I’ve talked about the efficiency of our government before, but I’m starting to see it play out in real time. Right before my very eyes.

The American Recovery and Reinvestment Act (ARRA), also referred to as the stimulus bill, is showing up all across the Nation. And if you pay attention, you’ll realize how lousy a deal it really is.

On a trip to the in-laws this weekend, we ended up taking a detour through the backroads of a sleepy little town due to the removal and replacement of the towns one and only intersection. Sponsored of course by the ARRA.

Six weeks ago we made the same trip and took the same detour. At that time they working on the project for two weeks.

It’s clear to me that this is a government sponsored job simply because it’s taking so long. Any project funded through local means would have been done weeks ago.

This is but one clear example of how inefficient our government is with money. Little projects like this have popped up all over and they’re costing us millions a piece when they should be measured in hundreds of thousands.

In an interview by Fareed Zakaria, Treasury Secretary Tim Geithner revealed (or more, admitted?) that he’d never held a “real job”.  Essentially, since grad school he’s spent his entire professional life in some sort of “policy job”.

Initially, this made me really mad, until I realized that a good portion of those making “policy” haven’t held a real job either.  So Geithner is no odd duck.

Realizing that I’ve got better things to do than be enraged about the people that make up our corrupt government, I moved on to determining what criteria candidates need to get my vote in the future.

A real job is now one of those criteria.

From now on, you need experience in a “real job” to get my vote.  That means a real, no kiddin’ 8 to 5 gig making a no-kiddin’ paycheck.  And you need some tenure too.  None of this, “I worked as an intern as a financial analyst while in school” stuff.

If you want a government job determining how my hard earned tax dollars get spent, you need to have some concept of how my tax dollars are earned.

An ugly era in our country is right around the corner.  Spending is out of control.  The misunderstanding of our own Constitution by our own representatives is reprehensible.

If fact, it’s become apparent that our representatives really aren’t representing any longer, they simply vote to keep their jobs.

In that light, please let me send a bit of a warning to our fellow Americans in Washington.  When the taxpayer no longer sees their money as being spent frugally, they stop paying taxes.  Laws be damned.

Our government is one of the most corrupt in the World.  It should become obvious when labor unions sway votes even though the general public doesn’t want legislation.

Last night my wife and I went out to a movie for the first time in a long time.  We brought Grandma over to look over little Squeebles, and mom and dad went out on town.

We went to see The Blind Side, which I highly recommend.  The underlying story is of a well-off couple with two kids who take “Big Mike” (a teenage kid from the “other side of town” with only the clothes on his body) under their wing, buy him clothes, send them to school, and he ends up getting a scholarship to play football at Old Miss.

I’m not much of a movie critic, and the the previous paragraph doesn’t do the storyline justice.  I recommend seeing it for yourself.

A long time ago I wrote about how I paid good money (and a lot of it) for a bottle of water, when there was a water fountain right next to the concession counter.

Well, I failed in frugality once again.

Last night I paid $8 for a “large” bag of popcorn.  I admit it, guilty.

I can’t believe I did that, but popcorn sounded really good at the time, and I figured we’d split it, which we did.

There’s no way that bag of popcorn was worth $8.  But I paid for it anyway, and apparently by the looks of the line at the counter, other people did too.  I suppose a product is worth what people will pay for it, but for something as cheap and easy as popcorn, it strikes me that so many people are willing to pay for it.

I was only slightly vindicated by putting $4 worth of free fake butter and salt on the popcorn.  If I’m gonna overpay for popcorn, I’m gonna load it up with all the free stuff I can.  Arteries be damned.

This is just the beginning I suspect.  The rate for emergency loans from the Fed went up to 0.75% today, up from 0.5%.  It’s really a trivial move, but it signals far much more than just a quarter point increase in rates.

This is the beginning.

Readers of this space know that I feel interest rates will go up.  They have to.

You can’t spend money like our Government has been printing it and expect any semblance of balance to be maintained.

If the economy were going great gangbusters right now it would be a different story.  In general, debt is not necessarily bad.  But like many households in the last several years, our Country can no longer service it’s debt without taking on even more debt…

So interest rates (and I’m certain, taxes too) are going up so we can get some cash out of the economy.

An interesting article in this weeks BusinessWeek.  I’ve always liked the Facetime section of the magazine, and since Maria Bartiromo quite writing the column, I’ve wondered who will fill her shoes.

This week, Diane Brady chats with Pay Czar Ken Feinberg on the TARP program and its effectiveness.

