Letter To Washington

Dear Congressman:

I am a constituent that is a frequent letter writer to your office. Normally, I am writing to you about a particular issue that is in the headlines, today I am not. Instead, I am writing to give you an idea how the decisions you, and the rest of Congress, are making are paralyzing the economy and business.

While I am not writing the letter on behalf of my company, the issues that I am going to outline drastically effect the decisions made by me and the company that employs me. As a direct result of your actions in Washington, you and the other members of Congress are affecting the competitiveness of our nation and the standard of living that all Americans enjoy today.

My job involves trading a commodity by-product of refineries. These are the refineries that produce transportation and heating fuels that make our economy so productive. State of the art technologies at work in these plants give consumers and businesses the lowest cost energy anywhere in the world. This means that consumers can consume more and business can invest in more machinery that leads to our high, relative standard of living. Congress is threatening this industry with regulation and taxes that will hurt the competitiveness of our domestic refining infrastructure. Whether it is over-reaching environmental legislation or cap-and-trade taxes, this kind of burden adds tremendous cost. This cost must be passed on to consumers or the businesses will close. Either one of these consequences is devastating. Higher costs mean less economic growth and a lower standard of living. Instead of consumers consuming more goods and services, they will be pressed into spending more money on energy. If business cannot pass on these new costs, they will close. This means loss of high-paying jobs in the industrial sector the means so much to the country’s prosperity.

The company I work for is dedicated to following the letter of the law. However, there are so many conflicting and overlapping agencies at all levels of government that it is paralyzing our business and many others. When a business does not know the rules and legal expectations, they are very hesitant to make investments. In addition, they are forced to tie up more capital and resources to maintain compliance thus reducing the investment in plants, property and equipment that to are key to economic growth. Government has to become less burdensome and complex so business feels confident they can make investments that will make our economy more productive.

Congress must also stop subsidizing inefficient businesses in this country with legislation. Inefficient business mean a loss of productivity that is the key to economic growth. Two prime examples are agriculture and shipping, but there are hundreds more examples I could choose. A few examples in the agriculture segment are dairy and sugar farming (not to mention feed grains like corn, wheat and rice).

Today there is a glut of milk on the market. Consequently most dairy farmers are now looking at producing milk at a loss. The reason the price of milk is so low is over supply based on current levels of demand. When this happens in any other industry, the highest cost producers go out of business and the market corrects itself with no help from government. This situation leaves only the very best, most efficient producers operating dairies and redirects the other resources to more efficient areas of the economy. No doubt this creates localized pain when a farmer goes out of business, but why should the taxpayers be left with the burden of supporting that farmer? If that farmer were making paper, furniture or computers the government would not support him. The agriculture lobby has gotten strong because there is money in it. Washington needs to get tough and say no to handouts.

The other example I referred to is sugar. Perhaps no other example is so wrapped up in special interest and government interference. Because of import tariffs and production limits on sugar, US consumers pay two to three times the world market price for sugar. Why? To protect a very small industry, primarily in Florida, with tremendous clout and to support the high price of corn syrup in grain growing regions of the country. No doubt this has saved jobs in these industries, but it has cost many more as consumers had to pay more for sugar than they should have. Industries where sugar is a primary ingredient have moved production overseas because they cannot be profitable paying more than market prices for sugar. This particular situation plays out in any industry where government gets involved. No matter the temptation, government has to stop determining winners and losers in business and let markets decide who succeeds and who fails.

As a taxpayer, I am appalled at what the US Government does in the shipbuilding business. Due to the legislation passed in 1920 known as the Jones Act, the US Shipbuilding business has enjoyed a position in the world market for ships that has made it terribly inefficient and driven the cost of vessel freight between US ports to unreasonable levels. In addition, it has driven the cost of Naval vessels for our own defense to ridiculously high costs for the taxpayers.

I recently received a quote for a vessel that would move the commodity that I trade. If I were to build a Jones Act vessel (one that could move between US ports), the price would be over $100 Million. I can have the same vessel made in Korea today for $30 Million. Not only is the price cheaper, but I can also have it a year sooner. Unfortunately, I cannot take that Korean vessel, loaded, between US Ports due to the Jones Act. This is a terrible outcome for businesses that are trying to compete. I cannot buy and sell with my own countrymen at a price that is competitive with foreign traders in foreign flagged vessels that only move product in or out of the US. To make matters worse, I hear the Navy is buying several high-speed ships at a cost of nearly $400 Million each. I can only imagine how much these vessels would cost if the US Shipbuilders had cost structures that forced them to compete with the Asian builders. The US Taxpayer is getting fleeced only to protect a small industry with very good political connections that have been in place for nearly 100 years.

