Cincinnatus BLOG *** Political Commentary - Social Commentary

  The Obama 10 year budget includes trillions in new spending programs at a time when tax revenues are declining at a precipitous rate. The projected deficit in the Obama Budget is $7.0 trillion for the decade 2010 to 2019. That's the good news! The Congressional Budget Office (CBO) has concluded that, if the Obama budget were approved, the federal government would actually run even larger deficits averaging nearly $1 trillion a year over the next decade. The cumulative deficit from 2010-19 would be $9.3 trillion, according to the report - $2.3 trillion more than the Obama administration's forecast. The main reason for the difference in budget estimates is a difference in economic growth, with congressional views of long-term growth less optimistic than those of the White House. … Continue reading | 7 Comments

  On average home prices have fallen 32.2% since they hit their peak in the second quarter of 2006. In super housing bubble markets like Phoenix and Las Vegas home prices have plummeted by 50% from their all time highs. At the risk of being labeled a cock-eyed optimist I will predict  - The end is near! What makes me so optimistic? Traditionally home prices have tracked inflation. In fact, in the last 50 years home prices have appreciated approximately 1% faster than inflation. There is an internal logic to this trend. If housing prices appreciate at a rate that is appreciably faster than income, within a decade we would be unable to purchase our own homes. And that is exactly what has happened. Fueled by political pressure from the left and… Continue reading | 2 Comments

  Now that Standard and Poor's has cut its outlook on the U.K.'s AAA credit rating, can the U.S. be far behind. We're headed down the same primrose path, according to Bill Gross co-chief investment officer of PIMCO, who predicts that the U.S. "will eventually loose its top rating". How did we get to this sorry state of affairs? Unbridled spending and borrowing  - The U.S. is boosting its debt sales to $3.25 trillion for the fiscal years ending Sept 30th pushing the nation's "marketable debt" to an unprecedented $6.36 trillion. The Federal Reserve's custodial holdings of Treasuries for foreign accounts have already risen to $1.9 trillion. But the past is only prelude to the Obama fiscal future. Further deterioration of the dollar and our credit rating is a virtual certainty as… Continue reading | 1 Comment

  How much confidence do we have in the science? Researchers use the scientific method to search for cause and effect relationships. This method requires that a hypothesis be constructed. Scientists then design an appropriate well-controlled experiment to test that hypothesis. The results must be statistically significant and reproducible in order to be considered valid. There are a number of techniques that can be used to enhance the objectivity of a study as well as increase its statistical reliability. In prospective medical research for example, we often use double blind, placebo controlled studies so that neither the researcher nor the patient knows if they are receiving the active drug or a placebo. This eliminates observer bias. Some times we cross the patient's over, so that the same patient takes both the active… Continue reading | 13 Comments

  Barack Obama will travel to Egypt next month to deliver a long-anticipated speech about America's relations with the Muslim world.  "President Obama will deliver his long-promised speech to the Muslim world in Egypt next month", White House Press Secretary Robert Gibbs declared.  It does make one wonder what Obama sees as the role of the United States in the 21st century. Will the secular U.S. government give de facto recognition to a global "Islamic State" that supersedes our relationship with the secular governments of these countries? Will he stop on the way back in Rome to discuss U.S. relations with Catholic countries and go on to London to discuss U.S. Anglican relations? What could a U.S. President possibly say beyond the fact that we respect all religions and we believe that every… Continue reading | 11 Comments

  Start small: dispose of a pesky corporate CEO, who is not compliant and objects to your grand design for the U.S. automobile industry. Who could object to the summary dismissal of the unpopular Mr. Wagoner, after all he was just getting in the way of the grand plan. Never mind that President Obama had no such legal authority. By simple fiat, he fired a sitting corporate CEO, and overrode those with the legal authority to make such decisions, the GM board of directors. Like so many politicians before him, he instinctively knows that in an opportune economic crisis, it is only a small step from being the duly elected "President" to being transformed into a charismatic leader with the power to bend the will of the people to his own. It… Continue reading | 113 Comments

  The Democrat Party is in the hands of the Pelosi-Obama extreme left, the Republican Party is in the hands of the Bush-Limbaugh fanatic religious right and the mindless party faithful gleefully sing along, ours is not to reason why, ours is but to do or die. The Congressional Budget Office (CBO) estimates that there will be trillion dollar annual deficits for the next decade if the Pelosi-Obama left prevails, and the response from the right, narrow-minded religious platitudes. Maybe its time for a third party that represents the rational, pragmatic majority of the country. I believe the founders would approve if we called our new party, The Enlightenment Party. First let's look at what we can expect from the left: In 2010 federal outlays will be a breathtaking $3.6 trillion, or 24.1% of… Continue reading | 15 Comments

  Tax havens! Greedy Wall Street bankers! Hedge fund money lenders! Speculators! Shameful profiteers! President Obama's populist demagogic outcries against America's 200-year history of free market capitalism seem limitless. My immigrant grandparents are undoubtedly turning over in their graves to hear such blasphemy from the mouth of the President of the United States. Obama's most recent target - those evil Caribbean tax havens. The current tax-deferral system is merely a ban-aid on a tax system that is openly hostile to American multinational companies. No other major industrial country treats its international business interests with such disdain and puts its companies at such a competitive disadvantage in the global economy. Then we wonder why we have such a large trade deficit. A German firm doing business in Ireland, say, pays no German income… Continue reading | 8 Comments

  Despite the soaring rhetoric to the contrary, President Obama has amassed an impressive record of caving to every Democratic special interest group in America. Not once, has he stood up to the special interests. The critical question is - will he find his manhood before he gives away the national store? We were promised shovel ready infrastructure projects by President Obama, but only a miserly 8% of the $787 billion stimulus plan was allocated to this use, and very little of that will be spent in 2009. The left of his party held sway and President Obama sheepishly, albeit with great fanfare, signed on. With great oratorical flourish we were introduced to President Obama's choice for Secretary of Education, Arne Duncan, the man who would bring real change to a failing inner-city… Continue reading | 11 Comments

  The stress tests appear to be boiling down to one critical measurement of bank capital, Tangible Common Equity (TCE). While the assets themselves may be tangible, the intangible result could be a tectonic shift to a politicized banking system. To avoid any confusion it is probably best that I define my terms at the outset: 1. Tangible Common Equity  (TCE) equals book value minus intangible assets, goodwill, and preferred equity. Essentially this is the most conservative measure of bank capital and represents what common shareholders would have left if a bank were liquidated. 2. Tangible Book Value (TBV) equals book value minus intangible assets and goodwill. This measure would include preferred shares held by the government and private investors and gives a broad view of… Continue reading | 3 Comments