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Corporate Bonds at Record Levels

Posted by Steve Markowitz on August 28, 2014

The Wall Street Journal reported that corporations are issuing US bonds, i.e. taking on debt, at record levels.  This is the third consecutive year for a record.  So far for 2014 the issued bonds are just shy of $1 trillion.

When corporations sell bonds, typically this is done to raise funds to be used for future expansion.  Such expenditures are usually productive and can be beneficial to the economy as a whole.  However, these are not normal economic times.

With interest rates remaining at record lows for years, companies are taking advantage of this abnormality, issuing debt to refinance previous loans, or merely holding cash with the belief that interest rates will rise in the future.  This hoarding of cheap cash creates economic imbalances with consequences to play out in the future.

The Fed’s low interest rate policies have not created an environment for a sustained economic recovery.  It can be argued that these policies have in fact delayed the recovery by not allowing supply and demand to meet their natural levels.  In addition, many who rely on fixed incomes, such as the elderly, are being hurt as their incomes decrease.  Finally, the artificially low interest rates have led to equity valuations that are now in bubble territory.  The world got a taste of the downside of bubbles in 2008.

Posted in Debt | Tagged: , , , | Leave a Comment »

Obama is Tone-Death at Veteran’s Convention

Posted by Steve Markowitz on August 27, 2014

On Tuesday, President Obama gave a speech at the American Legion’s national convention.  The President made his familiar presentation on America’s role in the world.  While this view obtains much acclamation from his Leftist allies, it was not so well received by the veterans, as seen in the video link below.

Obama’s cool reception from the American Legion was not surprising given the typical veteran’s more activists view of American exceptionalism.  What was surprising was the level of presidential gall and tone deafness exhibited by Obama in making the presentation to the American Legion.



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Dr. Ben Carson Verses Rev. Jesse Jackson re Ferguson

Posted by Steve Markowitz on August 25, 2014

Atty. Gen. Eric Holder once infamously said that Americans are cowards when it comes to discussing race.  Holder was correct, but for the wrong reason.  Many White Americans avoid discussions on race due to the fear of being labeled racist.  This fear has been fed by years of political correctness and intimidation from the Left.  It has thwarted open and constructive discussions on an important issue facing America.

This Blog has previously raised the issue of a small but growing number of African-Americans with conservative political views.  These Americans do not avoid discussions of race with fears of being called a racist.  However, they show great courage coming forward as they often expose themselves to even greater insults from the Left.  Over the years many have been labeled “Uncle Tom’s” and worse.

One well-respected African-American conservatives is Dr. Ben Carson.  Prior to entering the political discourse, Carson proved himself as a world renowned neurosurgeon.  Carson was not born with a silver spoon in his mouth, being raised by single mother in the inner city.  He credits his upper motility and great success on his mother who motivated Carson to achieve, irrespective of racism and other challenges he encountered.

In the video below, Dr. Carson debates Rev. Jesse Jackson concerning the most pressing challenges facing African-Americans today.  It is telling how different their positions are.  Jackson shares common Leftists view that outside and uncontrollable events by the African-American community are the biggest impediment towards upward mobility.

Carson, on the other hand, acknowledges the challenge the community faces stating:” Is there racism? Are there problems?  Yes.  Yesterday, today, and tomorrow.  But we need to start looking at bigger issues here.”  However, his message seeks to empower communities, families and individuals to find ways to succeed, as Carson did so well.

It is not surprising that Jackson and Carson view the same problems so differently.  Jackson’s success and wealth emanates mainly from becoming a professional in the civil rights movement.  Carson has obtained his success through achievement in the competitive world of medicine.  In a sense, these two individuals represent a microcosm of the difference between the way those on the Left and Right view of individuals and their responsibilities to society.

Posted in Racism | Tagged: , , , , | Leave a Comment »

Pro Israeli Letter Signed by Hollywood

Posted by Steve Markowitz on August 24, 2014

Hollywooders are generally known for Leftist political views.  With that, they have not been known for supporting Israel and many have publicly criticized Israel for its military response to Hamas’s rockets.

However, not all in Hollywood are devoid of moral convictions.  A group called Creative Community for Peace recently came out with a strong pro-Israeli statement concerning its battle with Hamas. This statement includes: “Hamas cannot be allowed to rain rockets on Israeli cities, nor can it be allowed to hold its own people hostage,” and “hospitals are for healing, not for hiding weapons. Schools are for learning, not for launching missiles.”

The list of 200 Hollywood signees below includes many on the Right, and Left.  This coming together shows promise coalescing around an issue with clear moral clarity.  It is unfortunate that the Obama Administration has shown no such clarity and more often than not acts like it is merely a mediator between two opposing groups.  The recent horrible events in Iraq perpetrated by another Sunni-based radical Islamist group ISIS, makes the White House’s position even less comprehendible.

