The Hippie Yippies

Across the country the Hippie Yippies are "ocupying". Those without jobs, who went to college yet find they did not get an education, those who have no clue about, well, anything, are now gathering in major cities to protest, um, well, nobody is really sure. It appears they are angry that no one has handed them a job, and that they are on the hook for student loans, for an education they did not receive. They do not appear angry at their colleges however, just the banks that loaned them the money. What a bunch of useless nits. As one astute observer put it "25 is the new 15". I predict the "occupy for no reason" movement will last just as long as the weather stays nice. When the snow falls, it will be back to the parent's basement.

For the Republicans, this show of idiocy is a gift, as all shades of the Looney Left rainbow, from Obama to SEIU to Michael Moore embrace the protesters demands for "something". Voters are seeing the Rpublicans and the Tea Party as the "Rational Right", which can only magnify the 2012 sweep.

One last day of summer

This picture was taken October 9th at Wingaersheek beach on Cape Ann Massachusetts. After Labor Day, as the days grow shorter and colder, New Englanders begin to hunker down for the winter. Apple picking and foliage viewing are usually the last gasp activities of nice weather before the leaves and then the snow begin falling. But on October 9th a rare August day coincided with a weekend, so bathing suits and sunscreen were dug out from premature storage, and the beach was stormed. With 9% unemployment and an economy stuck in the mud of Obamanomics for another 13 months, it is important to appreciate the simple joy of a day at the beach.

The hidden costs of Green

Within the next six weeks Massachusetts is scheduled to release its new redistricting map. The redistricting is necessary because MA loses one congressional district due to our state growing its population slower than other states (such as Texas, which gains 4 seats).

The question is: why is MA experiencing sluggish population growth? One answer might be the map below, which shows the relative cost of energy across the country. If you go to this link you can scroll over each state and see what the cost of power is in kilowatt-hours. What you will see is that the state with THE highest cost of power is Massachusetts.

High power costs are clearly a dis-incentive for companies looking to locate in MA. The high power costs are also a dis-incentive for people to live in MA. People and jobs are moving out. So why is power so expensive in Massachusetts?

A study conducted by The Beacon Hill Institute (at Suffolk University) and published in October of 2010 points to one clear driver: green energy mandates on electricity producers. From the executive summary:

“Massachusetts has attempted to lead the push for renewable energy and energy efficiency programs. The state currently offers over 25 unique mandates, programs and incentives to promote renewable energy and energy efficiency. Since all of these mandates, programs and incentives attempt to influence the behavior of utilities, consumers and businesses they incur costs. Massachusetts ratepayers will continue to pay for these programs through higher electricity bills.”

“While the costs of these mandates, programs and incentives are already substantial, we expect them to rise dramatically in the coming years as an ever greater percentage of our electricity must be generated from renewable sources. As Table 2 illustrates, the added cost of these mandates, programs and incentives will more than double to over 2.6 cents per kWh, and nearly $1 billion annually by 2020. The cumulative cost over the period will be more than $9.8 billion”

Below is a chart showing the effect of these 25 mandates on the price of electricity over the next 10 years:

In its pursuit of ‘green’, MA has created a significant drag on the state’s economy, and a huge reason for people, companies, and jobs to move out. A smaller tax base means those that remain have to pay more, and the cycle of flight continues.

The Obama administration and the Democrats are trying to port this green mess nationally. The Solyndra fiasco is just symptom of damaging energy policy, Evergreen Solar is another. So the question is: who is driving this policy? Do we know anyone in Congress on the Energy and Commerce Committee? Perhaps a senior Democrat who drove policy for the first two years of the Obama administration? I’ll give you a hint – his name rhymes with Ed Malarkey, and he needs to be retired before his policies do more damage.

The Green agenda is draining our budgets and killing jobs. Let your representatives know that the green-energy surcharges must stop.

The sky is falling! Not.

With just 3 days to go until the August 2nd date for "default", and with no agreement in sight, let's take a look at exactly what will happen if no deal is reached and the credit ceiling does not go up.

First of all, despite claims from President Odrama, the US will not default on its debts. There is plenty of cash to pay our creditors. And medicare. And social security. And the military. But not all government functions will be able to keep going - in fact 40% of the federal government will shut down. Inconvenient perhaps, but not Armageddon.

Many news organizations, even Fox News, have pointed to the decline in the stock market last week as a sign that investors are concerned about the debt ceiling. As a professional working in the financial sector, I can say with some certainty that the markets are not worried that the federal government won't be able to continue spending money it doesn't have. The markets are concerned that the economy is limping along at best. Weak GDP numbers are the issue, not the debt limit.

Another theory is that investors are concerned that without a debt ceiling increase the credit rating on US debt will decline, raising interest rates across the economy. But the markets understand that a downgrade of debt is going to happen no matter what. No plan currently under consideration in congress addresses the $14 TRILLION debt problem to the satisfaction of the credit agencies. If anything, the markets are reacting to the increase in interest rates that are inevitable after years of over-spending.

So what would happen if we shut down 40% of the government and the sky did NOT fall? I think this is actually the biggest fear of the Democrats. In three days it looks like we will have an answer to that question.

The fall of Rome

I recently spent some vacation time on the west coast of Italy. In Rome, I was awed, as most tourists are, by the 2000 year old remnants of the Roman Empire: The Forum, the Pantheon, and of course the Coliseum. For a thousand years, from roughly 600BC to 400AD, Rome was the height of enlightenment, of art, architecture, technology, science and political freedoms. And then the Barbarians sacked Rome, and the Dark Ages descended.

