Friday, February 13, 2009

Welcome to My Periodic Journal of Rants, Raves and Bits of Humor ( or how the world is seen and understood by me).

Octuplets, Multiplier and other things.

I think the IV Fertility doctor should pay child support for the octuplets, anyone agree? As far as Ms. Shuleman ( the mom) she should be nominated for the Nobel Prize in the area of economics, she bore eight children who will consume over a billion dollars in medical care, support and other services until they are old enough to care for themselves if ever. She is a one woman California stimulus package.

As far as paying for all this, we all will pay! I know you are sitting there all smug and saying I don't live in California so I am not going to pay but O'contrere ( is that correct if not pardon my French) my dear, California is so broke and debt ridden they are going to receive a bail out from the federal government so we all will pay.

Multiplier effect:

The major theory driving this and any bail out is the multiplier effect, Keynesian economic theory states that each $ 1.00 the government spends creates $ 5.45 in
downstream spending. This is a wonderful theory and along with Santa Claus want to make me gush and proclaim we have achieved Utopia and it is here to stay.

But for the life of me I cannot understand how any one spending $ 1.00 can generate
$ 5.45 in additional spending. If the same dollar is spent 5 times then that is $ 5.00 but it is the same dollar at the end of the day.

In actual theory if the the $ 1.00 is printed or borrowed by the government and they then hire contractor A to do work for the government and pay him the dollar, he then pays 30 cents ( 30 % ) federal, state and social security taxes and takes his net pay of 70 cents and spends it on groceries, the grocer then receives 70 cents and pays his taxes of 21 cents and the grocer now spends 49 cents paying his employee, the employee receives 49 cents and payes 16 cents tax and has 33 cents to spend on gasoline, the gas station owner receives 33 cents and pays his tax of 10 cents and has 23 cents to spend, can you see where I am going with this. After a while all the money ends up back with the federal government. I fail to see how that $ 1.00 can generate $ 5.00. Now I know it is more complex than that because you have inventory, supplies, insurance and many other considerations but the complexity does not change the theory and the same $ 1.00 cannot become $ 5.00.

Politics as usual:

U.S. Representative Patrick Kennedy D. R.I. replied when asked his opinion on the stimulus bill yesterday " I haven't had time to review the whole bill but I know it will pass". Patrick lighten up on the Ambien and get to the job we are paying you for. The vote in the House of Represenatives is today and yesterday you had not reviewed the 800 page bill that portends to spend $ 800 billion. When are you planning on reading this thing ?

Actually in all fairness to Patrick I do not think any politician has read all of or any of the 800 page bill, and if a select few have they do not and cannot understand it.

Remaining along family lines, the Senate brought Patrick's father Ted Kennedy back from his recuperation in Florida, I have nothing but sympathy for this 75 year old man suffering from brain cancer, but does he have the mental or physical capacity to vote on anything ? My prayers and wishes for the best go out to him ( and believe me I can sympathize with his plight) but there comes a time when people should consider retirement.

Finally Goldman Sachs:

In a quote released yesterday the usually optimistic Goldman Sachs stated the following:

"Historically it takes 5 years for bank stocks to bottom out
so we are about 1/ 2 way there"

" Historically it takes 5 years for housing prices to bottom out
so we are about 1/2 way there"

" The banking system has 2.1 trillion in toxic mortgages to write
down and so far have written down 1.1 trillion so we are about
1/2 way there"

Goldman Sachs feels we have 2 - 3 years left of this downturn to bottom out, let's hope they are as wrong about this as they were about buying and selling all these bad mortgages.

OK, the good news, I can see all my grass as the snow cover is gone for the first time since Christmas Day, I have had it with Global Warming, call Al Gore !

1 comment:

  1. Hot off the AP (Associated Press): "...The Suleman octuplets' medical costs have not been disclosed, but in 2006, the average cost for a premature baby's hospital stay in California was $164,273, according to the U.S. Department of Health and Human Services. Eight times that equals $1.3 million.

    For a single mother, the cost of raising 14 children through age 17 ranges from $1.3 million to $2.7 million, according to the U.S. Department of Agriculture..."