Monday, August 04, 2008

Obama and the Economy

I watched most of Obama's speech today in Michigan and finally had to turn it off because with every word he demonstrated just how unaware of how the economy and the rules of supply and demand work. He held out a fig leaf to the Michigan audience by promising that he is going to make the auto manufacturers start producing energy efficient cars and how that will create more "good union jobs" in Michigan.

Obama doesn't seem to comprehend that he can't make the auto makers do anything unless he declares a national emergency and puts industry on a wartime footing. He also doesn't seem to understand that the Detroit automakers are rapidly going bankrupt because of the "good union jobs".

Any move by automakers toward alternative fuel powered cars will probably be by manufacturers located outside Detroit and they will probably be made in new manufacturing facilities located in states that are business friendly. Low state tax rates, right to work laws, work forces that actually want to work and functioning local governments will attract the new plants and Detroit will continue to slide downhill.

Obama promised to give everyone a $1000.00 rebate to help offset the high cost of gasoline which he intends to fund with windfall taxes on the oil companies "obscene" profits. Obama doesn't seem to understand the difference in gross profits and profit margins. If he imposes windfall taxes on gross profits, the oil companies will go broke in a hurry. Then where will we be?

When Obama speaks about the economy, its almost like John Edwards wrote the speech. Big oil, big pharma, big this, big that they are all evil and must be taxed to death. Where does Obama think the money for the research and development that gives the US the lead in developing new drugs or the money to develop new forms of energy will come from. Does he expect it to come from the government? That would require higher taxes than Obama has already proposed.

I think Obama is finally on the verge of putting himself in a corner he won't be able to talk his way out of. He is making promises that the public knows he can't keep. Most people have a better understanding of economics than Obama is giving them credit for. People don't like to be played for fools and Obama is about to step over that line.

Look for Obama to start sliding in the polls soon.

Chuck

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