If the citizens of this country are to continually see our standard of living rise and enjoy the fruits of economic growth, then business has to be allowed to thrive. After all, this is where real jobs are created and real wealth built. There is no better way to do this than to reduce, or even eliminate, corporate income tax. No better stimulus could be designed than a program to eliminate the corporate income tax.

Corporations make capital investment based on after-tax returns. When the government takes nearly 40% of all income on investments, it means that business must have incomes that are 40% higher in order for a capital investment to yield a return that warrants the risk. Imagine all the investment that businesses could make if the return threshold was lowered by 40%! This new investment would mean more jobs for everyone since someone would have to build the new machinery, buildings and transportation networks that new investment would require. Consumers might also enjoy lower prices as the cost of taxes is passed on directly to them. If not, companies would either pay more in dividends (that are taxed as income) or have even more money to invest in productive assets starting this entire cycle over again. A zero tax environment would attract scores of foreign investment, as the US would again be the best place to invest.

Growth in the Federal bureaucracy means more human resources and productive capital are in non-producing, government jobs rather than in production of consumer goods and services. These are jobs that play no role whatsoever in economic growth as they do nothing but force more cost on society. More government jobs mean more taxation on an already stressed private sector. Even worse, this bloated government bureaucracy has over-lapping regulatory authority that complicates all compliance matters as it relates to business. Washington must realize that it is impossible to create greater prosperity and a higher standard of living with a bigger government machine.

The US is losing its competitive edge. It is not too late to stop the decline, but Washington has to make it happen. This is not a Republican or Democrat issue, it is a matter of securing the country’s future. I want my kids to enjoy a better quality of life than mine, just like I enjoy a higher quality of life than my parents. Unfortunately, that history of prosperity and economic growth is now at risk due only to decisions made by politicians catering to special interests. What needs to be done is take the incentive out of lobbying the government for money or special protections, stop having the government determine winners and losers in commerce, and eliminate the tax burden on business. These very simple steps are all that are needed to turn the country around.

Congress is truly destroying the goose that lays the golden eggs and that goose is the entrepreneurial spirit that is historically unique to the United States of America.

Respectfully submitted,

Job Creation Math

Carol Baum with Bloomberg wrote a great piece on Friday. In short, government does not create jobs it can only enable the private sector to do so. That is done with less regulation and lower taxes. If government could create jobs, their would be zero unemployment. However, when everyone is "working" for the government no value is created. There is no profit to tax and the growth of government cannot be sustained.

It is only through productive investment in the private sector will real job growth occur. The government does not know what industries will be successful. If they did I am sure synfuels and ethanol would be huge today. Instead, they are both colossal failures.


Here are some highlights from Bloomberg:

If putting people to work is the goal, we could get rid of all the heavy earth-moving equipment and go back to digging ditches with shovels.

Why stop there? If it takes one man two days to dig a trench three feet deep and 30 feet long with a shovel, how long would it take 100 men using spoons?

You get the point. We can always create jobs by replacing capital with labor, by going backward. The entire history of civilization has been characterized by an effort to move in the opposite direction and become more productive, which is another way of saying produce more with less.

All Aboard

Automation and technological innovation have had the effect of replacing humans with machines. Yet the unemployment rate isn’t perpetually rising. As countries develop, they create new and better jobs, not more of the same old ones. The goal is to raise the standard of living, something that (all economists agree) can only be achieved through higher productivity growth.

That’s something the government can’t provide. It doesn’t “sell” its goods and services to discerning buyers. It isn’t driven by the prospective return on its investment.

Instead, the government requires us to pay taxes in exchange for goods and services -- transportation, education, homeland security -- that may or may not be worth the “cost.”

There’s nothing like a crisis to play on the public’s insecurity and expand the reach of government. There’s nothing like a serious financial crisis to get economists of all persuasions on board.

