If 41 cents of every dollar you made was going on your credit card, would you keep doing it?

According to the Department of the Treasury, 41 cents of every dollar spent by the federal government of the United States was borrowed. 

Think about that. Think about that long and hard. Can you imagine that any sane person can possibly think that this kind of reckless spending can be sustained?  This is the equivalent of a private person making about $25,500 spending $50,000 dollars every year. That means that they had to put $20,500 on the credit card in a single year to hit the same ridiculous deficit spending percentage our government has.

The Bi-partisan Debt Commission report has come out. It's harsh. It's going to ask Americans to accept deep cuts in many of the entitlements that we hold dear. It holds nothing back. Deep cuts are found in health and human services, Social Security, the Department of Defense, all of which been "untouchable" and "third rail issues" until now.

So its surprise to me that the commission itself was only able to get 11 of 17 to support the conclusions of the commission. 

Two examples:
Max Baucus of Montana refused to support it because of the proposed gasoline tax hike that would damage the agriculture industry.  That's nothing. If it were me I would end farm subsidies and let farmers grow whatever the heck they want in quantities they want.

Andy Stern, the president of Service Employees International Union (SEIU) also refused to support it, because it would have deep consequences for federal government employee union pension plans.

As long as people continue to think "Think not what I can do for my country, think what my country can do for me" we are going to head down the road of national insolvency.  When will We, the People, wake up and realize that we've allowed our politicians to walk us down a path paved with the false glitter of lies and promises right to the very trapdoor of financial hell?  When will we stop demanding that our government take money from some and give it to others, when in fact there just isn't any more money to take?  Yeah, the rich are rich, but there aren't enough of them nor do they make enough that by themselves they could pull us out of this mess we are in.  We have to reduce spending. All across the board.

Because unlike you or I who have our mortgage company or credit card company to send us into bankrupty, the federal government instead gets to answer to China and Qatar and the United Kingdom.  And they aren't likely to be any more understanding than your local debt collector. What kind of a debt collector would China use, anyway? Do we really want to find out?

8 Stood in the Way

Eight GOP senators voted against the 2-year earmark moratorium.  They are:

1. James Inhofe (OK)
2. Bob Bennet (UT)
3. Susan Collins (ME)
4. Thad Cochran (MS)
5. Richard Shelby (AL)
6. Lisa Murkowski (AK)
7. George Voinovich (OH)
8. Dick Lugar (IN)

With their votes, the resolution failed 56-39.

I hate earmarks. I hate them because they are a backdoor currency to buy votes. And they are hard to find because they are not in the budget package. They can be attached to anything the house or senate passes.  I note that only one of these senators is actually up for re-election next year. That's Mr. Lugar of Indiana.

There are also 7 Democratic senators that voted for the moratorium. They are:

1. Evan Bayh (IN)
2. Michael Bennet (WI)
3. Russ Feingold (WI)
4. Clair McCaskill (MO)
5. Bill Nelson (CO)
6. Mark Udall (CO)
7. Mark Warner (VA)

Which just goes to show that doing the right thing isn't necessarily being done by just the right wing.

Quantitative Easing and the 2010 G20 Summit.

From the FT.com (Financial Times): In an article by Ralph Atkins while in Frankfurt, Germany, he wrote about the "collision" course that Germany has plotted with regards to the United States.

Our policy makers are whining about our trade imbalance.  Wolfgang Schäuble accused the United States government of undermining its own policymaking credibility.  "It is not consistent when the Americans accuse the Chinese of exchange rate manipulation and then steer the dollar exchange rate artificially lower with the help of their printing press." He went on to say that American's have lived for "too long" on credit, overblown their financial sector and neglected their industrial base.  There are lots of reasons for the US problems -- German export surpluses are not part of them.

He further pointed out that we don't have a liquidity problem. There's a LOT of money in the system right now.  What he didn't say, but was definitely implied, is that borrowing is low because banks have increased standards for borrowing and therefore far fewer borrowers are found to be credit worthy. 