Naturally, Feinberg is elated that the big banks are in a proverbial race to pay back the TARP money they borrowed from the government to help keep them out of Chapter 11. To hold any contempt would come off as sinister and socialistic.

The article speculates that it was the pay cap of $500,000 that really persuaded companies to pay back the money at such a rapid pace.  Feinberg does a great job of trying to spin the results into a “yeah, we knew it would happen this way”.  He goes on to say that the Government has no business regulating pay for companies that haven’t, or don’t, take tax payer money.  While I hope he and his compatriots in Washington actually believe that, unfortunately, I’m not buying it.

Lately my mantra has become, as the late Bob Novak put it: “Always love your Country, but never trust your Government”.

I believe the Government never wanted the banks to repay the money, at least not this quickly.  The fact that they want to turn around and hand the returned TARP money out for a second round of stimulus should be evidence enough.

In the end, the Government will end up getting most of the TARP money back, but not because companies suddenly became healthy enough to do so.  They got the money back because the banks found out how terrible it is to sleep with the Government, and wanted out ASAP.

Since I’m a firm believer that history repeats itself, I got to wondering how things turned out in the past for economies facing our current challenges.

Fortunately, I didn’t have to go too far back in time to find out.  I did, however, have to go overseas.

The Greeks are in much the same boat we are in the States, although their ship has taken on a bit more water.

The Greek government has pushed social welfare programs that they can’t seem to find the funds for.  The budget deficit will be more than 12% of GDP this year, and the elected officials campaigned on extra spending, yet they now find themselves having to cut costs dramatically just to keep their head above water.

And to say the EU is a bit peeved is an understatement.

Since Greece is on the Euro, they really don’t have the ability to print money like the U.S. does.  The European Central Bank is suggesting that the Greeks, among other European countries, are on the verge losing their credibility, adding that it could stall the recovery process.

The rest of the countries on the Euro will be on the hook to bail out Greece or cut them loose from the currency all together (a rather unsettling proposition).  If the Germans, French and English will be forced to bail out Greece, you can bet it will be with some very unfavorable terms.  Screw me once, shame on you, screw me twice…

The total national debt in Greece is expected to increase from 99% of GDP to 135% by 2011 without significant cuts in spending. Compare this to a ratio of 90% for the U.S. and rising to over 101% by 2011.

The elected George Papandreou instituted a pay freeze for state workers earning more than  €2,000 a month which did nothing but cause an uproar within the Hellenic Socialists party.

The U.S. has some eerily similar financial stats as compared to Greece.  The one thing we can do that they can’t is print money and expect the general population to underwrite the transaction.

I suspect the underwriters of the U.S. national debt will not be happy.  Just ask the French… and Germans… and English…

News out of the UAE yesterday that really shouldn’t surprise anyone.

Late Wednesday, Dubai World (the largest corporate entity) asked creditors for a six month reprieve on paying its $60 billion in debt.

You’ll remember that Dubai thrived during the last ten years due to the infusion of billions of dollars on financial infrastructure and tourist destinations like the indoor snow ski facility, the Palms and World man-made islands.

Since the current economic conditions don’t really facilitate a healthy tourism industry, and many financial firms are on the rails already, it’s not surprising that Dubai is struggling.

The news is having global impact on financial and equity markets.

In the U.S., the Dow was down more than 220 points today at the opening bell, the S&P 500 was down 2.3% and the Nasdaq declined 2.6%.

In Asia, the Hang Seng Index was down just under 5% and the Nikkei 225 was down just over 3%.  Combined, this made up the worst single-day percentage declines for those markets since March of this year.

The news out of Dubai suggests that we’re no where close to being out of the economic mess we’re in.

There have been a number of wild rides through bubbles in the last decade or so.  There was the dot-com bubble that closed out the 90’s and welcomed in the new millennium.  Then there was the financial bubble, the credit bubble, the housing bubble…

Arguably many of those are inter-related, and chances are, you were affected by at least one of them.

So where is the next bubble?

First, I’ve come to accept the fact that history will repeat itself.  We are all poor students of history, but deeper, no one can really understand all the forces at play to effectively stave off a repeat of a certain event.

With that, it’s realistic to assume there is another bubble brewing as we speak.

With all the government intervention in finances, and the U.S. Fed’s “as low as we can go” interest rate policy, I suspect the next bubble will be in interest rates.

If there is one thing that history tells us, and it seems those in power never seem to study enough, is that the Fed is notoriously late when it comes time to act on monetary policy.

