The amount of scandal and fraud from Katrina should not surprise anyone since there is a pattern and trend of corruption in the region.

The federal government certainly made many mistakes and is accountable for allowing the fraud and scandals. However, the people of Louisiana and the local government have done more to slow the progress of repairing New Orleans since they are primarily responsible for the scandals and fraud. After all, it did not happen in Mississippi. Twelve months following Katrina, Mayor Nagin visited his city of New Orleans two times from his Houston, Texas home. President Bush visited eight times. Nagin is the Mayor of this city, and it is his job to be there and help with the reconstruction. Instead, Nagin sat in his nice Houston, Texas home, and every time he got a chance to speak, he criticized the federal government. To make things worse, he generally followed his federal government criticism with a racist and insensitive remark to help further divide his city and the country. He is another example of a poor minority leader, yet he was still re-elected shortly after Katrina.

My Book: Is America Dying? (Barnes and Noble, Amazon.com)

What Caused the Housing/Financial Collapse (Part I)

Let’s do the math. Over 97% of U.S. mortgage debt has been handed out by commercial banks, savings institutions, credit unions, government sponsored programs, agency and government sponsored programs, asset backed programs, and financial institutions. We can model mortgages handed out through these programs/institutions as well as those mortgage backed securities (MBS - both private and government that were handed out by the before mentioned mortgage institutions and programs), that are believed to have caused the financial/housing collapse, against the results of the Dow Jones, S&P500, NYSE, NASDAQ, foreclosure rates, home ownership rate, home vacancy rate, and the mortgage payment delinquency rate. The data used in the model came from the Census Bureau, Market sites, and SIFMA statistical research company. Here are the results (I will draw conclusions at the end of each section. I will cover the market results in this post and the economic indicator results in Part II):

Dow Jones

R2 0.87
Adjusted R2 0.75
SE 1699.374

Term Coefficient 95% CI SE t statistic DF p
Intercept -9154 -23045 to 4737 6234.4 -1.47 10 0.1728
Commercial Banking 7.901 -39.748 to 55.550 21.3851 0.37 10 0.7195
Savings Institutions 8.797 -13.315 to 30.908 9.9237 0.89 10 0.3962
Credit Unions -100.2 -301.3 to 101.0 90.28 -1.11 10 0.2932
Government sponsored -2.618 -30.477 to 25.241 12.5034 -0.21 10 0.8383
Agency and Government Sponsored 9.434 -4.832 to 23.700 6.4027 1.47 10 0.1714
Asset Backed -3.34 -20.37 to 13.69 7.644 -0.44 10 0.6714
Finance Corporation -24.58 -71.01 to 21.85 20.838 -1.18 10 0.2655
Non Agency MBS (B) 11.34 -5.62 to 28.30 7.613 1.49 10 0.1673
Total U.S. Gov MBS (B) -3 -9 to 3 2.7 -1.10 10 0.2956

S&P 500

R2 0.79
Adjusted R2 0.60
SE 243.213

Term Coefficient 95% CI SE t statistic DF p
Intercept -837.7 -2825.8 to 1150.4 892.26 -0.94 10 0.3699
Commercial Banking 0.7569 -6.0626 to 7.5764 3.06061 0.25 10 0.8097
Savings Institutions 0.8265 -2.3381 to 3.9911 1.42027 0.58 10 0.5735
Credit Unions -7.911 -36.701 to 20.879 12.9210 -0.61 10 0.5540
Government sponsored -0.5208 -4.5080 to 3.4664 1.78947 -0.29 10 0.7770
Agency and Government Sponsored 1.087 -0.955 to 3.128 0.9164 1.19 10 0.2631
Asset Backed -0.68 -3.12 to 1.76 1.094 -0.62 10 0.5482
Finance Corporation -3.472 -10.117 to 3.173 2.9823 -1.16 10 0.2713
Non Agency MBS (B) 1.876 -0.551 to 4.304 1.0896 1.72 10 0.1158
Total U.S. Gov MBS (B) -0.4876 -1.3542 to 0.3791 0.38897 -1.25 10 0.2385

NYSE

R2 0.89
Adjusted R2 0.80
SE 1041.118

Term Coefficient 95% CI SE t statistic DF p
Intercept -3636 -12146 to 4875 3819.5 -0.95 10 0.3636
Commercial Banking 4.888 -24.304 to 34.080 13.1015 0.37 10 0.7169
Savings Institutions 3.411 -10.136 to 16.957 6.0797 0.56 10 0.5872
Credit Unions -37.9 -161.1 to 85.3 55.31 -0.69 10 0.5088
Government sponsored -1.798 -18.866 to 15.270 7.6602 -0.23 10 0.8191
Agency and Government Sponsored 4.823 -3.917 to 13.563 3.9226 1.23 10 0.2470
Asset Backed -2.759 -13.193 to 7.675 4.6830 -0.59 10 0.5688
Finance Corporation -18.36 -46.80 to 10.09 12.766 -1.44 10 0.1810
Non Agency MBS (B) 9.863 -0.529 to 20.255 4.6640 2.11 10 0.0606
Total U.S. Gov MBS (B) -2.265 -5.975 to 1.445 1.6650 -1.36 10 0.2036

