Posts Tagged ‘Economy’
Cartoon: Christmas Bailout
December 15, 2009
Ensuring The Permanence Of Poverty
September 21, 2009Ensuring The Permanence Of Poverty
IBD: 18 Sept. 2009
Spending: President Clinton said reform legislation would “end welfare as we know it.” That was in 1996. The current administration appears determined to take welfare to heights we’ve never known.
America’s tried. The country has spent $15.9 trillion of other people’s money on welfare since the mid-1960s. But it has failed. As noted in the Gospel of Matthew, we will always have the poor.
It would be vain to argue otherwise. The evidence is hard, the facts clear.
“Welfare spending was 13 times greater in fiscal 2008, after adjusting for inflation, than it was when the war on poverty started in 1964,” says a new study from the Heritage Foundation.
“Means-tested welfare spending was 1.2% of the gross domestic product when President Johnson began the war on poverty. In 2008, it reached 5% of GDP.”
Apparently, we just haven’t spent enough. At least that seems to be the position of the White House. It has opened the spigot of the fastest-growing government expenditure. Over the first two years of this administration, annual federal welfare spending will jump by a third, from $522 billion to $697 billion, says the Heritage study titled “Obama To Spend $10.3 Trillion On Welfare.”
The cost to the families funding the programs is enormous. Heritage says each household is paying $560 a month this year and will pay $638 a month in 2010.
But this administration is just getting started. Over the next decade (which includes the current fiscal year), welfare spending will hit that $10.3 trillion mark — $7.5 trillion in taxpayers’ money disbursed by Washington, $2.8 trillion in taxpayers’ money handed out by the states. None of this even includes what the federal government will spend if it successfully takes over health care.
The spending party began early with an assault on the Clinton-era welfare reform law. The 1996 Personal Responsibility and Work Opportunity Reconciliation Act had ended the practice of Washington sending more welfare money to the states when the states increased their caseloads. But the policy was reversed through a provision in the February stimulus bill.
Self-identified neo-liberal Mickey Kaus, writing in Slate, called the “insufficiently publicized” and “deeply troubling” provision in the legislation a “liberal conspiracy to expand the welfare rolls.”
“If only for political purposes, I figured, Dems would have to wait a few months or years before sabotaging Bill Clinton’s major domestic achievement,” wrote Kaus. “It took them two weeks.”
In the 1950s, welfare spending was less than 1% of GDP and 4% of government expenditures at all levels. It is now the third largest federal expenditure, following only Social Security and Medicare entitlements and education. Fourth is national defense. For all the criticism leveled at the previous administration for the taxpayer dollars spent on the battlefield, Obama, says the Heritage study, “will spend more on welfare in a single year than President George W. Bush spent on the war in Iraq during his entire presidency.”
The gains from the Iraq War are evident. A brutal anti-American dictator was toppled, a terrorist-friendly regime was displaced and a representative government was installed in a region filled with oppressive states. So what of extravagant welfare spending? What have been its tangible benefits?
Government welfare programs have done nothing but institutionalize poverty. The country is spending more than it ever has on the poor, yet neither poverty nor want has been eradicated.
Accelerating welfare outlays will only make the problem worse.
Cartoon: Economy Ready to Go?!
September 16, 2009
Obama seemed to agree…..BUT….
America’s Tired Protectionism
By INVESTOR’S BUSINESS DAILY | 15 Sept. 09
Trade: President Obama has fired the opening salvo in a trade war with China by slapping 35% tariffs on its tires. But besides giving China a kick, this protectionism will harm Americans across the economy.
Read More: Business & Regulation
Sen. Reed Smoot and Rep. Willis Hawley, the two protectionists who deepened the Depression and fueled the rise of militarism ahead of World War II, would have liked the move to keep Chinese tire exports out of the U.S. through tariffs.
There’s no dumping going on — just China’s success in the U.S. market, which has raised its share to 17%.
We can’t blame the president for sneaking in the tariffs late Friday. Raising tariffs is nothing to be proud about. In this case, tariffs jumped from 4% to 35% on Chinese tire imports under Sec. 421 of the 1974 Trade Act, intended to control surges in imports.
But the markets paid attention. Global stock futures tumbled over the weekend. Asian markets dropped sharply Monday, fearing a wave of U.S. protectionism.
China called the U.S. move “rampant protectionism” and vowed to investigate dumping charges against U.S. auto parts and chicken, two industries that have made inroads into the China market. The Asian giant also vowed to challenge the U.S. at the World Trade Organization.
Why should we care? This protectionist move, meant to please a single labor union, takes a big bite out of our global trade credibility, making us look like a country that can’t compete in global markets.
Earlier this year, Obama seemed to agree when the leaders of the Group of 20 declared they wouldn’t worsen the global financial crisis by enacting protectionist measures.
But by mid-year, that strong free-trade declaration was already fraying badly from indirect protectionism in Europe, along with the U.S.’ “Buy-American” provisions in the $787 billion stimulus package. Even so, the tire tariffs this week mark a new low.