I've harped on this for years.  Part of our problem is that in the noble but misguided effort to make home ownership attainable to more people, the federal government put great pressure on banks to ease lending requirements, with the result that potential borrowers were not required to provide much proof that they could pay back the money they were borrowing. This risky behavior resulted in the mortgage bust of 2008, although signs could be seen as early as 2005-6.  Federal policy makers tried to exert pressure to roll back these practices but were soundly rebuffed by a Democrat-controlled Congress. 

If our government continues to "monetize our debt", soon the Federal Bank will be the only organization that will be willing to buy our debt, and at that point the "Weimar moment" as Glenn Beck puts it, will happen.  

Call your congressman, call your Senators and inform them that printing money is no solution to our problem.  Demand that they reign in federal spending, but be aware that in so doing you will be asking the government to reduce services, some of which you or someone you love and know are depending on. How tight are you willing to pull your belt in order to gain federal fiscal responsibility? Because until you are willing to live with less entitlements from our government, our government will continue to spend its way into debtor's prison.

Boycotts work two ways.

My beloved wife and I had planned on going to Anaheim this October and spend a fun weekend at Disneyland.  I've been wanting to see the "Haunted House on Holiday" exhibition for the last couple of years and we finally seemed to able to arrange things so that we could go this fall.

Well, all of a sudden, California cities started making a fuss about Arizona's anti-illegal immigration enforcement laws, also known as "SB 1070", also known as "Arizona Safe Neighborhoods and Law Enforcement Act".  Cities like Los Angeles, San Diego and Berkeley (OK, Berkeley isn't a surprise, really) have indicated that they will boycott contracts with Arizona.

Clearly, they've not actually read the law (even though the total number of changes to existing Arizona state statutory laws account for only about 16 pages or reading).  Clearly, they've not yet seen that the law can only be enforced as part of a "contact by law enforcement officials" for other reasons and that questions can only be asked about immigration status if "reasonable suspicion" arises as part of that lawful contact.  They've also clearly not read the even more strongly worded amendment that specifically prohibits the use of race in evaluating "reasonable suspicion". 

OK, California. Have it your own way. But although your contracts with us are important to us, I know that tourism from out of state visitors is also important to you.  So let me point out a few things:

1. Rasmussen polls:
1. 53% in Pennsylvania favor passing legislation similar to AZ SB1070 in their state.
2. 57% in Texas support passing legislation similar to AZ SB1070 in their state.
3. 68% oppose boycotts of Arizona over SB1070.
4. 55% nationally favor immigration law similar to AZ SB1070 in their state.
2. Pew Research Center
1. Broad approval for New Arizona Immigration Law
1. 73% approve requiring people to produce documents verifying status. (86% of Republicans, 65% of Democrats, 75% of Independents)
2. 67% approve allowing police to detain anyone unable to verify status.
3. 59% approve the general provisions of SB1070.
3. Gallup Poll
1. Among those who have heard of the law, 51% favor and 39% oppose it.
4. MSNBC/Telemundo
1. 61% favor AZ SB1070, although only 31% of Latinos favored it.

So... if you look at these results, it's pretty simple: Nearly 2/3 of the nation disagrees with the city council rulings for San Diego, Los Angeles and Berkely (amongst others). And just as California wants to flex it's financial muscle (oh... wait... what financial muscle? Isn't CA like 21 billion in the hole?),  so can we who support AZ SB1070.

You remember that California vacation I alluded to earlier? Well, we're going to Jackson Hole, Wyoming instead.

Well, It's Time to Fight.

In a fifteen minute speech today in front of several lab-coat wearing health care professionals, President Obama called for the end game by rejecting GOP suggestions to "start over" on health care reform.