How to Kill an Economy

From Cato:

Justification....Politician Style

From Senator Stevens's testimony today:

Stevens has said he never sought gifts and wouldn't even accept a free lunch, much less expensive remodeling services. But prosecutors say he had a history of accepting gifts — including an expensive massage chair from a friend — and omitting them from the financial disclosure forms.

He said he considered that chair a loan.

"And the chair is still at your house?" prosecutor Brenda Morris asked.

"Yes," Stevens said.

"How is that not a gift?"

"He bought that chair as a gift, but I refused it as a gift," Stevens said. "He put it there and said it was my chair. I told him I would not accept it as a gift. We have lots of things in our house that don't belong to us."

Playing to the jury, Morris appeared confused.

"So, if you say it's not a gift, it's not a gift?" she said.

"I refused it as a gift," Stevens replied. "I let him put it in our basement at his request."

Why Stealing From Taxpayers Should Be Treason

This story in the NYT about made my blood boil.  A typical government bureaucrat in the Defense Department bilked millions from taxpayers.  How did this happen?  He was in cahoots with lobbyists, corrupt politicians (Lott, Shelby, Stevens, etc.), and contractors that took advantage of lax oversight.

It just makes me wonder how much waste and corruption is there in the Federal budget?  There is just too much incentive to cheat the system and not enough penalty to avoid it.  I am thinking death by hanging should be in store for any of those involved here, including CONgressmen.

The truly said fact is many, if not all, of these politicians will be re-elected.

Government and Profitability

I saw this column come up on my yahoo reader this week and it caught my eye for obvious reasons: DOE Doles OUt Bucks for Biofuel.  Not only does this article outline who is getting what from our government at a time when money seems to be no scarce object, but it also talks about the return our government is "getting."  

Novozymes said Wednesday it scored $12.3 million from the U.S. Department of Energy to develop enzymes that would help cut the cost of producing cellulosic ethanol.

Then

The government expects something in return for its investment. The deal calls for the Danish company to increase the efficiency of the enzymes by two folds.

Wow, the government is getting an increase in efficiency?  That does not sound like money for the taxpayer to me.  That sounds like a better return for the producer?

Then the article goes on to say...

This is the second time the company has received funding from the DOE. In 2001, Novozymes bagged $18 million from the federal government, again to improve enzymes used in producing biofuels.

So the government has now invested over $30M in this company, that is Dutch no less, and how much cellulosic-based ethanol is commercially available?  None.

Then the article finishes with this....

Ethanol producer Poet said Tuesday it is getting the total funding the DOE promised last year. In February 2007, the DOE said it would give Poet up to $80 million to build a commercial ethanol plant that makes fuel from corn as well as corn fiber and cobs. The first part of the deal with the government gave the Sioux Falls, S.D.-based company $3.7 million to help with the preliminary design of the plant and feedstock collection. Now, the company is getting the remaining $76.3 million for construction and plant operation. Upon completion, the plant will make 125 million gallons ethanol per year, 25 million of which will be from corn fiber and cobs. Construction on the plant will begin in 2009, and cellulosic fuel production could come as early as 2011, the company said.

The government is paying for the entire plant?  Where is the tax payer return on this one?  Oh yeah, there is not one.  This is exactly why government needs to stay out of business.  The US Taxpayers just flushed $80M down the drain.  Why is that, well ethanol producers all over the country are going bankrupt (see here and here) since the US is producing more ethanol than is demanded.  So government just throws more ethanol supply into the mix at a lower cost to produce.  The funny thing is most of these ethanol producers think government is their friend.

Our government should not be in the investment banking business.  As a matter of fact, it should not be in any business.

One Trillion Dollar Transfer

From the Independent Institute:

How Goes the War on Poverty?

Americans transfer about one trillion dollars a year to low-income families at the bottom fifth of the U.S. income distribution. Putting that into perspective, one trillion dollars is more than twice the total spent annually on national defense, ten times as much as was spent on redistributive policies in the 1950s (adjusting for inflation), and about equal to the total before-tax cash income of middle-income households, according to Independent Institute Research Fellow Edgar K. Browning, author of Stealing from Each Other: How the Welfare State Robs Americans of Money and Spirit.