“Economically, the idea is ominous,” said Thomas Pruse, an economist at Rutgers University and an expert on trade protectionism. “Not a single tire company thinks it will change the dynamics of the tire industry.” And none supported the tariffs.
Now, we can expect other countries to hike tariffs, going after the U.S., the world’s third biggest exporter, hard. Worse still, expect more requests for tariffs as U.S. special interests line up for their cut of the protectionist pie.
Who pays? On tires, don’t assume for a minute the Chinese will.
The tariff costs will go straight to American consumers who will, as of Sept. 24, pay higher tire prices. First casualty: those who buy low-cost tires, the market where Chinese tires dominate. Big U.S. companies ignore this market because it’s not profitable enough.
Amid a slowdown of tires and an inventory buildup, “I estimate there will be 8 million fewer tires consumed in the first 12 months,” said Pruse. “These are 8 million tires that need to be replaced, and there’s plenty of evidence people are delaying the replacement of their tires, creating safety risks. If (poorer people) can’t replace tires at $120, how can they do it at $200?”
So brace for an upsurge in tire-related crashes on U.S. highways.
But aside from what amounts to a tax on the poor, industry will be hurt, too, and quite a bit of it downstream from mere tires.
Tariffs will add $100 to the price of a new car, cutting into U.S. auto sales, Pruse noted. It will also harm much of the tire installation industry, all of which is U.S.-based. Some 15,000 U.S. workers will lose their jobs from this tire tariff, he said.
The auto industry will get a double-whammy if the Chinese retaliate on auto parts coming into the Chinese market, cutting into sales on that front too. Sales of auto parts in the booming Asian market are critical to the U.S. auto industry’s recovery strategy.
Meanwhile, the United Steelworkers Union, which brought the Sec. 421 complaint, is hurting its own members. No new jobs will be created by this, said Pruse.
The Chinese imports may be replaced by imports from other countries, like India — meaning the U.S. jobs aren’t coming back.
Other unions will take hits too. Longshoremen who unload tires from ships and Teamsters who transport them to tire shops will lose jobs and maybe members. So much for union brotherhood.
It all amounts to the loudest signal yet from this administration that we’re moving toward a level of protectionism not seen since the days of Herbert Hoover and FDR.
This will cost us more than China, with the consequences ricocheting across the globe. Has nothing been learned from history?
Cartoon: Economy on FIRE!
September 3, 2009
Stalling On Trade
August 13, 2009IBD 7 Aug 09
Trade: The White House seems to grasp the value of free trade — at least in those rare times the topic’s even brought up. Too bad that free-trade stance has been undercut by Washington stalling on new deals.
That’s evident from a letter sent Wednesday by six business groups, including the Business Roundtable, the U.S. Chamber of Commerce and the National Association of Manufacturers, among others.
In their note, they urged President Obama to “make the case that international economic engagement and . . . efforts to eliminate market barriers . . . are more important than ever to the revitalization of America’s economy.”
With 9.5% unemployment and plunging poll ratings, you’d think that would be a no-brainer for the president. Unfortunately, President Obama has been promising that speech in support of free trade for months and has still done nothing.
His excuse is always that there’s something more important on the table that must be addressed first. The stimulus package, card check legislation, cap-and-trade laws and now health care reform have all been used to shut out free trade. It’s getting old.
Six months into his administration, Obama’s initiatives are running into trouble. The top reason is the weak economy. Opening huge markets for American companies will help reverse that.
The Obama administration has three treaties on the table with Colombia, Panama and South Korea. Free trade with those fast-growing nations could help kick-start U.S. economic growth if they could just be put to a vote in Congress.
Negotiated by the U.S. Trade Representative’s Office, Obama has the power to communicate that these are not mere political decrees put forth by the Bush administration, but legal agreements executed by the same trade experts who now work for him.
What’s more, action has already been taken to placate workers who erroneously believe that free trade kills jobs. Congress has handed out hundreds of millions of dollars for worker retraining for job losses due to overseas competition, special help that may in itself encourage workers to blame foreigners for lost jobs. Even so, it’s yet another reason for Obama to boost free trade.
The big reason, though, is what it can do both for the Obama presidency and the country. Exports create jobs, and none more than those with free-trade partners. How? Free-trade accords not only cut tariffs but provide legal protections to U.S. companies abroad.
It means lots of buying from abroad. The U.S. has a $21 billion surplus with free-trade allies, another easy point for Obama to make.
The Obama administration knows all this. We know they know it. Now it’s time to act, and get this economy moving again.
Tax Hike Comin’
July 17, 2009
IBD July 16 09
Paying For Reform: New data from a nonpartisan think tank confirm our worst fears about health care reform: The plans proposed by the White House and Congress will lead to economically ruinous tax hikes.
Thursday marked the kickoff for the White House’s push to get medical insurance reform passed in Congress. Top White House aides David Axelrod and Rahm Emanuel and spokesman Robert Gibbs will make a hard sell on reform’s big benefits.
