Tag Archives: morality

Bailouts

Posted on by
2

Spiegel Online International carried a disturbing story Monday on the subject of bailouts.

The proximate item is Greece’s economic strait, and this is what Spiegel is reporting about that.  The current troika—the IMF, the European Commission, and the European Central Bank—are proposing

[a]nother partial default.  That, indeed, would seem to be the conclusion that Greece’s main international creditors have come to.  According to information received by SPIEGEL, representatives of the so-called troika—made up of the European Central Bank, the European Commission and the International Monetary Fund—proposed just such a debt haircut at a meeting last Thursday held in preparation for the next gathering of euro-zone finance ministers.

But half-measures simply prolong the problem and continue Greece’s addiction to handouts while at the same time providing no mechanism for getting the Greeks to self-sufficiency other than leaving them to their own, already failed devices—both those that drove them to this strait and those of the last three years that have had no useful effect.

Worse, though,

This time around, public creditors would be involved, meaning that taxpayer money from those countries which have stood behind Greece would vanish off the books.

But where is the justice in this?  Indeed, where was the justice, originally, in forcing the taxpayers of entirely separate jurisdictions—other nations—to indemnify the Greeks (and the Irish, and by extension, the Spanish, Italians, and Portuguese) against their own foolish decisions?  Indemnify rather than help, since no meaningful accountability mechanisms were applied.

That’s in the past; those innocent taxpayers already are dragooned into the existing bailout.  The primary question remains, though: where is the justice in compounding that prior error by extending it, by forcing responsible taxpayers to pay for continuing this folly?  And how does this enabling help the Greeks (and Spanish, Italians, and Portuguese; although these three already are attempting preemptive measures so as to avoid their own humiliation)?

Indeed,

Athens has only introduced 60 percent of the reforms [already] demanded by the European Union.

Yet,

The troika has already agreed to give Greece two extra years to meet its austerity goals, a delay that will likely result in a need for up to €30 billion in additional aid, according to the ECB and European Commission.  The IMF believes the funding gap will be closer to €38 billion.

Thus, the EU and the IMF know they’re proposing throwing money down a rat hole, and they’re proposing that anyway.  It’s true enough that cutting the Greeks off from further bailout moves will jeopardize the taxpayers’ money already committed.  However, it’s the nature of bankruptcy—which the Greeks will be better off going through—that such debts get written off and the creditors lose out.  But that’s the only way to stanch the bleeding here.  There’s no useful purpose in committing additional taxpayer funds to this failed effort.

Take careful note of the similarities to our own situation.  Failures here, too, says the current administration, need to be propped up with taxpayer money and, in our case, favored investors protected from the consequences of their decisions.

Death Tax Failure

Posted on by
Reply

The death tax, aka “estate tax” was, briefly, 0 for 2010, then rose to 35% of an estate’s value above $5 million for 2011 and 2012.  Next year—in addition to the fiscal cliff of the Obama tax increases and the Obama sequestration that occur on 1 Jan—the death tax is set to rise again, to a usurious 55% of anything above $1 million.

Never mind that this theft of a parent’s hard-won legacy, intended to be for the benefit of the his sons and daughters, simply leads to market distortions by those rich enough to be able to follow the Warren Buffet example of transferring wealth to, for instance, charitable organizations (good for them, though), and so avoiding—legally and appropriately—sending revenue unnecessarily to the Federal government.

Consider the choices lesser lights—Joe the Plumber with his business, for instance—are forced to make instead.

When [Mr Wurzelbacher] begins to consider retirement with perhaps $10 million of lifetime wealth, he can reinvest the profits in the business (which means growth and more workers) or live lavishly in retirement and spend the money down to zero.

In the first case, he is smacked with federal…death taxes that can take away half of the wealth.  In the second instance, he pays no tax.  A new study by the Joint Economic Committee Republican staff estimates that because of this disincentive to save and invest “the estate tax has cumulatively reduced the amount of capital stock in the US economy by roughly $1.1 trillion.”

Democratic Presidential Candidate Barack Obama insists that this is entirely fair—that death tax is needed for his redistribution programs.  Despite those choices and loopholes.

As the WSJ notes, though (the above link), there is a moral question here, too:

The levy makes Uncle Sam up to a half-partner in the proceeds of successful businesses.  That is on top of the property and income taxes and other assessments that owners pay year after year.  … What is truly unfair is when a family-owned enterprise has to be sold at auction to pay the death tax to the IRS.