Creative Community for Peace statement

We, the undersigned, are saddened by the devastating loss of life endured by Israelis and Palestinians in Gaza. We are pained by the suffering on both sides of the conflict and hope for a solution that brings peace to the region.

While we stand firm in our commitment to peace and justice, we must also stand firm against ideologies of hatred and genocide which are reflected in Hamas’ charter, Article 7 of which reads, “There is a Jew hiding behind me, come on and kill him!”  The son of a Hamas founder has also commented about the true nature of Hamas.

Hamas cannot be allowed to rain rockets on Israeli cities, nor can it be allowed to hold its own people hostage.  Hospitals are for healing, not for hiding weapons.  Schools are for learning, not for launching missiles.  Children are our hope, not our human shields.

We join together in support of the democratic values we all cherish and in the hope that the healing and transformative power of the arts can be used to build bridges of peace.

Capture creative community for peace

Posted in Hollywood, Israel, Radical Islam | Tagged: , , , | Leave a Comment »

Bank of America Settles with US Justice Department for $17 Billion

Posted by Steve Markowitz on August 21, 2014

The Wall Street Journal reported that mega-bank, Bank of America, has agreed to pay a $17 billion fine for its role in the mortgage crisis that led to the 2008 financial meltdown. This is only a piece of the nearly $60 billion the bank paid during the last five years to settle legal problems.

Those who cheer the huge Bank of America fine are missing the larger picture. Certainly many banks used dubious tactics and business practices that help lead to the 2008 economic meltdown. However, willing partners included the US government that pressured banks into giving mortgages to individuals who could not afford them, and the Federal Reserve whose easy money policies were major factors in creating the housing bubble. These issues, along with banker greed and borrowers, were significant factors in creating the bubble and subsequent meltdown.

How did the government respond to those largely responsible for creating economic calamity? First they bailed out large banks and other companies. Then they bailed out some individuals who borrowed too much money.

Perhaps the biggest problem relating to the huge monetary settlements between large banks and the Department of Justice is that the penalties are not placed on the perpetrators of wrongdoing. No executive or bank employee has been charged criminally by the DOJ. This is not by accident. Further, the current fines will be paid by shareholders including pension funds who had nothing to do with creating the problem.

The Department of Justice understands the misplaced logic behind the large penalties imposed on banks today. However, this populist action not only protects those in the private sector responsible for the bad behavior, but deflects attention from the government’s own role in creating the economic problems.

Posted in Bailouts, Banks | Tagged: , , , , , | Leave a Comment »

Comedian Bill Maher Calls Islam on Violence in Tweet

Posted by Steve Markowitz on August 21, 2014

Comedian Bill Maher is an unapologetic Leftist and atheist.  He now has one thing in common with Pope Francis; both have called Islam on the violence emanating from too many followers of that religion.  Maher’s recent tweet follows:

Bill Maher

Posted in Islam | Tagged: , , , | Leave a Comment »

Rick Perry Indicted for Refusing to Fund Drunk DA

Posted by Steve Markowitz on August 17, 2014


Texas Gov. Rick Perry was indicted on Friday for refusing to fund the State’s Public Integrity Unit.  The implication is that the Governor either overstepped his authority or has attempted to block some related investigation.  While this may be the case, there is at least antidotal evidence that the Unit is run by an incompetent District Attorney.

The Texas Public Integrity Unit is headed by Dist. Atty. Rosemary Lehmberg. In 2013, DA Lehmberg was arrested for driving while under the influence of alcohol. A video below shows her booking at a Texas police station. She is not only an incoherent, but also threatens the arresting officer.

Irrespective of Perry’s motive in not funding the Public Integrity Unit, DA Lehmberg has proven to be an inappropriate public servant to have the power to make decisions on criminal matters. However, like too many “servants” of the People, she is not held accountable for inappropriate behavior. It is another example of the growing tyranny by the governing class.

Posted in Politics | Tagged: , , , , , , , | Leave a Comment »

What is Money?

Posted by Steve Markowitz on August 14, 2014

For some years conservative economists have voiced opinions that the easy money policies of the Federal Reserve and the increasing deficit spending by the United States will damage the economy. As the years pass and without clear connection between these policies and their costs or consequences, these calls have begun to sound more like the girl that cried wolf. However, unless one believes in perpetual motion or alchemy, there must be costs to policies that in essence print money.

Forbes Editor-in-Chief Steve Forbes has said of money:

Money is simply a tool that measures value, like a ruler measures length and a clock measures time. Just as changing the number of inches in a foot will not increase the building of houses or anything else, lowering the value of money will not create more wealth. The only way we will ever get a real recovery is through a return to trustworthy, sound money. And the best way to achieve that is with a gold standard: a dollar linked to gold.