“The American people want to know if it’s still possible for Washington to look out for their interests and their future,” Mr. Obama said. “They are waiting for us to act. They are waiting for us to lead. And as long as I hold this office, I intend to provide that leadership. I don’t know how this plays politically, but I know it’s right. And so I ask Congress to finish its work, and I look forward to signing this reform into law.”

President Obama clearly believes that this health care legislation now has enough bipartisan elements to it that they can get the votes to pass it.

Even though it does not contain federal-level tort and frivolous lawsuit reform.

Even though it does not hold the FDA and HHS departments accountable for their internal spending or even allow them to be co-litigants when procedures and medicines approved by THEM through an incredibly expensive regulation process are then the targets of class-action lawsuits. Lawsuits that are equally expensive and therefore cost big pharma and health care providers with HUGE malpractice/errors and omissions policies. Cost that are passed to the end consumer.

Even though it does not address how the current health care system can possibly afford to insure pre-existing conditions without driving up costs. President Obama and his Democratic compadres apparently don't realize that only 5% of heavy users of the medical system consume 50% of the resources

Even though it does not accurately estimate how pre-existing conditions or no caps on benefits will effect all of us who use insurance.

Even though it does not address how to deal with the shortfall of medical services that will be available when the so-called "31 million" will flood the system. Doctors, nurses and technicians already work long weeks. How will they become less overworked by adding 1 new insured for every 6 already on the system.? How will costs be kept down when services will go into even greater demand with a proportionally smaller supply?

Even though the current bill steals from Medicare Advantage to pay for part of it's costs.

Even though the current bill gives the HHS secretary HUGE new powers to mandate oversights that, if wielded unjustly, can be used to cause companies to go bankrupt.

Even though the CBO does not agree with the Democrats that the current legislation will not add any further money to the federal debt.

Even though current polls show that over 2/3 of the American electorate do not want this bill to be passed into law. 87% of Americans are currently satisfied with their current coverage and costs, but they believe that if this bill passes then they will either have to accept reduced benefits or higher costs and more likely a combination of the two. Even though most Americans understand that our country cannot afford the deficits that this bill will bring, and that we are at the tipping point of no longer being able to pay back the debt we owe.


The Democrats paid only lip service to including the Republicans and their ideas in this bill. Concessions came too little and far far far too late. While there may be 'bipartisan' elements in it, it is primarily a Democratic boondoggle intended to take direct control of the $2.7 trillion health care industry in this nation.

I will now vote with my wallet as well as my phone. The GOP needs to stand firm. If even one Republican Senator votes for this farce and blatant anti-free market, and arguably unconstitutional bill then they will be electorally crucified in November.

I hate this partisan bullcrap but we simply can't afford this now.

Wake Up America! We are going to have to both cut spending AND raise taxes.

America, we are in big trouble. We have allowed our political representatives, senators and even our President to hoodwink us in believing that we can have a chicken in every pot today without paying for it until tomorrow. This is not a new phenomena. Anybody that thinks that reckless spending without restraint has only happened under President Obama's administration is delusional. Only one President in the last 40 years got us even close to a reasonable budget and that was President Clinton, who was the beneficiary of the tremendous "peace dividend" bequeathed to him by President Reagan and to a lesser extent President Bush (41).

Republicans and Democrats alike have flimflammed us, the American people in believing that the government can improve all of our lives if we just give a little more. And when we the people aren't in the mood they take anyway by simply selling off some more debt to the Federal Reserve or to foreign investors and in the process they mortgage us and our progeny.

We are now at the point where our progeny will be paying for the arrogance and greed of the Boomers, The X'ers and Y'ers and who knows what we will call the current generation, for decades to come.

Congress just raised the debt ceiling to 14.6 trillion dollars. We had a budget deficit of 1.2 trillion in 2009 and 2010 is going to have a 1.6 trillion shortfall. Our national debt now represents nearly 85% of our Gross Domestic Product. I am told that when it exceeds 90%, "bad" things are going to happen. This rant however, isn't about what those bad things are. Instead it's a high level view of what it's going to take to start curbing the debt.