NASDAQ

R2 0.59
Adjusted R2 0.22
SE 792.941

Term Coefficient 95% CI SE t statistic DF p
Intercept -1534 -8015 to 4948 2909.0 -0.53 10 0.6096
Commercial Banking 0.6868 -21.5465 to 22.9202 9.97844 0.07 10 0.9465
Savings Institutions 0.9137 -9.4037 to 11.2310 4.63046 0.20 10 0.8475
Credit Unions -7.779 -101.642 to 86.084 42.1261 -0.18 10 0.8572
Government sponsored -1.026 -14.025 to 11.973 5.8342 -0.18 10 0.8639
Agency and Government Sponsored 2.488 -4.169 to 9.145 2.9876 0.83 10 0.4244
Asset Backed -1.98 -9.93 to 5.97 3.567 -0.56 10 0.5910
Finance Corporation -8.576 -30.240 to 13.088 9.7230 -0.88 10 0.3985
Non Agency MBS (B) 4.971 -2.944 to 12.886 3.5522 1.40 10 0.1920
Total U.S. Gov MBS (B) -1.314 -4.139 to 1.512 1.2681 -1.04 10 0.3246


The mortgage model results when compared against the markets are mixed. Although the four models are not super strong in predicting outcomes (NYSE best and NASDAQ is the worst – by R² data), the models show that there is an inverse relationship between Non Agency MBS and Total U.S. Gov. MSB. Non Agency MBS are those toxic Mortgage Backed Securities (MBS) assets issued by private sector companies and Total U.S. Gov. MBS are those toxic mortgage backed securities issued by government entities Fannie Mae, Ginnie Mae, and Freddie Mac. Non Agency MBS work to drive up market values whereas; Total U.S. Gov. MBS work to drive market values lower. It is not all bad news for the government since agency and government sponsored mortgages drive up market values, but government sponsored mortgages drive down the market. I am not sure of the difference between these two, but I suspect they include VA, FHA, and GSE mortgage loans. Unfortunately, I am not sure how this data is divided between the two programs. Commercial banks and savings institution mortgages tend to drive the market up; whereas credit union and finance corporation mortgages drive the market value down. However, it is important to note that the correlation is strongest between Non Agency MBS and Total U.S. Gov. MBS with the markets than the other variables (based on higher t statistic and lower p results).

My Book: Is America Dying? (Amazon.com, Barnes and Noble)

Wednesday, June 1, 2011

Obama's Weekly Lowlights (6/1/11)

Education – Here is a look at some of the history questions on the Florida state exam: Analyze the major factors that drove United States imperialism? Examine the controversy surrounding the proliferation of nuclear technology in the United States? Assess key figures and organizations in shaping the Black Power Movement? Analyze significant Supreme Court decisions relating to reproductive rights? Describe efforts by the United States and other world powers to avoid future wars? Examine the failure of the United States to support the League of Nations? These are obviously liberal “leading” questions.

NY-26 – The Left is proclaiming a victory for socialism. First, a 3rd party candidate took 10% of the vote (mostly conservative), secondly the Democratic campaign was nothing more than scare tactics falsely proclaiming the GOP is going to kill Medicare for those who are already on the program, and thirdly the Democrats are too afraid to propose a plan of their own for Medicare (and without a plan, those on Medicare may lose it in the next decade).

Potatoes – The Department of Agriculture is moving to ban white potatoes from school menus.

Milk – The FDA raided an Amish farm that tried to sell unpasteurized milk across state lines.

Health Care – Americans can expect to see an average increase in their insurance premiums of 8.5% next year.

Food Stamps – A Michigan man, who won a 2 million dollar state lottery, is not only collecting food stamps but the state is okay with that.

College Graduates – Eighty-five percent of this year’s graduates will go home to live with their parents.

Goodwin Liu – The Senate blocked his confirmation to the Ninth Circuit Court of Appeals. Some argued Liu (Stanford Law Professor) would have been the most liberal judge in the upper courts.

San Francisco – The city has proposed a bill banning circumcisions.

AARP – The group who represents the nation’s elderly population, and was a big proponent for ObamaCare, recently got a waiver to circumvent the new legislation.

Jesse Lee – He will be the new media director in the White House that will be responsible for responding to and squashing any negative stories about the President. How’s that for transparency and a good use of our tax dollars?

Israel – Got to give props to Netanyahu for repudiating Obama’s 1967 border proposal in a speech in front of Congress.

John Edwards – The former Democratic Presidential candidate will face prosecution for using campaign contributions to cover up an extramarital affair.

Stimulus – The accountability office found companies that owe millions in back taxes received billions in federal stimulus monies.

Jared Loughner – The AP reported that the man who shot Gabrielle Giffords is not competent to stand trial. It is amazing how our system protects criminals.

Budget – The Senate defeated both the Ryan and Obama budget proposals for 2011. Obama’s was defeated 97-0 after Democrats praised it when it was first released.

My Book: Is America Dying? (Amazon.com, Barnes and Noble)