Likely missing from their pitch will be the tragic cost it will mean for the economy once the huge new tax hikes to pay for it are in place. The House bill, for instance, is estimated to cost $1 trillion to $1.5 trillion over 10 years. To pay for it, the White House has proposed raising taxes by $544 billion, almost all on the “rich” — those in the top 5% of incomes.
That leaves a $1 trillion gap. Where will the rest of the money come from? The government claims it will be able to “save” that amount. But please name any government program that saves money over a private one. The only way government will save money is to ration care — that is, give you less medical care at lower quality. Is that your idea of reform?
When the savings fail to appear, higher taxes will have to be imposed — especially on a middle class that’s been led to believe it’ll get something for nothing on health care.
And why the middle class? “Because,” as bank robber Willie Sutton said when asked why he robbed banks, “that’s where the money is.”
Douglas Elmendorf, director of the Congressional Budget Office, sees no savings from the health reform plans offered. He reckons that current legislation would raise costs.
Faced, then, with exploding annual deficits over the next decade of $1 trillion or more, the federal government will be looking high and low — mostly high — for more revenues.
The government’s pitch will go like this: Don’t worry, we’ll make the rich pay. And, indeed, the House’s reform plan will hit millionaires with a 5.4% tax surcharge, and gradually raise taxes on those with incomes starting at $280,000.
“I promised that Americans making $250,000 a year or less would not pay more in taxes,” President Obama said Monday. “These are promises that we’re keeping as reform moves forward.”
But read the bill’s fine print. Those earning less than $250,000 will be hit with new taxes, too. Those who don’t sign up for health care, for instance, will be taxed up to 2.5% of their income. Small businesses that don’t have health plans will have to pay up to 8% of their payroll as a “fee.”
These new taxes will have a devastating effect on the economy. According to the National Tax Foundation, the top total tax rate on Americans — that is, state, local and federal taxes — will top 50% in 39 states.
Will entrepreneurs and small businesses expand and create new jobs if they know more than half what they earn will be taken by government? Not likely.
Two million jobs have been lost this year. If you think that, and 9.5% unemployment, is bad, wait till health reform passes.
Big June Job Losses Heighten Concerns About U.S. Revival
July 6, 2009Big June Job Losses Heighten Concerns About U.S. Revival
IBD: 6 June 2009
UNEMPLOYMENT NOW 9.5%
Layoffs likely to continue even if recession ends, as expected, later in ’09
Employers cut far more jobs than expected in June and the unemployment rate hit a 26-year high, the Labor Department said Thursday, raising concerns that the coming economic recovery won’t be strong enough to revive hiring.
Companies shed 467,000 workers last month, up from a drop of 322,000 in May. Wall Street expected a loss of 367,000 jobs.
No Job- How Come?
June 29, 2009
John Smith started the day early having set his alarm clock
(MADE IN JAPAN ) for 6 am.
While his coffeepot
(MADE IN CHINA )
was perking, he shaved with his
electric razor
(MADE IN HONG KONG )
He put on a
dress shirt
(MADE IN SRI LANKA ),
designer jeans
(MADE IN SINGAPORE )
and
tennis shoes
(MADE IN KOREA)
After cooking his breakfast in his new
electric skillet
(MADE IN INDIA )
he sat down with his
calculator
(MADE IN MEXICO )
to see how much he could spend today. After setting his
watch
(MADE IN TAIWAN )
to the radio
(MADE IN INDIA )
he got in his car
(MADE IN GERMANY )
filled it with GAS
(from Saudi Arabia )
and continued his search
for a good paying AMERICAN JOB.
At the end of yet another discouraging
and fruitless day
checking his
Computer
(made in MALAYSIA ),
John decided to relax for a while.
He put on his sandals
(MADE IN BRAZIL ),
poured himself a glass of
wine
(MADE IN FRANCE )
and turned on his
TV
(MADE IN INDONESIA ),
and then wondered why he can’t
find a good paying job
in AMERICA
AND NOW HE’S HOPING HE CAN GET HELP FROM A PRESIDENT
Start Parker Article
June 23, 2009Dear Star,
Good, logical economics. Yet we never learn and we always return to the trough. God bless you for all you do to keep America focused.
In His Holy Name,
Don + Carol
Star Parker – Syndicated Columnist
Six years ago I wrote a book called Uncle Sam’s Plantation. I wrote the book to tell my own story of what I saw living inside the welfare state and my own transformation out of it.
I said in that book that indeed there are two Americas — a poor America on socialism and a wealthy America on capitalism.
I talked about government programs like Temporary Assistance for Needy Families (TANF), Job Opportunities and Basic Skills Training (JOBS), Emergency Assistance to Needy Families with Children (EANF), Section 8 Housing and Food Stamps.
A vast sea of perhaps well-intentioned government programs, all initially set into motion in the 1960’s, that were going to lift the nation’s poor out of poverty.
A benevolent Uncle Sam welcomed mostly poor black Americans onto the government plantation. Those who accepted the invitation switched mindsets from “How do I take care of myself?” to “What do I have to do to stay on the plantation?”
Instead of solving economic problems, government welfare socialism created monstrous moral and spiritual problems — the kind of problems that are inevitable when individuals turn responsibility for their lives over to others.