Had that money gone directly to those poor families--with no "leakage" by the federal bureaucracy middleman--that trillion would break down to about $81,000 for a family of three--higher than the median income of all American families and far greater than the poverty threshold of $15,577, according to Browning.

Those sizable sums should prompt Americans to ask rather obvious questions: Are poor Americans more independent and self-supporting than before the War on Poverty? Are children born into poor households better off than they were before the War on Poverty? Has the trillion-dollar expenditure reduced inequality? Are egalitarians grateful to Americans' sacrifices in the name of redistribution, or do they continually complain about rising inequality?

"The answers to these questions, I submit, paint a bleak picture of the accomplishments of the American welfare state," writes Browning in a new op-ed. "While a nuanced interpretation of the evidence may identify a few positive returns on our 'investment,' we have a right to expect a lot more for a trillion dollars a year."

Just more proof that government is not free of charge. The machine of big government manages to consume huge sums of money that orginally had good intentions. Just wait until that machine gets its hands on health care.

From the Kansas Dept of Labor

Looks like Government in Kansas is the place to be working. However, when over a third of the jobs "created" in the state are government jobs doesn't that mean we all have to pay more in taxes? Why yes it does. Looks like Gov. Sebelius will be the perfect running mate for B Hussein. Their economics are about the same.

From Kansas Department of Labor:

According to July 2008 estimates, Kansas businesses added 5,200 jobs in the last year, a 0.4 percent increase. Six of the 11 major industries added jobs in the last year.

Government added 3,100 jobs in the last year a 1.3 percent increase. Most of the gains in this area were primarily due to additions in local government.

Free to Work

Over vacation this summer I read Capitalism and Freedom by Milton Friedman. One of the most interesting chapters was on professional licencing and the freedoms they restrict. Sure enough, this is making news today, 30 years of the first publication of the classic.

From Foundation for Economic Education:

An Institute for Justice (IJ) case that last week attracted international media attention vividly illustrates the uncontrolled growth of occupational licensing and the outrageous lengths that a cartel will go to protect all facets of its business from the most harmless of trades.

Mercedes Clemens was threatened with thousands of dollars in fines and criminal prosecution unless she stopped . . . massaging horses. In Maryland two powerful groups decided to monopolize the growing field of animal massage by requiring all practitioners to spend four years in veterinary school -- where massage is not even taught.

Suggesting that only people with veterinary degrees are capable of massaging animals is like suggesting that only people with medical degrees are capable of massaging humans. Preventing Clemens -- who is a licensed human-massage therapist and certified in equine massage -- from working in her chosen trade has absolutely nothing to do with consumer or animal safety and everything to do with the financial interests of the veterinary cartel.

Perhaps the most well-organized cartelization effort underway in the United States today is in the interior-design industry. A powerful faction of insiders has already put thousands of its competitors, mainly middle-aged and elderly women, out of work.

The American Society of Interior Designers (ASID) represents less than 3 percent of all designers, but its members have designated themselves as spokespeople for the entire industry. In over 30 years of lobbying, ASID has never presented a single shred of evidence to support its extraordinary claim that literally "every decision an interior designer makes affects life safety and quality of life."

This kind of protectionism is non-sense. But when you can concentrate benefits and spread out costs you are sure to get corruption and special interest pressure.

Something To Make You Mad.

Exactly why dependence on the State is bad for the poor.

Birth Rate 3X Higher for Women Receiving Welfare

The Lunacy of Energy Independence

Stossel writes perhaps the best column I have ever read of his today.


It's amazing how ideas with no merit become popular merely because they sound good.

Most every politician and pundit says "energy independence" is a great idea. Presidents have promised it for 35 years. Wouldn't it be wonderful if we were self-sufficient, protected from high prices, supply disruptions and political machinations?

The hitch is that even if the United States were energy independent, it would be protected from none of those things. To think otherwise is to misunderstand basic economics and the global marketplace.

Trade also saves us money. "We import energy for a reason," says the Cato Institute's energy expert, Jerry Taylor, "It's cheaper than producing it here at home. A governmental war on energy imports will, by definition, raise energy prices".

Don't Obama and Pickens realize that we get something useful for that money? It's not a "transfer"; it's a win-win transaction, like all voluntary trade. Who cares if the sellers live in a foreign country? When two parties trade, each is better off -- or the exchange would never have been made. We want the oil more than the money. They want the money more than the oil. They need us as much as we need them.