Most recently, Fed Chairman Greenspan was slow to lower interest rates which kept borrowing at bay when borrowing was most needed.  To that tone, I suspect Fed Chairman Bernanke will be slow to raise interest rates in an effort to keep inflation at bay.

Since any sort of monetary policy is based on lagging economic data (by 3 months or so), it’s understandable why interest rate moves also suffer from the same lag.  Historically though, interest rate moves have been late to the game by as much as 8 and arguably 10 months.

In the end, I suspect Bernanke will delay raising interest rates until late next year, and he’ll be forced to raise them to levels he’d not anticipated to keep the wraps on inflation.

So what makes this the Mother Of All Bubbles?

In one word, China.

Unlike the past, the Chinese are taking a great interest in our monetary policy, primarily because they own so much of our debt and currency.  To say the Chinese aren’t really happy with how things are going would be an understatement.

The Fed wants to keep rates low for fears that increasing rates will hamper an economic recovery.  But the Chinese have more leverage in our debt than they do in our unemployment rate.  They’re really looking out for their own financial interests, and who can blame them.

The Chinese are worried that the current U.S. policy is creating insurmountable risks to the recovery of the global economy, and they’re worried we’ll bring them down with us.

Any freshman in a college history course knows that the Chinese will do just about anything to keep their economic freight train steaming down the tracks, and they’re not real happy about the prospect of U.S. monetary derailing that train.

They own a lot of U.S. debt, and they’re not afraid to use that debt to influence policy in the States.  Higher interest rates will appease them as it will increase the value in their holdings.  It’s only a matter of time before Bernanke will have to oblige.

Higher interest rates is what they’re looking for, and higher rates they will get.

I suspect that interest rates will be late to go up, and will go higher and stay higher for longer than they need to.   All in the name of keeping the Chinese at bay.

So I’ve set a goal to contribute the maximum amount possible to Roth IRA’s for both my wife and I, totaling $10,000 a year.

Well, I’m happy to say that I’ve completed half of that goal, and my Wife’s Roth IRA is maxed out for 2009, and I only have another $1,500 to go for my own account.

For the most part, the money has been sitting in the account waiting for action, and with this tumultuous market it’s tough to say where it should be put to work.  The first few trading days of October have me a bit miffed, and I’m wondering if the downward slide in the market will continue.

The next few days will be very telling.

I just spent a week completely disconnected from the stock market.  Disconnected, for a majority of the time, from email, telephone, television and financial information as a whole.

How relaxing.

So I’ve decided to move all my banking to USAA from Bank of America.  The fact that the big BOA still needs money from good old Uncle Sam doesn’t instill confidence in this customer.

So I set up a checking account and several different savings accounts at USAA to replicate the banking structure I had at BoA, and signed up for their USAA World Mastercard as well with the Total Rewards program.  My existing card is held through Citi, who happens to also need another boatload of cash to continue its business.  Since I don’t keep a balance on any of my cards, there’s really nothing to transfer, and I just need to change all of my automatic payments over to the new card.

I’ll probably continue to keep the Citi card active just in case, but I don’t anticipate using it.

No more going to the bank for me!

The other cool thing about USAA banking is the Deposit@Home feature, where you simply scan your deposits directly from your scanner via a Java applet on the website.  The funds are deposited directly to your account and are available immediately.  Kind of cool, and despite the a slight hiccup at first with the Java program, the system works pretty well.

The rewards program is a little different.

As for the rewards program with the Total Rewards card, there are a few differences compared to my Citi Dividend Platinum card.  The first being that you earn one point for every dollar you spend on the card, and one point for every two dollars you spend on your USAA debit card.  You can redeem these points for merchandise, gift cards, charitable contributions, or my favorite, cold hard cash.

With the Citi card, we had a limit of $300 in dividends per year, and by charging all our utilities to that card, plus everyday purchases, we achieved that $300 limit fairly quickly.

The USAA Total Rewards card doesn’t have such a limit, however the program isn’t quite as lucrative as the Citi program.  The Total Rewards program breaks down the rewards in a tiered fashion where you get more cash back the more you spend.  For instance, the first 20,000 points only returns you 0.83% in cash, but after that, you earn 1% cash back.  So the key is to wait until you have accrued more than 20,000 points to redeem for cash back.

Stick a fork in ‘em, Lenny’s done.  The former pro ball player turned self proclaimed Wall Street guru Lenny Dykstra is flat out of money.  Broke.  Penniless.

