FedUpUSA

Oh boy…..

Debra Rousey of Gainesville, Georgia, says that she received an unemployment check of $194 last week, half the usual amount she receives, along with a letter announcing that this check would be her last. She is now in a complete panic over what to do next.

Welcome to a thing called “reality.”

“I’m desperate and devastated,” she told HuffPost. “I didn’t get any warning. I was barely making ends meet on $330 a week, trying to diaper my grandchild and put food on the table for the four people I support. What do I do now? How am I going to make rent next month? I keep thinking, ‘If I end up in a cardboard box, can I find one big enough for everybody, or do I have to send my son to live with someone else?’”

Ok, let’s think here.  Four people you support?  One is a grandchild (where’s Dad – if not Mom?); who are the other four?

Since Rousey, 45, was laid off from her job as a branch manager for Suntrust bank in November, she says she has been “frantically looking” for a job — everything from entry-level marketing positions to a fry cook job at McDonalds — but hasn’t had an interview in months. As of tomorrow, she will be one of nearly 1.7 million people whose unemployment benefits have prematurely expired while Congress sits on legislation that would renew those benefits.

How long did you have that job and how much did you save of your income during that time?  Little – or zero?  It sounds like it.  This situation, incidentally, is why that’s a bad idea.

Rousey is currently pursuing a master’s degree in adult education through an online program, and her son, 17, and her 25-year-old daughter are also full-time students. She said all three of them are desperate for work.

How is the school being paid for?  And the 25-year old – how long has she been in school?

“They cut off my Internet and cable about five minutes ago, and my landlord is already calling,” she said. “I don’t have time to wait for Congress to extend these benefits. I’m drowning fast.”

Oh, I see.  And in November, when you lost your job, the Internet and Cable (which is likely $100 a month or so) was not something you cut off proactively to conserve funds?  Why not?

Got a cell phone?  What’s the monthly nut on that?

Diapers are expensive in packages.  Cloth ones are cheaper.  Yes, they’re less convenient – a lot less convenient.  I remember buying the packages of Pampers for my daughter.  If I had been broke, cloth it would be.

What’s your electric bill?  Did the AC get cut off in November too, or has it been blasting away all spring and summer?  Was your heat set at “Jimmy Carter” levels over the winter months, or was it a nice toasty 72F inside?

November -> June is six months during which the standard 26 weeks of unemployment (that you do pay into via taxes and premiums that are assessed on your employer) ran. 

The rest is a handout.

Over those six months this individual appears to have made no adjustments of materiality to compensate for the fact that she lost her income.  Now she’s in a panic and is looking for someone to blame. 

Notice that nowhere in that article is even the first hint of accepting responsibility for not cutting back on significant discretionary purchases when the job was lost and attempting to stretch every dollar as far as it could possibly go.

I empathize with this woman’s dilemma, but here’s the problem: We (the government, the people) don’t have the money to keep doing this.

Yes, I also recognize that we squandered an awful lot of money, but those funds are gone.  Take it out on whoever you’d like for those acts.  I did my level damndest to stop it, and failed.  We gave money to GM, we gave money to Chrysler, we gave money to AIG, we gave money to foreign banks.  Both republican and democrat administrations did this, including President Barack Obama who, I remind everyone voted for TARP along with a number of other pork-laden bills.

Nearly three years ago I recommended that the government fund and put aside $200 billion in actual cash to provide emergency shelter and food for up to 25% of the population for as long as 12-24 months.  I was entirely serious, although I’m sure that many Congressmen and women who got my faxed letter perceived me to be absolutely insane.  My recommendation was to be prepared to provide “three hots and a cot” on closed military bases or unused parts of active facilities for this purpose.  These would not be “luxury accommodations” or even trailers – we’re talking literally “three hots, a cot, hot water to shower with and flush toilets.”  That’s all.

The simple fact of the matter is that huge swaths of America literally have saved nothing.  They have been goaded into borrowing amounts that in some cases exceed their annual earnings.  Most of these people are literally one hiccup in their income stream away from utter destitution. 