While reasonable people can argue as to the merits of again linking the dollar to gold, it is hard to argue with Forbes’ common –sense definition of money being a measuring tool. Fiat currencies, those not tied to a commodity other than the printing press, are a promise that the currency will be worth something of value in the future for trade or commerce. It does not take a PhD in economics to realize that if the total amount of goods, services and demand remain constant while the money supply increases, that the value of money will decrease.

As a simplistic example, in an economy for which the only goods and services offered and that there is demand for is corn. In this example there are 100 bushels of corn produced each year and demand remains constant at 100 bushels annually. Finally, the total currency available to this society is $100. Under this scenario, the price of corn will be $100 divided by 100 bushels or one dollar bushel. If these assumptions remain unchanged, except the aggregate money supply increasing to $150, the price will increase to $1.50 per bushel, $150 divided by 100 bushels. This is an inflation rate of 50% for the year caused by the natural bid up of prices that will occur, the result of excess currency chasing limited supply.

So far the federal deficit and Fed’s easy money policies have not resulted in significant inflation. This is due to extraordinary economic events including: 1) outsourcing that has lowered the cost of labor to the developed world, 2) excessive production capacity due to significant increases, mainly in China, and 3) historically low cost of financing that has offset spending increases by the government and lowered various costs to private industry. However, none of these items are sustainable, which when the tide turns, has the potential to lead to significant inflation with little warning.

Few economists are currently predicting significant inflation in the near-term. However, significant economic changes are rarely predicted in advance by mainstream economists. We need look no further than their track record of not predicting the 2008 economic meltdown or the problems that the subprime mortgage market would cause the economy.

Bubbles and other non-sustainable economic events generally continue much longer than reasonable logic predicts. This reality leads to a hockey stick type trajectory towards the end of bubbles. Therefore, the best economists can do is to predict a low rate of inflation until inflation kicks in. Yikes and hold on!

Posted in economics, Inflation | Tagged: , , , , , | 6 Comments »

Candidate Obama Derides Presidential Vacations

Posted by Steve Markowitz on August 12, 2014

While politicians tend to take liberties with truth and sincerity, Barack Obama has taken this to new levels. On nearly a weekly basis, decisions he makes are in opposite of what he promised the People when seeking office.

Recently some have criticized the President for going on vacation while the Middle East is in turmoil and Russia is on the verge of invading Ukraine. He is also been criticized for his many golf outings and fund-raising tours, some of which have also occurred when significant international turmoil was occurring.

Supporters of the President point out that the job is a difficult one and deserving vacations. It is hard to disagree with this logic. However, sometimes vacations need to be put off given unforeseen urgencies. In addition, it is difficult to justify the many outings that this President takes. Finally, when running for his first term, Senator Obama said (emphasis added):

You have to understand that if you seek that office, then you have to be prepared to give your life to it. Essentially, the bargain that I think every President strikes with the American people is, ‘you give me this office, then in turn my fears, doubts, insecurities, foibles, need for sleep, family life, vacations, leisure, is gone. I am giving myself to you.’

While the Barack Obama once correctly said that “words matter”, he does not hold himself to this reasonable standard. If indeed words matter, then promises made should be held to an even higher standard.

Posted in President Obama | Tagged: , | 1 Comment »

Former NFL Player Blames Anti-Poverty Programs for Damaging African-American Community

Posted by Steve Markowitz on August 9, 2014

Former NFL linebacker, Garry Cobb, played college football at USC and then went on to an 11 year pro football career. He is now running for Congress in New Jersey as a Republican in an area that typically votes Democratic.

In a television interview (video below), Cobb discusses why he switched parties and became a Republican years ago. He explains that as a child in the 60s his parents instilled in their large family a strong work ethic. At the same time he watched some of his cousins’ families break up as a result of Lyndon Johnson’s antipoverty programs, which that offered financial incentives for fathers to leave their households. As a result, Cobb also watched some of his cousins take the wrong path, ending up in jail. He contrasts this to the success that he and his siblings have, a result of his parents not getting sucked into the Progressive’s vortex.

Cobb’s explanation of the damage done to the African-American community by governmental programs is compelling. It should be the centerpiece of the Republican Party’s domestic agenda. However, Republicans often cower from the fear of being called racist. As an African-American, Cobb has no such fear. He is joining a still small, but growing list of African-Americans who are becoming a more vocal part of the Republican Party including Col. Allen West and Dr. Ben Carson.

Republicans would do well to elect leaders like Cobb who have the ability to articulate a cohesive domestic policy. Their current leadership is lacking in these important skills.

Posted in Government Ineptness, Racism | Tagged: , , , , , , , , , , , | Leave a Comment »


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