The legacy of American socialism is our blighted inner cities, dysfunctional inner city schools and broken black families.
Through God’s grace, I found my way out. It was then that I understood what freedom meant and how great this country is.
I had the privilege of working on welfare reform in 1996, passed by a Republican Congress and signed 50 percent.
I thought we were on the road to moving socialism out of our poor black communities and replacing it with wealth-producing American capitalism.
But, incredibly, we are going in the opposite direction.
Instead of poor America on socialism becoming more like rich American on capitalism, rich America on capitalism is becoming like poor America on socialism.
Uncle Sam has welcomed our banks onto the plantation and they have said, “Thank you, Suh.”
Now, instead of thinking about what creative things need to be done to serve customers, they are thinking about what they have to tell Massah in order to get their cash.
There is some kind of irony that this is all happening under our first black president on the 200th anniversary of the birthday of Abraham Lincoln.
Worse, socialism seems to be the element of our new young president. And maybe even more troubling, our corporate executives seem happy to move onto the plantation.
In an op-ed on the opinion page of the Washington Post, Mr. Obama is clear that the goal of his trillion dollar spending plan is much more than short term economic stimulus.
“This plan is more than a prescription for short-term spending — it’s a strategy for America ‘s long-term growth and opportunity in areas such as renewable energy, healthcare, and education.”
Perhaps more incredibly, Obama seems to think that government taking over an economy is a new idea. Or that massive growth in government can take place “with unprecedented transparency and accountability.”
Yes, sir, we heard it from Jimmy Carter when he created the Department of Energy, the SynfuelsCorporation and the Department of Education.
Or how about the Economic Opportunity Act of 1964 — The War on Poverty — which President Johnson said, “…does not merely expand old programs or improve what is already being done. It charts a new course. It strikes at the causes, not just the consequences of poverty.”
Trillions of dollars later, black poverty is the same. But black families are not, with triple the incidence of single-parent homes and out-of-wedlock births.
It’s not complicated. Americans can accept Barack Obama’s invitation to move onto the plantation. Or they can choose personal responsibility and freedom.
Does anyone really need to think about what the choice should be?
“The trouble with socialism is that you eventually run out of other people’s money.”
Regulation Nation
June 18, 2009Regulation Nation
By INVESTOR’S BUSINESS DAILY | 18 June 2009
Regulation: The White House wants to impose sweeping new rules for the financial industry to prevent another meltdown. Unfortunately, it was government — not the private sector — that was to blame.
Read More: Business & Regulation
Citing a “culture of irresponsibility” that it says helped cause last year’s financial crisis, the White House on Wednesday released an 88-page report that proposes major changes in America’s financial system. The Associated Press aptly called it “the greatest regulatory transformation since the Great Depression.”
Among the reforms put forward were a new, pumped-up Federal Reserve with greater powers to regulate and oversee the entire financial system, a new consumer credit watchdog to oversee home loans and credit cards, and new rules and oversight for hedge funds and exotic securities, such as credit default swaps and collateralized debt obligations, which some blame for making the financial crisis worse.
It’s nice to see that our government is so concerned about not repeating the errors of the past. But our advice comes from an ancient proverb:
“Physician, heal thyself.”
The White House’s financial regulation proposal blames “gaps in regulation” for our financial crisis. Wrong. It was in fact government misregulation and miscalculation that created our financial crisis — not private businesses. The record on this is quite clear.
As economic historian Lawrence White of the University of Missouri has written:
“The expansion in risky mortgages to underqualified borrowers was encouraged by the federal government. The growth of ‘creative’ nonprime lending followed Congress’ strengthening of the Community Reinvestment Act, the Federal Housing Administration’s loosening of down-payment standards, and the Department of Housing and Urban Development’s pressuring lenders to extend mortgages to borrowers who previously would not have qualified.”
Add to that Fannie Mae and Freddie Mac — created and regulated by acts of Congress — which together at one point controlled nearly half of the nation’s $12 trillion mortgage market. The two quasi-private entities served as the grand financial engine by which Congress would boost homeownership.
It worked well for a while. And we can’t fault the intent to help people. But the failure was one of too much government — not too little, which is the rationale for the new financial regulation regime sought for Wall Street and the banks.
As for the Fed’s new powers, we happen to believe the central bank has done a reasonably good job responding to this crisis — though as many others have noted, the vast expansion of the U.S. money supply in the last year poses a future inflationary threat.
But we don’t think the Fed needs enhanced powers. Far from it. It’s too powerful already. Giving it virtually unbridled control over our financial system without having to directly answer to the people is a danger to free market capitalism.
Many have argued that the Fed’s slashing of interest rates from 6.25% in 2001 to 1% in 2003 — following a stock market meltdown, a recession, the 9/11 attacks and the start of the War on Terror — was too much and led to the housing market bubble.
Now, strangely, many of the same people advocate giving the Fed even more power. It makes no sense.
If the White House really wants to fix our ailing financial system, it would do well to start by repealing what remains of TARP, undoing the government’s takeover of our auto industry and halting the fraudulent and wasteful $787 billion “stimulus” program.