Read the entire column and pass it along.

Government Debt

Here is a good video series that lays out, in one person's opinion, the financial crisis that awaits the Federal Government. I particularly like Chapter 12.

http://www.chrismartenson.com/debt

The Social Security Myth

I missed this blog entry last week. It seems very relavant as B Hussein starts talking about his economic policies.

From the EconLog:

Andrew Biggs writes,

First, Sen. Obama says, "Social Security has lifted millions of seniors and their families out of poverty. Without it, nearly 50 percent of seniors would live below the poverty line."

This is a common talking point, but let's be clear on what it means: if we forced people to pay Social Security taxes all their lives but didn't pay them any benefits, yes, nearly 50 percent of seniors would live below the poverty line. But this is a silly standard. If we were truly "without" Social Security, we would also be without Social Security taxes, which individuals could then save on their own for retirement. So the better question would be, "Without Social Security taxes and benefits, what would the poverty rate among seniors be?"

The answer is, about the same as the current rate. In the 1930's, many seniors were poor. Today, most seniors are affluent. It is tempting to credit Social Security. However, the main cause is economic growth.

Take away the economic growth of the last 75 years and leave Social Security, and seniors would still be poor. Take away Social Security and leave the economic growth, and most seniors would be affluent.

Government Never Wants the Blame

If you take a look at the current mortgage mess, the government is pointing fingers are everyone but themselves. That alone should raise some suspicion. Here is a segment from the Village Voice on the situation:

Andrew Cuomo, the youngest Housing and Urban Development secretary in history, made a series of decisions between 1997 and 2001 that gave birth to the country's current crisis. He took actions that—in combination with many other factors—helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded "kickbacks" to brokers that have fueled the sale of overpriced and unsupportable loans. Three to four million families are now facing foreclosure, and Cuomo is one of the reasons why.

Cuomo's predecessor, Henry Cisneros, did that [made sure CONGRESSIONAL housing goals were being met] for the first time in December 1995, taking a cautious approach and moving the GSEs toward a requirement that 42 percent of their mortgages serve low- and moderate-income families. Cuomo raised that number to 50 percent and dramatically hiked GSE mandates to buy mortgages in underserved neighborhoods and for the "very-low-income." Part of the pitch was racial, with Cuomo contending that Fannie and Freddie weren't granting mortgages to minorities at the same rate as the private market. William Apgar, Cuomo's top aide, told The Washington Post: "We believe that there are a lot of loans to black Americans that could be safely purchased by Fannie Mae and Freddie Mac if these companies were more flexible."

While many saw this demand for increasingly "flexible" loan terms and standards as a positive step for low-income and minority families, others warned that they could have potentially dangerous consequences. Franklin Raines, the Fannie chairman and first black CEO of a Fortune 500 company, warned that Cuomo's rules were moving Fannie into risky territory: "We have not been a major presence in the subprime market," he said, "but you can bet that under these goals, we will be." Fannie's chief financial officer, Timothy Howard, said that "making loans to people with less-than-perfect credit" is "something we should do." Cuomo wasn't shy about embracing subprime mortgages as a possible consequence of his goals. "GSE presence in the subprime market could be of significant benefit to lower-income families, minorities, and families living in underserved areas," his report on the new goals noted.

Fannie also developed a "flexible" product line, providing up to 100 percent financing and requiring borrowers to make as little as a $500 contribution, and bought $13.7 billion of those loans in 2003. In addition to subprime loans and securities, both banks burst into the "alt-a" market, making alternative products easily available to borrowers who had slightly better credit histories than subprime borrowers, but were unwilling to provide full documentation of their financial histories. (It was the "alt-a" investments that recently brought down the private bank IndyMac.) These risky adventures, according to the 2004 HUD report, prompted Freddie to claim that "the increased goals created tension in its business practices between meeting the goals and conducting responsible lending practices," a self-serving attempt to plant the blame back on HUD.

The HUD secretary is also required to produce voluminous rules that govern how the GSEs meet those goals, and the 187-page rules Cuomo issued opened the door to abuse.

The rules explicitly rejected the idea of imposing any new reporting requirements on the GSEs. In other words, HUD wanted Fannie and Freddie to buy risky loans, but the department didn't want to hear just how risky they were.