Take a look at this chart:

This image is referenced from Wikipedia.

From this graph it is clear that unless Congress is willing to trim back spending in some of the "sacred cows" of the Federal Budget we are going to go the way of Greece. Which is bankruptcy.

The progressives complain that we spend too much on Defense. They have a point. We do spend a lot. But when you look at that graph, you see that we spend more on each of the following: Treasury, which includes interest payments on debt, Health and Human Services and Social Security Administration.

The big four (Treasury, Defense, Health and Human Services and SSA) represent about 80% of the total money spent by the Federal government. Everything else represent only 20% of the budget. If we were to completely shut off spending for everything except the big four, we would roughly break even. That doesn't pay down the debt we owe. We simply wouldn't add any more to it.

We as the American people must be prepared to sacrifice some of our "sacred" entitlements. And some of that may take some time.

Examples:
Social Security was originally intended to be insurance against bad times for those who needed it. It was not an entitlement for all. Americans must once again plan for the future and start saving for their own retirements plans now. And the younger they start, the more likely they won't need to depend on the rest of us when they can no longer work. And in the immediate future, the SSA is going to have to freeze cost increases. Families are going to have to step in and help with their elderly parents and grandparents. 2009 funds spent: $720 billion.

Health and Human Services. Much of the activity under this branch of government isn't even mandated by the U.S. Constitution. Be that as it may, this branch is also going to have to be slashed. On their own website (http://www.hhs.gov/about/whatwedo.html) they state that "HHS represents almost a quarter of all federal outlays". Assuming that cuts CAN'T be made in Medicare and Medicaid (which I don't agree with but for the sake of argument) then we MUST cut the other functions, such as the FDA, Research grants, Head Start, and emergency preparedness. Those functions that can be handled by communities must be. 2009 funds spent: $790 billion.

Defense: Robert Gates did a bold thing when he canceled more purchases of the world's best air-superiority fighter, the F-22 Raptor. In the process, he made a lot of people very angry. Like the Air Force and the good folks who build it. But we need that kind of slashing at every level and in every sector of the defense industry and department. 2009 funds spent: $690 billion.

Since these three departments represent about 65% of the budget, if we were to look at the 2009 budget deficit of 1.2 trillion, that means that we would have had to cut the budgets in these three departments by a combined $780 billion dollars, or roughly $260 billion dollars each.

But don't forget, just slashing these budgets will make things worse. Because to slash these budgets to this level only balances the budget, meaning we aren't adding any more to the public debt. But we still have to REDUCE it. And in the process we would add another 10 million people to the unemployment lines.

So obviously we can't just cut spending. We must raise revenue. There are two ways to do this. We can grow the economy by making our corporate tax rates competitive with other industrialized nations, or we can pay it through income. It will actually be a combination of the two.

America, you must remember that our government is of the people, by the people and for the people. In the final analysis, we let the politicians sham us. But it's our government, and therefore it's our responsibility.

The question is: Do we have the guts to make the hard call? Do we have the guts to force our federal elected representatives and senators to cut the budget where they possibly can? Are we willing to sacrifice our entitlements? Are we willing to start paying on the enormous spending spree debt that we have accumulated over the last forty years? Democrats sure don't have it in them to do that. Republicans could, if they were true to their principles. Tea party people, with their feet on the necks of the Republicans, do they truly understand the level of sacrifice that must be given by every single American to right our financial ship of state? Because let me tell you how it's going to happen.

Congress will slash the federal budget by 900 billion dollars. Conversely, they must raise tax revenues by the same amount to balance the budget. If we make America friendly for manufacturing again... if we make America friendly for business and industry again... we might make it without each taxpayer having to pay an additional 3,500 in taxes EACH YEAR. But unless we can grow the economy while simultaneously tightening our belts we'll never get out of this death-spiral that we're in and the U.S. as we knew it will vanish into the mists of history.

