The Unintended Consequences of the Dodd-Frank Act

Everything has cause and effect. If you kick a ball, the ball will roll. If you tease a cat, the cat will growl. If you put your hand in a pot of boiling water, your hand will burn. We see this a lot in our economy, especially now in the housing industry. And this isn't any ordinary industry: It's a driving force for the entire economy, and your government is trying to suck it dry.

When you buy a house, you have to buy appliances, furniture, utilities, etc.. This in return creates jobs for the people, to make washers and dryers, to make chairs and beds, to run operations so that way we can have clean water; and it's all because of housing. But in April of 2010, the Dodd-Frank Act was passed just shortly after the Financial Crisis of 2008. While the Dodd-Frank Act might seem lengthy with its 2300 pages implementing 400 new regulations, it has one sole purpose: To over regulate the Mortgage industry.

If you were a car salesman, could you imagine how you would feel if the government told you that the maximum commission you could make on any car was 50$. It doesn't matter if you sold a Nissan Leaf or a new Bentley, all you could make was 50$. That is what they have done to the Mortgage industry. They made all loan officers make the same amount of money on any given loan. They have changed the way appraisals, title fees, flood certifications, and credit reports are all processed. This makes it longer to get a loan, because it costs more to get it passed which then goes down to the consumer. It is a sickness, it is broken. The mortgage industry will resurrect the housing industry, and by crippling it with oppressive legislation is doing an injustice to the people, an injustice to America.

I Didn't Watch It But...

The economy is stimulated by people spending money. That means people have to have money to spend. Now, I'm not going to lie, I didn't watch President Obama's State of the Union address, but I did read this article outlining his main economic policies for the upcoming year. I'm no expert on politics, but I do notice that the majority of the time, what a President says in the State of the Union address is all talk, no matter whose party they're throwing. But Obama did say some pretty interesting stuff about stimulating our economy. What it looks like to me is that he is all about Congress spending money to make jobs to decrease the unemployment rate. And where does Congress get this money? According to President Obama, its going to come from taxing the rich. Taking money away from the rich also takes away their spending money, so they stop spending money consuming and investing in business, which takes away money from businesses that they could use to create jobs and hire people. So in the end, this plan doesn't really work, because government created jobs aren't really jobs at all. For an economy to work, the people need to have a little bit of freedom and power to make and spend money as they see fit. With everyone "playing by the same rules", it's hard for people to do that. It ends up being a redistribution of wealth which is the complete opposite of the country's capitalistic foundation. In fact, it's socialism (ooohhh scary word). In my opinion, we should be looking for ways to stimulate the economy without additional government spending and taking money out of the public's hands. How? (ask Ron Paul)

Broken Economy, Broken Country

In his state of the union address, President Obama did not hide his optimism for the outlook of our country. Yes, there have been improvements as well as more set backs pertaining to our country's struggling economy. But for the individuals, or for the families across the nation, the President's bright attitude does not reflect their own. This article from Time looks into the emotions President Obama strived to instill in his speech.

Our country is staring at two broken codependent dimensions: government and economy. As we operate under a mixed economy, incorporating necessary government restrictions and intervention onto an otherwise free market, these two pillars of our country transform and affect one another invariably. Meaning, when the housing market tanks, unemployment skyrockets and more Americans depend on welfare than ever before, Washington divides- more so than its current state -and rips the country in half. The House and Senate are brimming with conflicting arguments and proposals, under-the-table deals and partnerships to block this or that piece of legislation, all of which inevitably leads to the current state of our union: a stalemate.

The solution? Perhaps a clean slate- all new representatives and senators to fill Congress with new ideas, new methods of operation and hopefully a more realistic optimism than that which appears on the President's face. Opposition for the sake of opposition plagues Congress now. Naturally, this rather immature emotional response to the current crisis trickles down into the constituants, as they listen to their congressmen gripe about how he or she COULD have progressed further in this past session, but it was Congressman so-and-so who thwarted his/her proposal. At this point not only in Congress divided, but all citizens of America start pointing fingers at their political enemies.

Certainly at a time of great economic crisis, such antagonism is more than detrimental. The problem to fixing the economy starts in Washington. But when Washington is broken, there's little to be optimistic about.

Disney

The 34 billion dollar company as well as creating over 65,700 jobs in just Southern California is no other than Disney. What makes Disney so popular is that it is for all ages. Disney has many people they can market to. Along with being a dominating tv channel for kids, movies, having its own popular cruise line and theme parks around the world, Disney has and will continue to have a big economic impact on America. Also having two popular theme parks in the US, tourists are attracted from countries all over the world to America. The cities around Disney theme parks and resorts also see a major increase in their economy. Orange County receives about 45 percent of the overall economic benefit with Los Angeles County receiving about 40 percent. With a booming economy, can you imagine how much money Disney can make? I feel like this is a company that will probably not be in any great financial trouble because people all ages and around the world contribute to the Disney’s company wealth.

Hypocrisy? You decide.