Then you might see a real economic recovery take place.
Beware Taxes Vs. Spending Compromise
June 4, 2009Beware Taxes Vs. Spending Compromise
By J.T. YOUNG | IBD 4 June 2009
Welcome signs of economic recovery presage an unwelcome prospect: tax increases. When the economy seems to have safely turned the corner, those on the left will seek to seize the recession’s fiscal fallout for tax hike leverage.
The deficit is their wolf in sheep’s clothing. Conservatives be forewarned: The most dangerous prospect is not straightforward tax hikes, but split-the-difference compromises promising spending cuts for tax increases.
The recession has hit the federal budget harder than it hit the economy. With only three consecutive quarters of negative economic growth so far, federal revenues have plunged and spending has soared.
As the table shows, since 2007, the fiscal year before the recession, the federal deficit has increased over 10 percentage points of GDP — from 2007’s 1.2% to 2009’s 11.9% today.
This enormous shortfall and the prevailing political climate of compromise-at-any-cost present the liberals with a golden opportunity to advance their larger sociopolitical agenda. Even the most simplistic of solutions — simply splitting the difference between conservatives’ spending cuts and the Left’s tax hikes — seems to approach the wisdom of Solomon.
Of course, the wisdom of that route is belied by the fiscal deterioration that brought us to this deficit. But that’s beside the point. Certainly tax revenues have fallen, but not because taxes have been cut. Revenues have fallen because the economy has undercut the economy’s ability to produce taxable income.
Even with that, revenues have fallen only 17.6% from their pre-recession point. By contrast, spending has increased 37.6% from its pre-recession point.
In other words, the two have not contributed equally to the deficit — spending has increased more than twice as much as revenues have fallen. So splitting the difference hardly looks “Solomonic.”
There’s a lesson, though, in Solomon’s decision to “split the baby.” When King Solomon was confronted by two women each claiming a child to be hers, he called for a sword in order to give each woman half the child. The first woman welcomed the solution, while the second pleaded that the child be given to the first rather than killed. Solomon then knew the second woman was the mother and returned the child to her.
Those on the left represent the first woman. They don’t care about the deficit. Their interest is only in the ability to take from another — in this case the taxpayer.
Conservatives must recognize the Left’s game, as Solomon did in the case of the woman willing to split the baby. And they must remember that Solomon did not split the baby after all.
Young served in the Department of Treasury and the Office of Management and Budget from 2001-2004 and as a congressional staff member from 1987-2000.
Housing, Industry Show Fresh Signs Slide Is Moderate
June 2, 2009From IBD
24 April 09
by Brad Kelly
Demand for new homes and big-ticket items last month largely held on to February gains, the Commerce Department said Friday, providing further tentative evidence that the housing and manufacturing sectors may be reaching a bottom after a long, sharp slide.
Sales of new homes dipped 0.6% in March to an annual rate of 356,000 units. But that was much better than expected because February’s sales pace was revised up by 21,000 units to 358,000. March sales were still 31% below a year earlier.
Housing is close to a bottom on the sales front, but that’s not to say we’ll see a bounce from here to new highs or anything,” Wachovia analyst Adam York said. “The big picture is that we’re not getting progressively worse.”
The number of homes for sale fell 5.2% to 311,000 in March, a seven-year low, as builders slash activity and prices. It was the biggest monthly drop so far in the current 23-month string of declines.
It still would take 10.7 months to sell those properties at March’s sluggish sales pace, but that’s the lowest in eight months.
But York says home values will likely remain weak for months to come. The glut of unsold homes and competition from deeply discounted foreclosed properties will put more downward pressures on prices and homebuilders.
The U.S. median price fell 3.5% to $201,400 last month, the lowest since December 2003.
Affordable homes, low interest rates and an $8,000 tax credit for first-time homebuyers should provide a boost to sales this summer.
Still, with credit tight and unemployment at a 25-year high and climbing, sales won’t rebound substantially, York says.
Meanwhile, orders for durable goods — items expected to last longer than three years — declined 0.8% in March, only about half as much as analysts expected. Demand for aircraft offset weakness elsewhere.
However, February’s gain was revised down to 2.1%.
Actual orders remain close to January’s 12-year low.
Orders for non-defense capital goods ex aircraft, a proxy for business investment, rose 1.5% after increasing 4.3% in February. It’s the first back-to-back gain since last summer.
Durable goods inventories slid 1.1%, their third straight fall. But with shipments sinking, the stock-to-sales ratio rose to 1.90, the highest since September 1992. That suggests manufacturers will continue to cut inventories and output.
The news for ailing automakers Chrysler and GM (GM) didn’t get any better in March. Orders for transportation products fell 1.4%, including 1.7% for motor vehicles.
GM and Ford (F) sales likely rose in April vs. March, Edmunds.com estimated Friday. But Chrysler, which will likely file for bankruptcy soon, probably lost ground.
“The positive signals in the past couple of months are still relatively weak, but it shows the economy is improving,” said IHS Global Insight economist Brian Bethune. “Getting to a trough will be an important rite of passage for the economy to move ultimately to a recovery mode.”