His 6 bedroom, 7 bath California mansion is up on the auction block, and the New York Times suggests that this is just the tip of the iceberg.  Dykstra’s Gulfstream II has been repo’d after the former infielder failed to pay a $228k bill for a new interior and electronic cabin entertainment system.

What’s ironic about all this is that Dykstra’s been touting his “gains” for the last several years on TheStreet.com and other financial blogs.  In fact, after reading his articles, you’d think Dykstra was the only one making money in the market over the last 12 months.

Countless pundits, Jim Cramer among them, have noted how dead-on accurate Lenny Dykstra’s been with his deep-in-the-money calls. One reason, says Cramer, “Lenny brings the same intensity, skill and aggressiveness to options trading as he did to baseball. Lenny is rapidly becoming one of the great ones.” -Source

What’s amazing is that Dykstra is still giving investment advice, for a price, on TheStreet.com.

For a mere $995 per year, you can get Lenny to tell you how to go broke, just like he did!

Of course, if you’re a pro athlete worried about your financial life after sports, Lenny can show you how to manage your money, just like he does through his Players Club Magazine.

Just goes to show, be careful who you take investment advice from.

The latest in the long saga of the refinance effort for our primary residence; the 4th loan handler called today to notify us that we’ve been approved for closing.  There is one very slight hitch in the works though, although I’m not real worried.  The message stated that the rate of 4.625% was approved for a loan amount of $152,400 bringing monthly payments to $1,080.

That sounds great, except for the monthly payment part.

By my calculation, the monthly payment should equate to just shy of $800 per month for principle and interest. A far cry from $1,080.

The representative did say, however, that those numbers were just preliminary .  I don’t know why she couldn’t give me the real, no kiddin’ numbers, they’ve only been working on this for 3 months!.

The final numbers should come via a phone call in 7 business days along with a request to schedule closing…

Wagoner’s out at GM, essentially pushed out by the Obama administration without consult from the rest of the policy makers in Washington (i.e. Congress) as a condition of new government loans.

This serves as nothing more than strengthened evidence of how screwed up our government really is.  At no point in history has a CEO ever been forced to leave through direct consult of the President of the United States.  A company board of directors reigns supreme over the function of the company, and last I checked no one from the Obama administration sits on the GM board of directors.

This is not how capitalism works.  This is not how free markets work.  This is not how a publicly traded company works.

If the Obama administration wanted authoritative power over who holds what position in a company, they should have bought stock and run the CEO and the board of directors straight out of Detroit.  Instead, the government gave the company a loan, which at last check, does not come with any voting rights.

To be sure, Wagoner needed to leave. His leadership was and has been ineffective for the last 5 years with no forward thinking and a complete lack of influence from the corner office.  But to be run out of town by the Government is preposterous.

The punchline to all this came from the joker himself:  “The government does not wish to run an auto company.”

Furthermore, if bankruptcy is an option, as Mr. Obama now states, then why did all that taxpayer money get dumped into the company in the first place?

The next joke will come at the conclusion of the bankruptcy hearings; as repayment of taxpayer money will be forgiven as debt is erased and creditors are shooed away.  All in the name of a stronger and healthier General Motors.

Meanwhile, Ford hasn’t taken a dime.

If this latest economic slump has taught us anything, it’s that you damn well better be conservative with money you’re going to need in the future.  That means money you’re saving for a house, a car, your kids college, and in many cases retirement, better not be rolling in the stock market.

It’s along those lines that I’ve decided not to create a 529 college savings plan for my son.  I can’t afford it.

It’s not that I can’t afford the fees or the up front costs, for those are a drop in the bucket compared to what college will cost in 18 years.  It’s that I can’t afford to have his college fund washed away in a market that can’t be trusted.

I value his education too much, and while he doesn’t know it now, he will value it too.

I was very fortunate that my parents could afford to send me to college (in-state worked out just fine, thank you) and graduated with no debt.  I was fortunate to marry a girl that had the same benefit, and even more lucky that we are able to stay that way (minus a home loan).  So it’s with that experience that I try to create the same for my kid(s).

Wrapping that opportunity into the market is something I’ve declined to do.  For those who have trusted their investment strategy to handle their kids future in this economic environment are now fretting about it.  For those with kids graduating from high school, there’s more than fretting going on.

Some data to back up my position:

There are over 3,500 options for college plans out there, and 93% of them fell in value over the last 12 months.  Nearly 1,100 fell by 40% or more.

The way that some states have handled portfolios leaves one to believe that they can’t be trusted to manage your money (shocker, I know).