While fashioning these final rules, Cuomo wrestled with the octopus-like reach of Fannie and Freddie, which spend tens of millions each year on lobbying firms. The GSEs hired 88 lobbying firms over six years, three of which were friendly enough with Cuomo to give to his campaign committee later.

Now this is the same government that B Hussein wants to take over our health care. Just makes you wonder how many casualties this bureaucracy would create?

If You Want Less Of It, Tax It.

Further proof that if you want less of something, government just needs to tax it. That goes for cigarettes, drugs, prostitution, transfats, or anything else that people consume. From the WSJ:

Politicians in Annapolis are scratching their heads wondering what happened to all those chain smokers who were supposed to help balance Maryland's budget. Last year the legislature doubled the cigarette tax to $2 a pack to pay for expanded health-care coverage. Eight months later, cigarette sales have plunged 25% and the state is in fiscal distress again.

A few pols are pretending to be happy that 30 million fewer cigarette packs have been bought in the state so far this year. As House Majority Leader Kumar Barve put it, fewer people smoking is "a good thing." Yes, except that Maryland may be losing retail sales more than smokers. Residents of Maryland's Washington suburbs can shop in nearby Virginia, where the tax is only 30 cents a pack, and save at least $15 per carton.

The Maryland pols are so afraid this is true that they've made it a crime for residents to carry two packs of cigarettes that weren't purchased in the state. In other words, the state says it's legal to smoke, so long as you use cigarettes that the government can tax and thus become a financial partner in your bad habit. But if you dare to buy smokes across state lines, you can be fined.

Members of Congress, please take note. Democrats are planning one more pre-election go at a $35 billion children's health program expansion (S-chip) funded by a 61-cent per pack tobacco tax increase. They justify the new levy as a "sin tax." OK, but if Americans don't start sinning a whole lot more, states and Uncle Sam are going to go broke.

Economic Realities

This article from Steve Chapman is the cold, hard truth.

Americans feel as though the economy is in a recession and want the government to do something about it. In reality, it is expanding. In the second quarter, it grew at a respectable inflation-adjusted rate of 1.9 percent, double the pace of the first quarter. Unemployment was up, but it's still a pretty mild 5.7 percent.

When you have a loss of wealth, the best way to cope is to accept it and adapt to a lower standard of living, sooner rather than later. Sending out rebates, eliminating gas taxes, bailing out homeowners and accelerating monetary growth, among the proposed remedies, do exactly the opposite. They spare us the obligation of dealing with reality by making us feel richer so we can keep on as we were before.

But they don't change the stark fact that we are poorer now and will remain that way for some time. And they ultimately backfire by wasting money, igniting inflation or both.

In the long run, we will adapt to the new realities, the economic impact will moderate, and the pain will fade. Till then, our least destructive option is to do something no politician would dare suggest: Suck it up.

More Bad Government and Idiot Politicians

Yesterday, the FDIC closed down Indymac S&L. This institution was a spin-off of Countrywide Financial several years ago and they focused on the large mortgages that Fannie and Freddie could not buy. This failure will cost the the FDIC between $4B and $8B, or about 10% of its assets according to the WSJ. How did this happen? Well turns out that the loud mouth Senator from New York, Chuck Schumer, sent a letter to the Director of the Office of Thrift Supervision saying the S&L would fail. This essentially created a run on the bank's deposits. Failure was imminent.

But government involvement does not end there. It gets worse, much worse. By design, the Federal Government stands behind two institutions that have lost over 90% of the value, FannieMae and FreddieMac. Combined, they hold over $5T in assets. That should scare all Americans.

From the Financial Times:

The real problem, demonstrated in the tumbling prices of their equity, is that their capital is insufficient to support their liabilities, given the scale of possible losses. William Poole, former chairman of the Federal Reserve of St Louis, argued only this week that Freddie Mac would be insolvent if the value of its assets were marked to market.

If either of these entities goes belly-up, the US economy could be in for a serious jolt. So how could these entities go so far off course? After all, there is an army of government bureaucrats that watch over them. Taken from the Office of Federal Housing Enterprise Oversight (OFHEO):

OFHEO's mission is to promote housing and a strong national housing finance system by ensuring the safety and soundness of Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation). OFHEO works to ensure the capital adequacy and financial safety and soundness of two housing government-sponsored enterprises (GSEs) -- Fannie Mae and Freddie Mac.