Home Prices Drop Sharply
June 1, 200911 April 09
Average 1Q sale price down 40%
Saturday, April 11, 2009
BY STEFANIE MURRAY
The Ann Arbor News
It’s well known that home sale prices have been declining. But 40 percent is a steep drop, no matter how you look at it.
That’s how much the average sale price of a home in Washtenaw County fell in the first quarter of 2009 compared to 2008. The Ann Arbor Area Board of Realtors reported the average sale price in the first quarter of 2009 was $154,015.
Home sale prices haven’t appreciated here year-over-year since 2005. Most recently, a high number of foreclosures and short sales have held prices down. Some agents say they don’t anticipate seeing gains until 2010.
“I’m not pleased, for my sellers’ sake, with some of the sale prices that are coming in,” said Matt Dejanovich, a real estate agent with Real Estate One in Ann Arbor, who has 20 homes sales pending. “But from an opportunity standpoint there is a lot of activity in the marketplace.”
The number of homes and condominiums sold in the county slowed 8.2 percent to 593 units during the first three months of 2009 compared to 2008. Listings fell 32 percent.
Dejanovich said the countywide average sale price data may be a bit misleading, however. Prices are being skewed by a low number of higher-priced homes being sold, coupled with a lot of first-time homebuyers making purchases, he said.
The federal economic stimulus bill – which gives an $8,000 tax credit to first-time homebuyers – is also partly responsible for boosting sales in a lower price range, Dejanovich said.
Chet Hill, who manages the Keller Williams Realty office in Ann Arbor, said short sales, foreclosures and investment sales have become a huge part of many agents’ business.
For the month of March alone in Washtenaw County, sales of homes and condos slid 11 percent while listings dropped 19 percent. The average sale price fell from $202,569 in March 2008 to $150,263 in March 2009.
In the city of Ann Arbor, 42 homes were sold last month, down from 59 at the same time last year. The average sale price dropped 3 percent to $255,386.
In Ypsilanti, 16 homes were sold, up from 15 last year. The average sale price in Ypsilanti declined 53 percent to $58,401.
Contact Stefanie Murray at smurray@annarbornews.com or 734-994-6932. Or follow her on Twitter at Twitter.com/StefanieMurray.
Is China As Suicidal As We Are?
May 28, 2009By INVESTOR’S BUSINESS DAILY | 28 May 2009
Energy Policy: House Speaker Nancy Pelosi goes to China seeking help in fighting climate change. It’s doubtful the world’s No. 1 polluter will agree to follow us over the economic cliff.
In the summer of 2007, a report by the Netherlands Environmental Assessment Agency announced that China had officially become the world’s biggest polluter after its CO2 emissions rose an astounding 9% the year before. Since then, China has shown no signs of slowing down in its commitment to both economic and energy growth.
Between 1980 and 2006, China increased its carbon emissions by 321%. China is adding 100 gigawatts of coal-fired electricity capacity annually. That’s like adding the entire capacity of the United States every three years. The irony is that this powers Chinese factories that export goods to the energy-starving and economically beleaguered U.S.
This isn’t all China exports. As Peter Brookes of the Heritage Foundation reports, , sulfur from China alone reaches 10% to 15% of the EPA’s allowable levels in California, Oregon and Washington. Estimates are that a third of California’s air pollution and a fifth of Oregon’s come from China. Sensors in the Sierra Nevada Mountains have identified huge Chinese pollution clouds that traverse the Pacific.
Apparently tired of breathing exported Chinese pollution in her San Francisco district, Speaker Pelosi found herself on Tuesday attending the U.S.-China Clean Energy Forum.
She brought along other members of Congress, including Ed Markey, D-Mass., co-author of an economy-killing cap-and-tax bill that just passed a key House committee.
This is the latest effort trying to persuade the Chinese to adopt the U.S. policy of restricting economic growth by accepting draconian caps on carbon emissions with no scientific evidence that it will measurably affect global temperatures. So far the Chinese aren’t buying it.
As Fareed Zakaria notes in his book “The Post-American World”: “The combined carbon dioxide emissions from the 850 new coal-fired plants that China and India are building between now and 2012 are five times the total savings of the Kyoto accords.”
So why are we sacrificing our economic growth to fight their pollution?
China is exempt from Kyoto as a “developing” nation, which is one of the reasons the U.S. Senate once voted 97-0 not to consider it for ratification. China doesn’t mind seeing the U.S. economy handcuffed as it races to make this century a Chinese century. As it is, our states and taxpayers struggle to clean up imported Chinese pollution.
In fairness, China is pursuing other, cleaner forms of energy. It has 11 nuclear power plants on line. Another 22 are under construction. Fu Manchang, the secretary-general of the Chinese Nuclear Society, says: “We have the ability to raise our nuclear power capacity to at least 60 or 70 gigawatts.”
China’s all-of-the-above energy approach to exploiting all its resources is part of its commitment to both economic and energy growth and stands in stark contrast to our none-of-the-above approach to proven energy sources. We are committed to pricing coal and other fossil fuels out of existence with no feasible substitute.