Yes, much of it (if not all of it) is their own fault.  They have saved nothing.  They run $100 cable TV and Internet bills, and another $100 for “smart” cellphone service – each and every month.  They have their financed car(s) on which they must maintain full coverage insurance (instead of a “moving jalopy” that is paid for, worth little, and on which one only needs liability insurance at 1/4 the cost.)  They’re entitled to a 75 degree house in the winter or summer, even if it generates a $300 electric bill.  They believe they’re entitled to student loans to go to college (instead of refusing to attend until the colleges get costs in check) further damaging their economic futures.

This state of affairs did not come about in an afternoon and it can’t be fixed in one either.  We cannot allow people to starve, but we also cannot continue to fund handouts as we have.  The money simply is not there.

We need to figure out how to live in a nation with a forty percent smaller GDP than we now have.  Yes, 40%.  That means you, I, everyone else.  The “living large” game is over.  All Ponzi Schemes ultimately collapse – they do not go quietly into the night.  The collapse is brutal, it’s quick, it’s efficient and it’s devastating to anyone caught in it.

Every time.

These are facts, not fantasies. 

If you are not prepared today, you need to become so by tomorrow.

Incidentally, yesterday would have been better.

There are some things we can do to help though, and they don’t cost much money at all.

One of them is to kick out the 20 million+ illegal invaders who are consuming resources of all sorts – including taking jobs that Americans could be doing.  The non-institutional working-age population (of legal residents and citizens) has gone from 230.6 million in 2007 to 237.5 million now.  The number employed has gone from 144.2 million to 139.5.  That’s 11.5 million citizens out of work but ready, willing and able.

So tell me why we have 20 million illegal invaders in our nation again?  Sure, some of them have jobs.  But every one of those jobs is one that an American could be doing.  It is an outrage that we allow our nation to be overrun with illegal Mexican invaders while our citizens are out of work and days or weeks away from being evicted and living under a highway overpass.

People tell me we can’t deport ‘em all.  My retort is that we don’t have to.  Drive a bus with armed security to every chicken plant and strawberry field in America.  Pick ‘em up, fingerprint ‘em electronically, bus ‘em to the border.  Make clear that if they get caught again in the United States they’ll do five years at hard labor, no possibility of early release, before being deported again.  Third time, 10 years.  And so on.

It’ll be a week before they all leave on their own, except the gang bangers, of which there are many.  Those we’ll have to actually go round up the hard way.

There’s your employment problem.

Who was it that gave a speech yesterday exhorting us to “understand” all those illegal invaders in our country, let them keep the jobs that Americans could be doing, and not kick them out again?

That would be President Obama, I think…..

Hmmm…

The Market-Ticker

Michigan has led the nation in unemployment for 19 months. Experts fear this will put even more strain on Michigan businesses, slowing hiring even more.

As of February 2010, Michigan owed the federal government $3.5 billion it has borrowed to help pay unemployment benefits, according to the state.

Michigan paid $7.1 billion in benefits to the 680,000 unemployed Michigan residents in 2009 and had to borrow $2.4 billion to cover that year’s expense. That state’s unemployment rate was 14.6 percent in December 2009, the highest in the nation. Nevada was second at 13.0 percent.

In Michigan, businesses carry the entire burden of paying unemployment benefits for the first 26 weeks and then share the cost with the state for the first 13-week extension. The federal government pays for its extensions as part of the stimulus package.

Businesses will be taxed more to pay back the billions they owe the federal government.

“Unemployment insurance taxes are payroll taxes. As such, they are disincentives to hire workers and they diminish the take-home wages of existing employees when they are increased,” said Charlie Owens, state director of the National Federation of Independent Businesses. “It is a certainty that these taxes will increase to cover Michigan’s debt to the federal government and this will exacerbate our high unemployment, creating a vicious cycle of decline.”

The state has paid out more in benefits than it has collected in taxes to pay those benefits since 2001, said Norm Isotalo, spokesman for the Michigan Department of Energy, Labor and Economic Growth. The state expects it will have to borrow another $1 billion through 2010.

Fred Radtke, president of F.A.R. management, an unemployment consulting business in Clinton Township, said the federal bill will linger for years.