How Business is Done in D.C.

http://blogs.abcnews.com/thenote/2009/11/the-100-million-health-care-vote.html

Read the article first. Of course, over time weblinks will fail. So here's the synopsis.

Senator Mary Landrieu (D-LA), a moderate Democrat, has been playing "hard to get" on committing to an up vote for the Senate version of the US Health Care reform bill. Apparently, a whole section has been added to the bill that benefits one state and one state only; Louisiana. The section is 58 lines and contains 660 words. It can be found on page 432 of the Reid bill, and the section is titled: "SEC. 2006. SPECIAL ADJUSTMENT TO FMAP DETERMINATION FOR CERTAIN STATES RECOVERING FROM A MAJOR DISASTER."

In summary this section increases federal Medicaid subsidies for certain states recovering from a major disaster. There is only one state that meets the conditions set forth in this section: Louisiana.

Since Harry Reid needs all 60 of his Democrat Senators to bring this bill onto the Senate floor for debate, he needs Mary Landrieu's vote. And this is apparently how he will get it.

Oh, one other thing... The Congressional Budget Office estimates that this provision will cost U.S. taxpayers $100 million.

I'm sure that Majority Leader Reid, who is battling an uphill fight in his own state to be re-elected next November, expects Senator Landrieu to stay "bought".

And this, ladies and gentlemen, is how bizness is done in DC.

Kudos to ABC News' Jonathan Karl for bringing this to the harsh light of day.

California's Fiscal Woes a Microcosm of Our Culture of Greed.

So, the people of the Republic of California have spoken. On Tuesday of this week, they failed to pass five of six "reform" propositions that were intended to help the state out of the huge fiscal deficit that they find themselves in. Just in case you weren't paying attention, here's a very brief summary of each proposition:

• Prop 1A (Failed): Rainy Day fund. This proposition would have placed limits on gov't spending during boom times to increase rainy-day reserves to be used during major natural disasters or economic down times.
• Prop 1B (Failed): Education Funding. Contingent on Prop 1A passing. Annual supplemental payments for K-12 schools and community colleges to begin in 2011 to make up for recent cuts.
• Prop 1C (Failed): Lottery Modernization. Authorizes state officials to borrow five billion dollars to be repaid by profits from a revamped California State Lottery.
• Prop 1D (Failed): Special Education Reallocation. Authorizes the state to shift 1.7 billion dollars from the early childhood development programs over five years to help balance the state budget.
• Prop 1E (Failed): Mental Health Budget. Authorizes state officials to ship money away from a mental health program established by voters in 2004 in an effort to help balance the state's books.
• Prop 1F (Passed): Elected Official Salaries. Would prevent pay raises for legislators and statewide officeholders during deficit years.

California's electorate may finally be waking up from decades of nightmarish propositions that have continued to increase government benefits while failing to address how those programs would be funded or maintained. As the Govinator put it, the people of California have now told them to "go all out and make those cuts and live within your means". I doubt that Californians really understand how much pain that is going to cause.

In 1978, Californians approved Proposition 13, officially titled the "People's Initiative to Limit Property Taxation". This resulted in a cap on property tax rates and an immediate collective reduction of about 57%. The intent was to prevent older state citizens from being taxed right out of their homes as property values continued to spiral out of sight. This proposition is a metaphorical and political 'third rail'. To touch it is to commit political suicide. And yet, with this legislation in place, it is almost impossible for California to raise the needed revenues for all of the programs that it's citizens have demanded through countless idiotic "propositions'. Even a "reform" candidate like Governor Arnold Schwarzenegger, who was advised by mega-investor Warren Buffet to repeal this act, has been powerless to do anything about it.

Much of the United States is in the same lamentable boat. We want less taxation, but we want the government to give us more benefits, not less. Yet anybody who knows how to balance a checkbook understands that if you continue to make the income each month while spending a little more each month that you will eventually come to a point where what you spend is greater than what you bring in. At that point, you must borrow to make up the difference or you must cut spending.