OFHEO's oversight responsibilities include:

Conducting broad based examinations of Fannie Mae and Freddie Mac; Developing a risk-based capital standard, using a "stress test" that simulates stressful interest rate and credit risk scenarios; Making quarterly findings of capital adequacy based on minimum capital standards and a risk-based standard; Prohibiting excessive executive compensation; Issuing regulations concerning capital and enforcement standards; and Taking necessary enforcement actions.

and more:

The Federal Housing Enterprises Safety and Soundness Act of 1992 gives OFHEO a broad range of supervisory tools that the agency may employ not only to address Enterprise problems in a remedial fashion but also to take actions to prevent such problems from developing. The agency’s use of those authorities helps mitigate systemic risk by reducing the risk of failure of Fannie Mae and Freddie Mac.

We have a Federal agency that is tasked with the sole purpose of monitoring two companies and they have watched 90% of the market value of these corporation evaporate! Even worse, there is talk these two corporations will fail? How could our government be so irresponsible? This situation is no different than any other bureaucracy. There is no punishment for failure as the taxpayer will bail out the defunct businesses. This is exactly why the government has to stay out of commercial matters like these. Government and business cannot co-exist as there is no profit and loss incentive to guide behaviors and provide consequences.

I fully expect this to be a disaster of enormous proportions because the government, especially the enormously bloated US Federal Government, cannot handle a task that the free market could be dealing with effectively.

All That Land And So Little Oil

We have all heard, usually from B Hussein, that the big oil companies have claim to many acres of untapped government land and sea leases and are refusing to use them. This claim has always sounded bizarre to me since oil companies want to find low-cost fields to develop.

Today the WSJ has a piece on why B Hussein is again up to his rhetorical tricks and normal hot air (maybe the real cause of global warming). The oil companies are not drilling on these leases because there is no oil there. Instead, Congress is restricting where oil companies can drill and actually find oil.

Kansas is bad, Ohio is worse.

Governor Sebelius has done about every thing possible to destroy the Kansas economy, but Ohio is even worse. While Gov. Sebelius has seen employment in the private sector drop, she can still claim employment gains since she has increased the size of government. Same thing happened in Ohio. If we are not careful, Kansas will be following in Ohio's footsteps.

The Self-Inflicted Economic Death of Ohio

Once known as the Mother of Presidents, Ohio is now getting poorer, older and dumber – and making all the wrong moves to reverse the situation.

And that may actually be a plus for Barack Obama. His party is finding that lofty, vague promises of change combined with high-spending, high-tax, welfare state-ish policies are a political winner in the state. How else to explain why Gov. Ted Strickland's approval ratings are in the mid-50s or why Democrats may even win control of the state House for the first time in 14 years?

Tweedle-Dee and Tweedle-Dumb (Maybe Tweedle-Dumber)

I really related to the column from Burt Prelutsky today.

Frankly, what I find even scarier than Iran’s getting its dirty little hands on a nuclear bomb is the fact that tens of millions of my fellow Americans are eager to elect this numbskull in November. As someone or other once observed, success doesn’t change people, it reveals them.

But, lest you think I’m just another right-wing partisan hack, let me assure you that I’m not too enamored of most Republican politicians, either. From 2000-2006, while the GOP controlled Congress, I watched those wimps waste six years trying to curry favor with the Democrats. What they needed was Newt Gingrich with a whip, what they had was Dennis Hastert with a very wet noodle.

The biggest question I have regarding the Republicans in Washington is deciding if their stupidity out-weighs their cowardice or whether it’s the other way around. On Monday, they seem to be worried about offending homosexuals. On Tuesday, they’re terrified of angering blacks. Wednesday, they’re scared stiff of alienating illegal aliens. By Thursday, they’ve taken to their beds, suffering from the vapors. The really nutty thing is that very few of those people are going to vote for them anyway. But of course if they dared come out against same-sex marriages, affirmative action or tax-funded social services for Hispanic scofflaws, they’d be scolded by the New York Times and the Washington Post, and that’s something they simply couldn’t bear.

The entire column is worth the time to read.