Last April, Oregon doubled the stock exposure in its “1-3 Years to College” portfolio to 40%. In 2004, an in-college student in Rhode Island’s aggressive age-based portfolio would have had 40% stocks, 31% bonds and 29% cash. By 2008, the equivalent was 40% stocks (including real estate), 55% bonds and a measly 5% cash.

Other plans took too much risk all along. In Utah, college enrollees could have 65% in stocks. Several states, including Maine and New Mexico, offered 529 portfolios with no allocation to cash for students over the age of 18. Even after North Carolina finally scaled back its risk earlier this month, a college sophomore can still have 43% in stocks, real estate and junk bonds.

Says Mercer Bullard, a securities-law professor at the University of Mississippi: “In some states, the asset allocation for the 16- to 18-year-olds looks as if it was designed by the 5-year-olds.” -Source

You see, many 529 plans are designed like many date-based retirement plans are: the older your kid, the more conservative the portfolio.  But that’s not the way many have been run, and unless you pay attention to where your money is, you wouldn’t have the slightest idea your portfolio is wilting.

Conservative Alternatives

Too many people got caught up in unrealistic returns from the market, and thought that it’s the only place to invest.  They’re paying the price now,  and a 3% return on a guaranteed CD looks pretty attractive.

Ditch the “get-rich-quick” mentality, and set up a structured CD ladder, or if you’re willing to ditch the guarantee, go with tax-exempt savings bonds.

The same goes for retirement.  If you are set to retire, you have absolutely no business having more than 10-20% of your money in stocks.

Based on the number of hands our government has in the free market “trying to do the right thing”, can you trust your kids future to government manipulation?  I think not.

Heck you can’t even trust them with your own.

You just need to know where to look.

John B. Taylor is a professor of economics at Stanford University, and debunks the notion that deregulation spurred on today’s financial crisis.

What a day.  Checking in on the markets around noon Central time, I was wondering if we’d seen the top of the bear market rally. There wasn’t much positive price action in the equities I’ve been watching, and gold (GLD: chart, web, Y!) wasn’t making any great shakes either.

Then Bernanke went on a shopping spree.

When I checked back in around the close, nearly everything I was watching not only reversed course, but went into overdrive.

The Fed committed to buying up to $300 billion in long-term Treasurys over the course of the next six months, as well as nearly double the purchasing power of mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac, totaling $1.25 trillion (remember, trillion is the new billion).

To top it all off, the Fed also doubled the amount of debt it committed to purchase from the inept mortgage lenders.

Effectively, this action is much akin to chopping interest rates even further; when you’ve hit bottom on the interest rates, the next best thing to do is buy the debt.  In a round about way, this increases the leverage on the banks side allowing them to borrow money at an even deeper discount.

Corner Office Comments

While all this sounds good on paper, and the market surely agrees, long term I’m not convinced this move was well thought out.  What is the Fed going to do with all this debt in the long term?  There was no exit strategy revealed.

Further more, anyone holding long term debt when inflation kicks in is going to get chewed up and spit out like something rotten.  The Fed included.  As the value of the dollar decreases, as readers of this blog remember I’m laying a significant amount of chips on some massive inflation, it’s going to take more of those dollars to service the debt the Fed is absorbing.  The fact that gold and petroleum products rallied on the Fed statement seems to reinforce that position.

This move seems to spread much of the financial strain in localized sectors of the economy, more broadly the financial sector, further out over the entire economy.  No longer are nearly worthless mortgage backed securities held by Fannie or Freddie, they’re held by the entire populous of the country (you and me).

From my standpoint Bernanke is throwing up his arms and wiping bad assets of public companies balance sheets, letting them start over, and forcing you and I to eat the bad tasting financial slop.  Things will look rosy for a while, until inflation starts creeping into play and the government will need to print even more money to service the debt.

Any further upside to this rally should be used to capitalize on gains and readjust into a hedge against inflation, in my opinion.

Hopefully I’m not the only one that’s noticed that the tone regarding the economy coming out of Washington has changed markedly in the last week.  And it should come as no surprise.

The Obama administration desperately needed to convey how bad things were to garner support for the $700+ billion “stimulus” bill, as well as the $400+ billion budget.  There would be no way he’d have the votes if people thought that kind of money weren’t needed.

Now that those two bills have passed, Obama has become the nation’s loudest cheerleader.  And for good reason.  His entire political capital rests in the success of those two packages to somehow speed economic recovery.