It's not like we haven't seen this coming. We've been talking heads on the alphabet broadcasters and 24 hour news channels proclaiming the future insolvency of Social Security, Medicare and Medicaid for decades. But we have become jaded by the frequency of the message and the remoteness of the actual eventuality.

Well, it's not remote anymore. The United States of America, once the leading market as well as military superpower in the world, is about to have it's AAA rating by Moody's revoked. Sixty billion of California's enormous debt is at "junk" status. The American people, led by their failure to recognize the financial disaster looming before us like the iceberg ahead of the speeding Titanic, and captained by Presidents and Congressmen who have failed to take the necessary hard and unpopular steps to correct the course of our doomed ship of state are about to be tossed into the icy seas of state and federal bankruptcies.

All because we were unable to balance our checkbook.

GPS About to Fail? Too Valuable to Yahoo and Google?

According to Bobbie Johnson, Dateline San Francisco May 19, 2009, on the Guardian website, there is a danger that the current global positioning system or GPS infrastructure may start to break down as soon as next year. This could result in system blackouts or even worse, incorrect navigational data.

The system is administered by the U.S. Air Force. Apparently, there have been some major problems in getting replacement satellites in orbit and the USAF is now running nearly 3 years behind schedule.

This is happening at a time when GPS-enabled smartphones and other gadgets that use GPS are more available than ever before.

Tom Coates, the head of Yahoo's Fire Eagle system – which lets users share their location data from their mobile – said he was sceptical that US officials would let the system fall into total disrepair because it was important to so many people and companies.

Well, if the system is so darned important to so many companies and people, why don't they put their darned money where the mouth is and help FUND the system?

When a Wheel-barrow was Needed to Buy a Loaf of Bread.

What does the Chinese Central Bank, the Russian Federation and the United Nations have in common? Answer: They are actively considering dumping the U.S. Dollar as the foreign reserve currency.

Why do they want to do this? What does it mean for us?

Their financial brainiacs are probably looking at grainy pictures of despondent and depressed Germans taking sacks of money to the grocery store to bring home a sack or two of groceries. Pictures that were taken in the 1920's and 1930's.

Since 1945, the United States has taken progressively more drastic steps to decouple our currency to anything of "real" value. Not because of any financial crisis, but because in order to create consumer spending, we first had to create consumer wealth.

Step 1: Right after World War II, the world's leading financial countries decided that they would fix the price of gold at US$35 an ounce. That meant that every dollar printed in the U.S. could buy one dollar's worth of gold (or 35 dollars to the ounce), even if we didn't have enough gold in the treasury at any given time to redeem all of the money we printed. This was because the likelihood was very low that everybody that had a "gold certificate" dollar (remember those?) would want to redeem their cash for gold at the same time.

Step 2: However, during the late 1960's we ran into a real problem. In order to fund the Vietnam War and the many government-run social engineering projects that were collectively known as the "Great Society", we had to accumulate more gold at Fort Knox. A LOT more gold. So in 1971 the U.S. decided to let the price of an ounce of gold to be set by it's market value. Gold suddenly and rapidly became a LOT more valuable, which meant that we could now print more dollars. Get it?

Keep in mind that from the 1940's through about 2005, the U.S. Dollar has been used as a "reserve" currency. In other words, other nations use the dollar the way we used to use gold. If a country accumulates a large quantity of very stable U.S. Dollars that have a good value against other financial instruments, then that country can leverage those dollars to buy things that they can't buy with their own currency. They use those U.S. Dollars just like gold. But part of the reason that these nations were willing to do this is because we essentially made a promise that we would never intentionally debase our currency.

