Random Thoughts

In my previous post, the mounting federal budget deficit had me worried about the possibility of the U.S. government not being able to pay back its debt, effectively wrecking the global economy as a result. The odds of the U.S. government defaulting on its bond payments are very small but not totally negligible, according to the Greg Ip's article on the subject . The chances of default remain pretty remote. But remote does not mean impossible. The best way to keep those chances remote is for policymakers to vow to get the deficit down once the recession is over -- and mean it. I am encouraged that the author approves of Obama's stimulus spending plan despite the country's mounting debt. The Obama administration should not focus on debt reduction now, which could actually undermine the prospects for a recovery in the real economy. With households and businesses trying to spend less and save more, the federal government must spend more and save less -- that is, borrow more -...

It is remarkable tha the Congressional Budget Office is projecting a federal budget deficit of $1.2 trillion without including Obama's expensive stimulus plan. Assuming Obama's stimulus plan costs $800 billion over two years, you are looking at deficits in the order of $1.6 trillion for the 2009 fiscal year!! Obama tells us that trillion dollar deficits are here to stay , for the coming years. These numbers are scary!! I like to think of the gravity of a federal budget deficit as a percentage of federal revenue (as opposed to be the GDP as everyone else does). Considering the federal tax revenue is about $2.5 - 2.7 trillion, the deficit for 2009 is going to be anywhere between 44-64% of the federal tax revenue!! Imagine if you are a household spending 44-64% more than you make. How long would you survive? Not for long!! I don't think even the money-printing Uncle Sam can pull this off for too long. This country is on an unsustainable path to a devastating nationa...

Obama has been talking about including digiization of health records as part of his stimulus plan. I was delighted this morning to see concrete numbers showing the cost and benefit of Obama's plan. So, the estimated cost of establishing the system is $75-100 billion over 5-10 years, which is about $10-20 billion per year. That number is minute ( I wonder if anyone would have any serious opposition to this plan.

According to the Christian Science Monitor , the embassy is supposed to be one of the largest in the world and it is meant to symbolize America's long term commitment to Iraq. Sure, $592 million is peanuts compared to the nearly $1 trillion the Iraq War has cost so far, but it is a bad investment and a waste of money for many reasons. For one, the U.S. remains largely hated in Iraq despite whatever progress has been made lately. Such a grandiose symbol of the much-maligned America will only exacerbate and fuel the anger and anti-American sentiment that exists there. It is quite inconceivable that the Iraqis will warm up to the U.S. anytime soon. Secondly, building such an expensive structure in a country where suicide bombings are a daily occurance and their scale/destruction is massive is a waste of money. I would not be surprised if the new embassy is a subject of a major terrorist attack. To prevent a terrorist attack, the U.S. would have to spend lots of military resources ...

It's time Oct 30th 2008 From The Economist print edition America should take a chance and make Barack Obama the next leader of the free world ... For all the shortcomings of the campaign, both John McCain and Barack Obama offer hope of national redemption. Now America has to choose between them. The Economist does not have a vote, but if it did, it would cast it for Mr Obama. We do so wholeheartedly: the Democratic candidate has clearly shown that he offers the better chance of restoring America’s self-confidence. But we acknowledge it is a gamble. Given Mr Obama’s inexperience, the lack of clarity about some of his beliefs and the prospect of a stridently Democratic Congress, voting for him is a risk. Yet it is one America should take, given the steep road ahead. ... _________________________________________ The New York Times endorsed Obama, as did The Chicago Tribune and The LA Times . Next up, The Wall Street Journal ??? It would be not be beyond the realm of possibility...

Obama and McCain had at one point both agreed to take public financing in September 2007 if they were their respective party's nominee. At the time, they were both long shots to get their party's nomination, but oddly enough they have both made it to the general election. As for their promise to take public financing, McCain decided to keep his promise while Obama opted to finance his campaign through his own fundraising. In doing so, he became the first ever presidential candidate to forego public financing during the general election. In February 2008, McCain started criticizing Obama for not keeping his promise to take public financing. How legitimate are McCain's accusations? That's what I wanted to discuss. According to The New York Times campaign finance page , Obama and McCain raised $401m and ~$150m, respectively, prior to earning their party's nomination. The public financing package is $84m over two months (Sept-Nov). For McCain, whose averaged $7....

In my previous posts, I have argued that democrats have simply been better stewards of the economy in the past, particularly in the last 60 years. Tax-and-spend Liberal My Ass Politics of the Federal Minimum Wage Democrats Have Kept Unemployment Low Democrats care about poor people Truth About Economic Performance of Political Parties In this post, I will discuss a recent graphic that further consolidates the view that the US economy has performed better under democratic presidents than republican ones. As I have noted before, there are many factors that affect the performance of the US economy aside from who is in the White House. Those factors notwithstanding, the whole narrative of a good economy under democratic administrations had been consistently true. Tommy McCall provided a stark graphic at The New York Times called Bulls, Bears, Donkeys and Elephants . In there, he compares the performance of the stock market (S&P 90 * S&P 500) during Democratic and Republica...