Walking around Rome, walking around Pompeii, the shadows of that great ancient civilization stand as a warning for today: The US is at the peak of its power, at the forefront of technology, architecture, art and science. This country has been around for just 235 years, a blink of the eye on the Roman scale. Will we surpass the Romans, will we last as a culture even half as long as the Romans? Or will we repeat the mistakes of the Romans, weaken ourselves from within, and be over-run by our enemies? Given the current direction of the country, it was fairly disconcerting to see the scattered remains of a civilization that achieved even greater things in its time than we have in ours.

With that sense of foreboding imparted from the ancient ruins, my vacation next took me to Mallorca, an island off the coast of Spain. And sitting just outside the harbor of the city of Palma on the island of Mallorca, flying the American flag, was the aircraft carrier USS Enterprise – with its flight deck full of aircraft. Nothing lifts the spirits like the sight of US power floating by. We may be moving in the wrong direction at the moment, but we’re not done yet.

We know where this path goes – over a cliff

If you understand economics, you can pretty easily predict the future. For example, history has shown with amazing clarity that socialism leads to societal disaster. Always. The more socialism, the quicker the disaster. In 2000 Zimbabwe seized the farms of 4000 white farmers. At that point simple economic principles forecast years of economic crisis, which unfortunately played out exactly as expected (hyperinflation in Zimbabwe doubles prices every 1.3 days, the unemployment rate is 80%). Everybody who understands economics saw the pending collapse immediately.

The path to disaster is playing out more slowly in Europe, but Europeans will find they simply can not beat the financial math. Greece is ground zero – the government borrowed heavily to shovel money to its citizens (its voters), and now can not pay back that money. That is a problem for the European banks that lent Greece all the money. If Greece goes down, those banks go down, which will likely torpedo the countries in which those banks are located. So the countries of the European Union have decided to ship tax-payer cash to Greece so that Greece can keep paying back the banks. But to get that cash for Greece, the other European countries (particularly France and Germany) must raise taxes. To the German taxpayer is certainly looks like he is paying more so that Greece can live beyond its means.

If the problem was just Greece, it would probably be manageable. But the socialist-leaning attitude of the Greeks permeates all of Europe, and there is the high likelihood that if Greece defaults on its debts, other countries such as Portugal, Ireland, and perhaps Spain might also default on their debts. The taxpayers of Germany and France are not going to bail them out, the sovereign bonds of many countries are going to default (Greece first and soon), many banks will fail, economic growth will slow, and the Euro itself will dissolve. There’s an old saying that Socialism stops when other people’s money runs out.

Which brings us to the US. The states of California, Illinois, Michigan and New York are teetering on collapse precisely because they have been infected with high levels of socialism – promise everybody everything, with no way to pay for it. These states (and Massachusetts isn’t too far behind) are losing people to ‘right to work’ pro-growth states as their governments attempt to impose ever-higher taxes. Illinois in particular needs to find a way to repudiate its crushing debt burden. When it defaults on its municipal bonds, the interest rates on all municipal bonds will increase to incorporate this new risk of default. Which is a good thing. These states would not have the enormous debt problems if investors had not given them more debt than the states could handle. The introduction of some ‘moral hazard’ in muni bonds would be a positive, but would make subsequent defaults by other states more likely (because they would have to roll over debt at higher interest rates).

On the federal level, the infecting socialism can be seen in the Medicare debate. Medicare is on its way to insolvency, the Republicans (Paul Ryan in particular) are proposing difficult solutions to a difficult problem, and the Democrats are simply standing around shouting “they are trying to kill grandma!” The Democrats have not proposed an alternate solution, and the status quo is not an option. Economic reality will come crashing down hard very shortly, and the Democrat’s strategy of ignoring the problem will just make the pain worse.

In fact, the entire federal budget debate is a debate about the level of government social programs that can be afforded. The Republicans are trying to balance the books, the Democrats are ignoring the problem, not even proposing a 2012 budget. Much easier to criticize the Republican budget, better sound bites.

The Republicans and the Tea Party are trying to shake voters of their stupor, grab them by the lapels and get them to understand that economic realities are leading our country to a bad future. It was predictable in Zimbabwe, it was predictable in Europe, and it is entirely predictable here. The 2012 election is about fiscal responsibility, and probably our last, best chance to alter the math before the walls come tumbling down.

The momentum builds!

We certainly can not let last week’s big win for taxpayers in Wisconsin pass unremarked upon. The unions poured millions into the effort to stack the Wisconsin Supreme Court, and it certainly appears that they failed. Even better, they thought they won, and THEN the rug was pulled out from underneath them – a 200 vote preliminary margin of victory for the Democrats/Unions turned into a 7,000 vote margin for the Republicans/Taxpayers when the official tally picked up a suburb that had been left out of the preliminary count. And the Democrat had already given her victory speech! A recount is a possibility, but the margin is so large now that the challenger would have to pay for it.

As one commentator observed - although accidental, Wisconsin may have stumbled on a good strategy: hold back Republican votes so that the Democrat machine doesn’t know how many ‘extra’ votes to come up with, then at the last second drop the hammer down.

The result is a huge win for the forces of fiscal restraint, a huge loss for the unions which wasted a good deal of member dues on the effort (which won’t be available for other races), and hopefully it energizes the forces of fiscal restraint and de-motivates the public unions. Put that together with a pretty good outcome of the congressional budget battle over fiscal 2011 spending, and the average taxpayer had one of the best weeks since the November election. But while two battles appear to have gone to the good guys, they were just skirmished in the bigger war to re-start our country. This war is likely to continue for years, but the forces of socialism are now clearly on the defensive.