Obama has yet to address this moral question in any serious fashion.  Keep that in mind as you go to the polls.

A Do-Nothing Senate

Posted on by
Reply

Recall the mandate to move to the right of center that our Congress received in the 2010 elections, when the people transferred 63 seats in the House of Representative and 6 in the Senate from the Democrats to the Republicans—a majority of those transfers to Tea Party Republicans, hence the mandate to move to the right.  Despite that outcome, though, the Senate remained under the control of the Democrats.  What has the Senate done in response to those instructions from its bosses?  The figure below, from The Wall Street Journal, tells the tale of the Progressives’ insubordination.

This illustrates the work the House has done these last two years in response to those instructions and the (not insignificant) numbers of House Democrats who actively supported that work.

On top of this dereliction, the Senate has refused to do its own work:

[T]he Senate failed to pass any budget in 2012. Or 2011. Or 2010. …more than 1,200 days.

And

The Senate also failed in 2010 and 2012 to pass a single appropriations bill.  …that hadn’t happened before in the 150-year history of the current spending process.  This year the Senate even failed to enact a national defense authorization bill, which almost never happens.

Senate Progressives have announced that they’ll continue their refusal to perform in 2013 [emphasis in original]:

Chuck Schumer (D, NY) warned that Democrats will stop any attempt at bipartisan tax reform next year, calling the idea “obsolete.”

We can’t afford even two more years of this Progressive refusal to perform, much less four more years of an incumbent President’s arrogance.

A Modern Concept of “Morality”

Posted on by
Reply

Leaving aside what led these folks to take on such debt in the first place, what a difference in the concepts of honor and morality is displayed below, both across generations and within the newer generation.  Think about what values were being taught….

On the one hand, we have these two examples [emphasis added].

Ms Cyndee Marcoux, a Massachusetts librarian, says she feels trapped.  She co-signed student loans for two of her three children—and both of them are struggling.  One, Jocelyn Marcoux, 30, says she has given up on paying back the loans that allowed her to graduate from the University of North Carolina at Charlotte in 2005.  An import-export agent for a freight company, she says she struggled to pay for child care and medical expenses for an autoimmune disease she developed.  “If I had known the amount of money I would have to pay a month, I wouldn’t have gone,” she says.

…

The younger Ms Marcoux feels she is taking a calculated risk, because her husband owns their home and she has little savings. “If they sue us, they can’t get anything,” she says.  But her mother sees things differently; she even moved in with her 83-year-old mother to pare expenses and make payments on Jocelyn’s loans.  “I have to,” she says. “I co-signed them.“

So, the child quit and dumped the whole obligation onto her mother.  Having little of present value other than her income stream that can be taken by creditors, Marcoux the Younger feels no obligation to do the right thing, solely because it’s the right thing to do.  Yet her mother hasn’t quit, isn’t “taking a calculated risk,” and isn’t reneging on the joint obligation.  The mother understands the nature of commitment: “I have to.”  Even when there are no material consequences for not honoring it.

I also have to wonder two things: what was the mother teaching the daughter early on, and what prompted the daughter (and mother) to sign loans that they did not understand?

and

[G]randparents are getting pulled into the debt morass too; some of them co-signed when a student’s own parents didn’t qualify to help out.  Pam Gerke, a 49-year-old divorced fourth-grade teacher in Davison, MI, owes $98,000 on her own student loans—too much, she says, for her to co-sign her daughter’s loans for beauty school.  So Ms. Gerke’s mother, Darlene Kuhn, did so instead.

After the daughter dropped out and quit making the $200-a-month payments on her debt in 2010, the 72-year-old Ms. Kuhn took over. She says she fears her credit rating will fall, so she draws from the $1,400 a month she collects in Social Security—her only income since retiring.  “I tried to do a good deed,” she says.  Indeed, both Ms. Kuhn and Ms. Gerke say they are bitter about the whole experience. (The daughter declined to return phone messages.)  “My mother would rather not eat than not pay her bills,” Ms. Gerke says.  “I’m mortified as a mother and a daughter.”

Once again, the child feels no obligation to honor her commitments.  It’s too hard, apparently.  But morality and integrity aren’t too hard for her grandmother.

I have to wonder here, too, what values were being taught.  Also, how did the loan of the mother-between-the-grandmother-and-granddaughter get so large?

On the other hand, we have these [emphasis added].