“I would be shocked, absolutely shocked if we could pay this off in five years,” Radtke said. “I’ve been doing this 32 years. This is as bad as I’ve ever seen it.”

Radtke said in some instances, businesses could see their unemployment payments per employee rise from $56 to $140 in three years.

“It’s a big problem,” Radtke said.

Milton Friedman on Minimum Wage

Milton Friedman discusses the effects of minimum wage, dispelling the myth that it is a Good Thing.
–
50 Years of Research on the Minimum Wage:

Economist Arthur B. Laffer, head of the Office of Management and Budget under President Ronald Reagan and founder and chairman of economic research and consulting firm Laffer Associates, says President Barack Obama’s proposed budget “is the perfect plan for catastrophe.”

“It shows no spending restraint and is raising tax rates,” Laffer told Newsmax.TV’s Kathleen Walter.

He said the budget blueprint puts a greater burden on people who work and gives more money to people who don’t.

Video — Laffer: Obama Budget Is Plan for Catastrophe

“If you tax people who work and pay people who don’t, do not be surprised if you find a lot of people not working,” Laffer says.

“If you tax rich people and give the money to poor people, you’re going to have lots and lots of poor people and no rich people,” he says.

Get “Return to Prosperity” by Arthur Laffer from Amazon at a Great Price — Click Here!

“The dream in America has always been to make the poor rich, not to make the rich poor. Obama’s budget literally tries to make the rich poor and does not try to make the poor rich,” he says.

If you have two locations with different tax rates, producers and manufacturers will move to the locale with lower rates, he says.

Obama takes no account whatsoever on the effect this will have on global competitiveness and the creation of jobs in the United States, he says.

Obama, Laffer says, is wrong on every single issue, is unrealistic, lacks experience and is causing a lot of damage to the economy.

“It’s just incredible how systematic he is in making errors,” Laffer observes.

“It’s a classic professorial response: In the classroom, you never have skin in the game, you’re never held accountable for your pronouncement, and that’s exactly what’s going on here,” he says.

Laffer would like to return to the tactics Paul Volcker used when he took over the Fed, which include intervening in the money markets to maintain purchasing power and parity of the dollar.

“The results were incredible,” Laffer says. “The dollar soared, interest rates tumbled and inflation literally disappeared from the U.S.”

Laffer also suggests eliminating the alternative minimum tax and reinstating the Bush tax cuts that are currently scheduled to expire this year.

Not reinstating the cuts will make 2010 look very good on paper and cause a major recession in 2011.

“If you know that tax rates are going to go up on January 1, 2011, you try to accelerate all the income you possibly can into 2010, which will make 2010 look a lot better than it should,” he points out. “Then, on January 1, 2011, the train goes off the track.”

The sheer size of unfunded liabilities is “awesome, just amazing,” Laffer says.

Civil service and military retirement and medical benefits, Medicare, Medicaid, Social Security, and that’s not even taking into account things like California and unfunded pensions.

The Obama administration needs to go through each of these and literally change the rules.

“You’ve got to go through all these programs meticulously and make sure you eliminate things that increase unfunded liabilities, which now exceed $100 trillion,” Laffer says. “Our GDP is only worth $14 trillion.”

Laffer wants to see unspent bailout funds returned.

“Not only have those programs not done any good, they’ve actually hurt the economy, and they’ve hurt it a lot,” he says.

“You can’t bail someone out of trouble without putting someone else into trouble. For every stimulus check written, there is a liability to someone else,” he says. “The sooner we stop the stimulus packages, the better off we’ll be.”

Laffer expects the U.S. economy will look very strong for 2010, but none of the things that will make it appear strong will be present in 2011.

The government has printed huge amounts of new money, he points out, which has stimulated stock and bond prices and commodity prices, but the effects of that will be short-lived.

However, we should not lose hope that the United States will once again become the land of opportunity, says Laffer.

“All we have to do is go back to common sense economics. If we had a low flat-rate tax … can you imagine how this economy would boom with that? It would be beautiful,” he says.

“And if you make the dollar solid … people won’t have to go into gold and silver. We can do that just the way Paul Volcker did.”