We are reminded of Vice President Joe Biden’s comment in a rope line during the campaign:
“We’re not supporting ‘clean coal.’ Guess what. China’s building two every week. Two dirty coal plants. And it’s polluting the United States. It’s causing people to die.” He went on to say, “No coal plants in America. Build them, if they’re going to build them, over there. Make them clean.”
They are building them over there and not here. That’s not an energy policy. That’s economic suicide. Clean energy and economic growth are not incompatible.
We should be trying to get China to reduce its pollution. But we should also be expanding our own domestic energy resources, including building at least as many nuclear power plants as China is.
China is unwilling to commit economic suicide. Why are we?
Chick-fil-A: Grow and Give
May 12, 2009Despite economy, Chick-fil-A continues to grow and give
by Linda Hahn | The Good News | April 1st 2009
Chick-fil-A, the company behind the cows begging customers to “Eat Mor Chikin,” has increased sales despite the struggling economy.
The restaurant chain marked its 41st consecutive year of rising sales with a 12.17 percent increase from 2007 to 2008. In addition, the company expanded with 83 new locations in 2008 alone.
Closing on Sundays and generous donations to community and ministry events have not affected Chick-fil-A’s escalating revenue. “God has truly blessed our business, and we pray that He will continue to keep His hand upon us,” says Chick-fil-A President and Chief Operating Officer Dan T. Cathy.
Hospitality and hope
The key component to continued growth of Chick-fil-A in South Florida can be traced back to biblical financial stewardship, as well as service to the community with a positive, encouraging attitude.
“It’s just the tip of the iceberg,” says Samuel Poeana, franchise operator of Chick-fil-A in Coral Springs. “We are constantly reminded of how [we can] make a difference in people’s lives.” Hospitality continues to be the focus in South Florida. “Right now, they need to be treated with honor, dignity and respect,” adds Poeana. “If we do that, then we’re winning customers.”
Poeana encourages his team not to participate in the negative rhetoric associated with the economic downturn, but rather to continue to provide good service by going the “second mile” that Jesus instructs in Matthew 5:41.
In addition to going beyond the call of duty, Chick-fil-A has a long-standing tradition of volunteer service. Chick-fil-A has provided food for numerous community outreaches including Big Brothers and Big Sisters for Jesus, a ministry of Calvary Chapel Ft. Lauderdale.
Recently, Poeana’s store teamed up with Church by the Glades to provide food and entertainment for a back-to-school event. Event volunteers provided book bags, uniforms and school supplies for inner-city schools while the children were entertained by the notorious “Eat Mor Chikin” cow.
“The reason I’m here … is I like serving people,” says Nick Cristantiello, operator of Chick-fil-A in Pembroke Pines. “I really have a passion for helping my people find their passion and any opportunity we have to help the community, we try to do it.”
Cristantiello’s store has partnered with schools, churches and non-profit organizations such as “All Pro Dads.” The organization encourages fathers to spend quality time with their children. Chick-fil-A is the main sponsor and promoter of the organization by providing information and food to local schools.
Recently, their promotional event at Pines Charter Elementary West attracted more than 150 participants. Local organizations appreciate the support from Chick-fil-A as they minister to the “least of these.”
Feeding the homeless
Ministering to the homeless is a calling Chick-fil-A employees take seriously. In fact, Chick-fil-A teams up with First Baptist Church of Ft. Lauderdale each year to feed and provide for the homeless. While local volunteers provide medical care and clothing, Chick-fil-A provides food and encouragement.
The Touch Project, a ministry serving the homeless of Miami every other week, works with Chick-fil-A to feed the poor.
“For years there has been one organization that has supported this outreach from the beginning. It’s been Chick-fil-A,” says Touch Project Director Warren Corbin. “… For over 2 years, they have donated over 2,400 chicken sandwiches faithfully to this ministry and never asked for a penny in return. No tax deductible receipt, no special mention, just given to this outreach because they believe it’s what God would want them to do.”
Chick-fil-A anticipates continued growth in 2009, with the anticipation of 76 new store openings nationwide.
Cathy adds, “While we by no means are immune to the economic challenges our country is facing, we do believe we will continue to remain healthy so long as we stay committed to the qualities that have shaped the Chick-fil-A brand thus far: Providing exceptional customer service and unmatched product quality to every customer on every visit.”
For more information, visit your local Chick-fil-A or www.Chick-fil-A.com.
Fiscal Nanosurgery
April 22, 2009Fiscal Nanosurgery
By INVESTOR’S BUSINESS DAILY | 22 April 09
Federal Spending: When President Obama directed his Cabinet to cut $100 million out of the budget, it looked at first like a misprint. That’s barely enough to count as a rounding error.
Read More: Budget & Tax Policy
Indeed, the only hard part about meeting the president’s goal will be finding programs small enough to fit under that bar. In making the announcement, Obama talked about earning the public’s trust on spending. Apparently, he thinks people put a low value on trust.