Bob Stinson, 65, retired from his job as a FedEx Corp plane-maintenance scheduler in 2003.  Two years later, he co-signed for the first chunk of about $50,000 in student loans for his daughter Tiffany, a dental assistant with an associate degree.  Although Mr Stinson had stopped working due to degenerative arthritis, he and his wife were enjoying a comfortable retirement at their home outside Michigan City, MS, he says.

But after getting her bachelor’s degree, Tiffany Stinson had to sidetrack her plans to go to dental school to help her mom recover from serious surgery.  She says she stopped making her $1,200 monthly student loan payments when “I couldn’t pay for stuff right then.”  She has since resumed making partial payments….

A family emergency—not a personal convenience emergency—caused an interruption, but now the child, the primary borrower, is trying to catch up, instead of walking away and dumping it all on the co-signer.

And

[S]ome borrowers are simply working on paying off their debt faster—in part, to help get co-signers off the hook.  Valentina Fleer, a 29-year-old opera singer in New York, faithfully has made $864 monthly payments on about $90,000 in private student loans that helped her graduate from Barnard College and Manhattan School of Music in New York.  She says her father co-signed for some of the loans because “it was only way I could get the money.”

But her parents are Russian immigrants, and Ms Fleer says she didn’t feel that she or her parents fully understood their commitment when they applied for the loans.

“Today, she says, the debt “just hangs over me.  I make those payments because I don’t want any backlash hanging over them.“

As before, I have to wonder why they made the loan commitments if they didn’t understand what they were doing.  But, more importantly, Ms Fleer is honoring her commitment and actively declining to dump it onto her co-signer.

Lies of my President, Part…Too Many

Posted on by
Reply

This is Part XX of my series on the lies told by Democratic Presidential Candidate Barack Obama in the nearly four years in which he’s been in office.  As I said earlier, I’m not concerned with his broken campaign promises so much as I am with his dishonesty while in office.

Kimberly Strassel, writing in Friday’s Wall Street Journal, describes a series of Democratic Presidential Candidate Barack Obama’s…changing…positions.  She’s polite and lays these variations off onto a psychology malady (a legitimate one) called projection.  She’s being polite; I have no such constraints.  Some of Obama’s changes are outright lies.  Herewith are the lowlights of Obama’s claims; RTWT.

I happen to be a proponent of a single-payer universal health care program—Illinois state Senator Barack Obama, June 2003.

I have not said that I was a single-payer supporter—President Obama, August 2009.

***

Leadership means that the buck stops here….  I therefore intend to oppose the effort to increase America’s debt limit—Senator Barack Obama, March 2006.

It is not acceptable for us not to raise the debt ceiling and to allow the US government to default—President Obama, July 2011.

***

We have an idea for the trigger….  Sequestration—Obama Office of Management and Budget Director Jack Lew in 2011, as reported in Bob Woodward’s The Price of Politics.

First of all, the sequester is not something that I’ve proposed. It is something that Congress has proposed—President Obama, October 2012.

***

If I am the Democratic nominee, I will aggressively pursue an agreement with the Republican nominee to preserve a publicly financed general election—Senator Obama, 2007.

We’ve made the decision not to participate in the public financing system for the general election—Senator Obama, June 2008.

***

I will never question the patriotism of others in this campaign—Senator Obama, June 2008.

The way Bush has done it over the last eight years is…[he] added $4 trillion by his lonesome, so that we now have over $9 trillion of debt that we are going to have to pay back….  That’s irresponsible. It’s unpatriotic—Senator Obama, July 2008.

***

Instead of celebrating your dynamic union and seeking to partner with you to meet common challenges, there have been times when America has shown arrogance and been dismissive, even derisive—President Obama, April 2009, in France.

We have at times been disengaged, and at times we sought to dictate our terms—President Obama, April 2009, in Trinidad and Tobago.

Nothing Governor Romney just said is true, starting with this notion of me apologizing—Barack Obama, October 2012, on whether he went on a global apology tour.

***

So if somebody wants to build a coal-fired plant, they can, it’s just that it will bankrupt them—Senator Obama, January 2008, on his plans to financially penalize coal plants.

Now is the time to end this addiction, and to understand that drilling is a stop-gap measure, not a long-term solution—Senator Obama, August 2008.

Here’s what I’ve done since I’ve been president.  We have increased oil production to the highest levels in 16 years.  Natural gas production is the highest it’s been in decades.  We have seen increases in coal production and coal employment—President Obama, October 2012.

***