What annoys me most about the presidential campaign is how every candidate and surrogate dumbs down everything to a few campaign talking points. The very intelligent candidates and highly accomplished surrogates never answer real questions and always choose to revert to their stump speeches. That would be acceptable in a Third World nation with a literacy rate of 50%, but not in America. The dumbing down is an insult to the highly engaged and worried public that is looking for solutions.

During times of great economic crisis and debate, the opinions of economists are as important as any other groups. The Economist did a great service to its readers by surveying as many prominent economists as they could and here is what they found out. A total of 142 responded, of whom 46% identified themselves as Democrats, 10% as Republicans and 44% as neither . This skewed party breakdown may reflect academia’s Democratic tilt, or possibly Democrats’ greater propensity to respond. Eighty per cent of respondents and no fewer than 71% of those who do not cleave to either main party say Mr Obama has a better grasp of economics. Even among Republicans Mr Obama has the edge: 46% versus 23% say Mr Obama has the better grasp of the subject. A candidate’s economic expertise may matter rather less if he surrounds himself with clever advisers. Unfortunately for Mr McCain, 81% of all respondents reckon Mr Obama is more likely to do that ; among unaffiliated respondents, 71% say so. On our o...

Barack Obama has been my candidate of choice from the beginning. I have outlined a few of the reasons I support him . One I didn't mention is the issue of foreign aid. As I discussed earlier, US government's foreign aid as a % of its GDP is one of the lowest for any developed nation. Economic Aid to Developing Countries - The Stats To make it worse, much of the aid is given to two sources: Military and economic aid to Israel and Egypt to keep some peace in the Middle East Colombia, Peru and Bolivia to fight drug The tiny bit that is left goes to countries where the US has foreign policy interests. The aid is used for political leverage. Here is where Barack Obama comes into the picture. He has said that diplomacy and restoration of American image in the world would be the pillars of his foreign policy. One way to improve America's image in the world is to provide more foreign aid, particularly one that is not directly used for political leveraging. Obama promised ...

This is a continuation of my earlier posts on economic performance of democratic and republican administrations. My earlier posts include: Politics of the Federal Minimum Wage Democrats Have Kept Unemployment Low Democrats care about poor people Truth About Economic Performance of Political Parties I like to think I have shed light on some facts and debunked some conventional wisdom. In this post, I will attempt to examine the tax-and-spend liberal label put on democrats. Republicans often try to label democrats as tax-and-spend liberals who are soft on national security. While the latter point is based on anecdotal evidence, the earlier is amenable to empirical examination. So, I set out to prove or disprove the notion that democrats often tax and spend in a way that does not yield economic growth. The implication of tax-and-spend liberal is one that puts excessive tax burden on its population and finds inefficient (think socialistic) ways of spending that tax reven...

In my previous post, I tried to test my theory that democrats care about poor people than republicans by looking at the change in federal minimum wage under democratic and republican presidents. It is somewhat difficult to prove or disprove my theory graphically, so I prepared a little spreadsheet and calculated real numbers. While I was at it, I decided to factor in the role of Congress in determining the federal minimum wage. The results are as follows. It is important to get a general feel for the extent to which the two parties have controlled the executive (president) and legislative (Senate and House) branches of the government. As the pie chart below shows, Democrats have controlled Congress for a lot longer than the Republicans, while Republican presidents have ruled a little bit longer. SOURCE: http://uspolitics.about.com/od/usgovernment/l/bl_party_division_2.htm Next item to look at is government control by president, Senate and House majority. The Democrats have ruled t...

According to unemployment statistics from 1950-2005, democratic presidents have consistently managed to achieve low unemployment rates while republicans have increased unemployment. Granted there are circumstances that are out of a president's control like Wars, global conditions, natural disasters Congress might have been controlled by a party different from the president to push his agenda The factors above notwithstanding, it amazes me how republicans can claim good stewardship of the economy while they have generally failed to provide people with jobs. The democrats, on the other hand, have kept unemployment low during their administrations. The more I learn about the post-WWII economic history of the U.S., the more I realize how the republican party is the party of fraud and myths, at least when it comes to the economic record.