Measured against the $3.6 trillion budget Obama issued weeks ago, the cuts amount to 0.0028%. And assuming each of his Cabinet officials shares the burden equally — and how could they not? — they each only have to come up with about $7 million in savings.
Perhaps the president is counting on taxpayers not being able to tell the difference between millions, billions and trillions. They all seem like such big numbers.
So to get a real sense of just how little is being asked of his Cabinet, consider:
• If Obama were your dietician, you’d only have to give up an apple a year to abide by his diet plan.
• If he wanted you to cut your gasoline consumption, you’d have to drive just one-third of a mile less in a year.
• And if he wanted you to waste less water, you’d only have to reduce the time you spend in the shower on one day of the year by 30 seconds.
Indeed, the only challenging part of Obama’s challenge may be finding ways to cut only $100 million. In an operation as gargantuan as the federal government, even little programs cost a lot. And trimming a little waste and fraud here and there will net you more than $100 million in savings.
The Congressional Budget Office, for example, puts out a comprehensive list of potential spending cuts — identifying programs that have outlived their usefulness, are wasteful, inefficient, prone to fraud, etc. The savings add up to hundreds of billions with a “b” instead of millions with an “m.”
Just canceling the federal Beach Replenishment Program (who knew there was such a thing?) would save a bit more than $100 million a year. Ending the “Essential Air Service” program, a “transitional” program put in place 30 years ago when the airline industry was being deregulated, would save $113 million a year.
Even doing something as simple as verifying the income levels for Pell Grant recipients would save more than $150 million a year.
Getting Amtrak to eliminate its five biggest money-losing routes would spare taxpayers about $250 million a year. Just eliminating the Presidential Election Campaign Fund, which Obama didn’t use in 2008, would save an average of more than $100 million.
Of course, if it’s too hard to find small enough cuts in the CBO guidebook, the administration could always look to the pork-laden omnibus spending bill Congress just passed and target some of those earmarks. Kill off the $44 million tucked in there for military chapels and the $41 million in earmarks for presidential libraries, and his Cabinet’s work is almost done.
Perhaps this is President Obama’s idea of change you can believe in. Cutting government spending in Washington has always proved difficult. By setting his sights so incredibly low, Obama might actually make it look easy.
1934 Chicago Tribune
April 15, 2009Those who refuse to read history always repeat the same mistakes –
Back to the trough.
Don
Cartoon printed in the 1934 Chicago Tribune
Wealth Connection
March 16, 2009Wealth Connection
By INVESTOR’S BUSINESS DAILY | 16 March 2009
Economy: The Federal Reserve last week announced that Americans’ net worth took an $11.2 trillion hit in 2008 — the biggest on record. Some might say, “Why care? It’s ancient history.” But we should care. A lot.
Read More: Economy
The recent economic and budget news has included so many gargantuan numbers — many in the trillions — that we’re in danger of becoming a bit jaded by them. In such company, the wealth shrinkage might seem benign by comparison. It isn’t.
Net worth — basically, the value of everything you own minus the debt you took on to buy it — plunged 9% from 2007’s $64.4 trillion to $51.5 trillion last year. In the fourth quarter alone, Americans lost $5.1 trillion in wealth. Both are records.
This is more than just a paper reduction in wealth. Such a big shift affects our behavior, making us less prone to take risks, less able to borrow, less able to spend and more anxious about the economy.
This is known as the “wealth effect.” When wealth rises, we spend more; when it falls, we spend less. For each $1 change in wealth, spending changes by 5 cents or so, economists say.
Across the economy, such impacts can be enormous. An $11.2 trillion drop in national wealth, for instance, translates into a $560 billion drop in spending — about $1,963 for every American.
This is why economists worry about net worth. If we don’t do something about stemming the decline in wealth and encouraging wealth accumulation, our economy will continue to struggle.
They may be on to this at the White House, where there’s been a decided shift in tone away from the expressions of doom and gloom common in the initial weeks of Barack Obama’s presidency.
On Friday, for instance, President Obama told Americans the economy is “not as bad as we think,” and that he was “highly optimistic” about things in the long run. Compare that with his statement of early February, when he called the economic crisis “as deep and dire as any since the days of the Great Depression.”
His Treasury secretary, Lawrence Summers, who isn’t exactly known as Mr. Sunshine, had this to say last week: “Before, we had too much greed and too little fear. Now, we have too much fear and too little greed.” And, for the record, he said he already sees “modestly encouraging” signs of success.
Maybe it’s dawned on them that fear and worry are two of the biggest enemies of wealth. People will only invest, and push up prices of assets such as stocks, bonds and real estate, when they feel comfortable about the future and its prospects. It’s called optimism.
We’ve heard this before, of course. FDR said, “The only thing we have to fear is fear itself.” The problem is, people do have many things to fear — especially bad policies that will drag stock and home prices down even more, further eroding wealth.
We’re glad to see a change in the administration’s tone. But wealth will start to grow again only when policies change to include lower taxes on income and capital, much less government spending and far fewer regulations.
This would make all assets in America more profitable and therefore more valuable — the essence of wealth.
BIJENKORF:beehive 