It also doesn’t help that the Chinese are questioning their investment in U.S. debt, to which Obama responded with such arrogance as to question why they would even be worried.  In fact, he’s trying to sell the Chinese even more debt; an effort akin to selling bullshit to a cattle rancher.

In effect, there’s really no reason for Obama to maintain any further pessimism, as doing so no longer helps his cause.

I hope the American public is tuning into the political game that Obama has forced us all to join.   After all, now that he owns Boardwalk and Park Place, he can’t help but encourage you to make a run at GO!  And if you land yourself in jail, not to worry, he’s got incentive to bail you out.

I can hear the construction commencing on those four hotels on the most expensive property on Monopoly.

I’m always interested in how a leader at the top of an enterprise communicates with regard to his own business.  A lot depends on the corporate structure, however there are some leaders that can speak intelligently about any aspect of their company.  Others have a broad understanding for how their business works, and shy on details of minutia.

There are others that must defer every question to the resident expert for that topic.

It’s with that basis for which Barack Obama’s leadership is telling.  The fact that he uses teleprompters for every public communique suggests that while he can pen intelligent prose while sitting at his desk, he can’t speak off the cuff to those details of minutia that the public so dearly wants to hear.  The fact that he won’t answer pointed questions at press conferences reinforces that trait.

The lack of deep minded intelligence from the administration as a whole is also reflected in its policy.

Tim Geithner

Obama’s  Treasury Secretary Tim Geithner (see: Oh, I need to pay my taxes?) talked about the tax implications of Obama’s budget proposal on the oil and gas sector earlier this month, and he too revealed a lack of deep-level understanding of the energy sector.

On the tax breaks given to oil and gas companies, Geithner had the following comment while speaking to the Senate Finance Committee:

“We don’t believe it makes sense to significantly subsidize the production and use of sources of energy (like oil and gas) that are dramatically going to add to our climate change (problem). We don’t think that’s good economic policy and we think changing those incentives is good for the country.”

That’s good economic policy?  I think not.  That might be good environmental policy, if it were true.

It takes little critical thinking to realize that, if you believe in the money-making, man-made global warming, any and all contributions to global warming would come from the consumption of petroleum products, not the production of petroleum products.

The government doesn’t increase taxes on cigarette manufacturers whose products are known to cause lung cancer, they increase the taxes on the consumer.

Why would the energy sector be any different?

Because there would be a huge backlash if the government came out and said it was increasing taxes on gasoline and other refined petroleum products because those products may cause global warming.

The administration went further to reveal the lack of understanding by proposing “a $4 per acre annual fee on energy leases in the Gulf that are designated as non producing.  The budget proposal projects the fee would generate $1.2 billion from 2010 to 2019″.

Perhaps someone in Obama’s energy cabinet should explain to the smooth talking President that not every acre out in the big Gulf of Mexico has petroleum reserves on it.  The fact that an oil company hasn’t drilled a well on acreage may mean that there’s no oil or gas to be found on that acreage.

The administration needs to get past the notion that “big oil” is holding back exploration and production in an effort to drive up the price in crude.  The most recent bust of the crude market should be evidence of that, but as the President suggests, we shouldn’t look to the markets to make long-term policy decisions.

Brilliant.

Evidently Geithner suggests that these new policies that roll out of Obama’s budget proposals are justified since the oil and gas companies are making such great money.

The additional taxes “can be absorbed” by the oil and gas companies, given the billions of dollars they have earned from high energy prices. -Tim Geithner, Source

Contrary to the fact that Exxon’s fourth quarter profit decreased 33% due to falling oil and gas prices, the Obama administration thinks that since they’ve made all that money in the past, they should spread the wealth in the future.

“The impact of these subsidies are very small relative to revenues produced by U.S. oil and gas producers.” -Tim Geithner, Source

It’s too bad that Geithner doesn’t understand that not every oil and gas producer has the balance sheet of Chevron or Exxon.  Furthermore, if the government does have the countries best interest at heart and wants to see these major oil producers expand into the renewable energy sector, they would be best served not to put a damper on those efforts through “relatively small tax increases”.

It’s clear to me that the Obama administration is trying to squeeze every dollar out of every nook and cranny in the American economy it can without actually thinking, or understanding where those dollars are actually coming from.

No one from the administration has shown that they can speak intelligently about the economy, finance or the budget, and that lack of intelligence will do our country more harm than good in the long run.  It will only be when real leaders with knowledge of the subjects of which they speak  step to the podium that our economy will start to right itself.

Until then, we wait for the next speech.