... if you look at racial composition of the delegates at their convention. According to The New York Times , their delegates were overwhelmingly white and male. According to polls of delegates conducted by The New York Times and CBS News, 93 percent of the Republican delegates are white (compared with 85 percent in 2004 and 89 percent in 2000), while 5 percent are Hispanic and 2 percent are black. The Democratic delegate pool in Denver, according to the survey, was 65 percent white, 23 percent black and 11 percent Hispanic , roughly the same as at other recent Democratic conventions. The poll also found that men accounted for 68 percent of Republican delegates (compared with 57 percent in 2004) and about half the Democratic delegates. I suspected this just anecdotally from inspecting the crowds on TV. Democratic delegates represent the demographic of the country extremely well while republicans are overwhelmingly homogeneous. I decided to compare these numbers with the general...

I always wondered whether the stereotypes of democrats as tax-and-spend liberals and republicans as efficient, fiscally responsible, small government republicans had any truth. Now, I have found the real answer from a variety of sources. First, Jacques Distler a physicist from the University of Texas at Austin evaluates how fiscally conservative democratic and republican administrations have been and what kind of GDP growth they have been able to achieve. He gets into the nuances, but I prefer to present just the summary here. 1. Fiscal Budget Deficits Contrary to the notion that democrats are not fiscally responsible, it is the republicans who consistently put this country deeper and deeper into debt. How this stereotype holds in the presence of such overwhelming data astounds me. It is simply astonishing for such myths to persist. 2. GDP Growth Once again, democratic administrations consistently outperform periods of republican rule in terms of GDP growth by 1%+/year. That is ...

After McCain picked a relatively unqualified and inexperienced Sarah Palin, many people gasped at the possibility of Palin having to take over the presidency in case something happens to McCain. I think McCain dying in office is overstated considering he appears healthy and fit despite the recurrence of a malignant melanoma. Plus, he has been getting great healthcare due to his status and will continue to do so whether or not he wins the presidency. That said, it would be nice to get numbers on chances of McCain's survival as a function of his age. Thankfully, that information was provided by Alex Burns at Politico . The odds of a 72-year-old man living four more years, or one full White House term, are better. But for a man who has lived 72 years and 67 days (McCain’s age on Election Day this year), there is between a 14.2 and 15.1 percent chance of dying before Inauguration Day 2013 , according to the Social Security Administration’s 2004 actuarial tables and the authoritati...

Check out the Google Trends for the VP choices McCain was considering. MITT ROMNEY TIM PAWLENTY TOM RIDGE Then look at Palin's. SARAH PALIN Apparently, there has been little to no interest or knowledge of her until McCain named her his VP.

As the reasons for rejecting Palin's VP candidacy mount, I went looking for unusual pictures and this is what I found. She is indeed more of he same . Sorry, I couldn't resist. One interesting point is Sarah Palin being MIA from the public scene since her introduction to the national stage. I think she is so unqualified to hold her own in the national stage that she is hiding somewhere cramming McCain's policies and talking points into memory. It is shameful that McCain would select someone so unfit and unqualified for this stage. Another interesting development is McCain campain's attempt to turn the population against the media's coverage of Palin. Her many flaws and lack of qualification which apparently were not vetted by the McCain campaign are becoming public, thanks to the media. But McCain's campaign is crying liberal media bias, which is real, but totally justified in this case. Standing on the platform that Hillary Clinton built, the McCain campai...

As in, can she withdraw from the race for one reason or another, making way for McCain to choose someone else? I don't intend to read the rule books to figure that out, but it should be something McCain might have to consider for many reasons. If she does withdraw her VP candidacy, she probably will need to do it before accepting her party's nomination in their convention in a few days. That is unlikely, so this whole post is a futile exercise. Nevertheless, I would like to list the many reasons Palin is the wrong choice for McCain. Her apparent inexperience in anything non-Alaskan - She has demonstrated that she has no clue about international affairs. Over the last year, she has admitted that she pays little attention to national and international issues because she is too busy governing Alaska. Untested nationally - She has not been tested on the national stage like Romney and Huckabee. Making the transition from being a 20-month governor of a state with a population...

Most people remember the Dot-Com bubble of the 1990s that peaked in 2000 before bursting in 2001-2003. Considering how the NASDAQ composite lost more than 60% of its value by 2001 alone, the country was about to go into a recession. The 9/11 attacks made things worse too. As the impact of 9/11 and Dot-Com bust were about to pull the country into a recession, another bubble came to the rescue. It was the housing bubble that deferred a sure recession and kept the US in an era of faux prosperity. It gave Bush a reason to soldier on with flawed economic policies as the housing bubble gave the impression that the good economic progress of the Clinton years were being sustained through Bush's years. This time though, there does not appear to be another bubble ready to bail the US out of the recession it is in. After suffering through the I.T. and housing bubbles in just a decade, I don't think investors and people in general will be adventurous enough to create another bubbl...