Adj. 1. unpatriotic - showing lack of love for your country

Adj. 1. irresponsible not showing or done with due care for the consequences of one's actions or attitudes; reckless


Does President Obama really love our country? Is he a responsible leader? Just recently on December 12, 2011 Obama asked congress to raise the Debt Ceiling by $1.2 trillion. Now flashback to July 3, 2008, when then Senator Obama adamantly proclaimed that President Bush was both "unpatriotic" and "irresponsible" for raising the same Debt Ceiling. Wait, did Obama just really contradict himself? So why did Obama so quickly change his tune now that he occupies Bush's previous post? Maybe because at his core he is simply a hypocrite. I think it's because he will say anything to make himself look good to his liberal base. However, one could simply reason along the lines of what Ed Morrissey, columnist/blogger/political activist, states in the following quote, “if Obama can use the increase in the national debt to question Bush’s patriotism, doesn’t it follow that increasing deficit spending by 152 percent per month makes Obama 152 percent more ’unpatriotic’ than Bush?” Either way, it doesn't cast a positive light on Obama. While everyone is entitled to their own opinion, I believe that Obama is set on this country transitioning from a mixed economy to a commanding one. For example, consider the following; The Affordable Care Act that basically gives everyone health insurance (sound like Canada, eh?), a vary large number of current Federal Employees make up a group that currently owes over $1 billion in delinquent taxes to their employer the Federal Government (someone turning a blind eye here?), and now our Debt Ceiling is being raised once again, thereby continuing to allow our out of control government to, according to Obama's own words, act in an unpatriotic and irresponsible manner to spend more money than we collect. So now, I challenge you the reader, to decide if Obama is really as unpatriotic and irresponsible as he lambasted Bush for being in 2008 or is he simply just a hypocrite and says whatever he thinks sounds good to his adoring fans.

An Idiot Abroad

This is the most appropriate video I could find on YouTube from Sky 1's (British) An Idiot Abroad. But in this part of the episode, Karl Pilkington goes to visit a village in Mexico where descendants of the Mayans who built Chichen Itza still live. Here, they use the same methods of farming and feeding that their ancestors did thousands of years ago. Karl has to go with one of the men from the village to take a wasp's nest down from a tree, because they use the larva in the food that they eat. The man Karl is with says that eating wasp larva makes you big and strong... but let's be honest, eating tiny wasp larva does not make you big and strong, as Karl puts so very well. But I feel like this is a great example of a traditional economic system, as discussed in class. The descendants still live in a village where lessons and strategies for surviving are passed down from generation to generation, and where they don't stray to far from their old ways. For example, these people have never had bagged chips before. I mean it takes a lot to go through life and not know about Lay's potato chips. And they are still eating wasp larva, because that's just what they are taught. It's weird how there are still people today that use a traditional economic system after we have improved so much farther then that.

The Cost of a Hit Song

It's no secret that the music industry is expensive. We all imagine the famous pop artists, rappers and bands getting paid millions for every hit album or concert and living luxurious lives. What most of us don't realize is the amount of money that is input to create such hit singles and albums is astronomical. A podcast on npr analyzes the process by which Rhianna's latest hit single was made and the absurd price at which it came. Record labels will fill a dozen recording rooms with top of the line song writers and lyricists. The rooms themselves cost between $2000-$2500 per day, per room. They will work for a week or two, and by the end will emerge with multiple prospective song ideas, which also don't come cheap. A song itself will be priced roughly around $18,000, and Rhianna then gets to choose her favourites to put on her album. The mixers and editors, the producer and the vocal producer also all get paid somewhere around $55,000 total. All these expenditures and the artist herself hasn't even stepped foot into the studio to record yet. What's the reason for such grand amounts of money to be thrown around so easily? Well, you can't pay just anyone to write a song for Rhianna, or just anyone to produce her hit singles. No, these professionals specialize in making Rhianna sound as amazing as she can, and as they are few and far between, they get paid like royalty. The consumer-in this case, the listener- won't buy an album that sounds like a train filled with crying babies. That's why Rhianna and her armada of virtuosos get paid top dollar salaries for their elite labour.

Made in China

This article talks about the relationship between trade with China and how it has created a gap between high and low skilled jobs. Because the cost to make something in China as well as other third world countries is much less than making it in America, more and more companies are moving out of the US and setting up factories else where thus taking away factory jobs i.e medium skilled jobs from Americans. Without these medium skilled jobs, people who don’t have the ability to work a higher skilled job have to resort to a lower skilled job where the pay is much lower. This also creates an other gap between upper class and lower class. Many Americans believe that foreign workers are “stealing their jobs” which in fact it’s American companies taking away jobs from Americans. Many products made in foreign countries aren’t being sold by the third world country they are made in but in fact sold by American companies. American companies chose to have their produce made over seas because the cost of labor and raw materials cost less over seas.

Outsourcing

Outsourcing has had a substantially detrimental affect on America's economy while serving to nurture and aid developing countrys' economies like India and China. Outsourcing is when an American company hires thousands to millions of workers in said countries for cheaper than what the average worker would earn here--much cheaper. An article from businessweek.com says that hired employees in outsourced nations might earn 1/5 th of the wage an American would. What does that mean for the company? Profit, of course. Cheap labor can slash production costs and save a company millions of dollars. However, while the company benefits from this movement, America's economy suffers. All the jobs given to developing nations is the kind of unspecialized labor that the 8.5% of Americans would kill to have. On the flip side, bringing all these jobs back to America--the call centers, the factories, the production lines--would cost a fortune for these companies and for the consumer. Consumers benefit from outsourcing in that they enjoy the deflated prices of the products they spend money on. By the time the company brings all the outsourced jobs back to America, hires Americans, builds new factories and provides them all with healthcare and minimal benefits, the American consumer would have already stopped pouring his/her money into that company.

Water Scarcity

Oil isn't the only resource that's scarce these days in North Texas. Restrictions are being placed on water use in cities all over the south in this unusually long drought. In Dallas, for example, the time of day that people can water their lawn is monitored and there is a limit on how many days a week lawns can be watered. Water is not a resource that we can just create more of. This scarcity of water, in turn, makes it more valuable to it's consumers (that's EVERYTHING by the way). Just the other day, our refrigerator was broken and we could no longer get filtered water out of it. Being as spoiled as I am, this was a big disappointment. I now had to drink tap water. After the refrigerator was fixed, I no longer took for granted my tasty filtered water. It's value increased much more to me, and that's what is happening to all of North Texas.