Step 3: Now here we are in 2007-2008-2009 in the midst of a pretty serious financial crisis. Banks and investment firms bought into highly lucrative but also very fragile "mortgage-backed securities", and worse yet, DERIVATIVES of those securities. This was all fine and dandy as long as real estate values kept going up and up and up. In order to keep those home-builders busy, we had to start selling more and more houses to people who were on the edge of qualifying, or worse yet, people who really didn't qualify. But that was OK. We changed the rules to allow them to buy houses anyway. Well, at some point, some of those folks were going to start defaulting. That began the cascade slide: More homes vs. less demand equals falling real estate values, which caused more people to become "upside down" on the mortgages, causing more defaults. At that point, the wheels came off and we started tumbling down the cliff.

In order to kick-start the economy the way it used to be, people have got to start spending money again. So, here's what our govenment has decided to do. Let's just "borrow" against ourselves and print more money. Two Trillion Dollars Worth. The problem is that this solution has been tried before. Just for fun, look up how in the 1920's Germany's Mark (their "dollar") pretty much crumbled and rampant runaway inflation took the country into a dismal financial period. Since neither we (or they) didn't correspondingly create all that wealth what really happened is that all dollars, everywhere, are suddenly worth less. A LOT less.

So now countries that have a LOT of our dollars now have a LOT LESS wealth in their vaults than a few days ago because we just devalued our dollar in the vain hope that by putting more dollars on the market we can get people to start spending. Oh, incidentally, while this makes the dollar less valuable against other currencies, it also makes things manufactured in the U.S. (do we manufacture in the U.S. anymore?) less costly to foreign purchasers. This makes American goods more attractive to foreign buyers because they can buy more of an American product with less of their native currency.

But if WE can see that side-effect benefit, you can darn well bet that the Russian, Chinese and UN financial brainiacs can as well. Which means this: They are positioning themselves to begin to divest themselves of their stockpiles of U.S. dollars. Now, with the dollar not being backed up by something tangible, like a precious metal in a secure vault somewhere, this also means that the dollar is subject to the same market forces that effect all other consumer goods. In this case, as demand for the U.S. Dollar drops, so does it's value unless we reduce the supply. Which means that if the biggest holders of the U.S. Dollar were to 'dump' their holdings this could cause a severe spiral where the dollar becomes like the peso or the yen; nearly worthless on the world market.

And then instead of looking at grainy black and white pictures of despondent and depressed Germans taking sacks of money to buy a couple of meals at the grocery store, we will instead be looking at gorgeous 16 million color digital pix of despondent and depressed Americans taking sacks of money to buy a couple of meals at the grocery store.

Write your congressman. Write your senator. Write your President. Tell them to cutback on government spending. Tell them to stop with the stimulus bills. Tell them to let the free market system work. Failing companies should fail. Companies that are tough, lean and mean will survive. Let's hit bottom and then rebuild. But it will be easier, a LOT easier to do if our U.S. Dollar still has some value to it. It's not only better for us but for the U.S. and the world.

Taxation as a Weapon. Now I'm Scared.

Chuck Shumer (D-NY) and Charles Rangel (D-NY) have both gone on record as saying that if AIG executives that were paid the "deferred retention bonuses" this month (March 2009) do not voluntarily return those bonuses then the federal government will write a specific tax to recollect those monies.

I am entirely sympathetic with the majority of Americans who think that it's hard for a company to justify paying any kind of discretionary compensation to it's executives if the company itself is not profitable. That shows an arrogance and disconnect with reality that is just impossible for the common citizen to wrap their head around. AIG should never have written those contractual obligations to be enforceable in such a horrid economic climate.

On the other hand, for the United States federal government to use taxation as a weapon is a far more unjustifiable and frightening concept. I feel that this could be the precedent in a whole series of punitive taxes that can be used against anybody who does not 'toe the line' with the current administration. Remember that while tax law is enacted by Congress, it is enforced by the executive branch (ie: the President through the Internal Revenue Service and Treasury Department).

While I have been uncomfortable in the current economic crisis, it was only until this moment that I became truly frightened for what our country is becoming: A Police State.

What Should Our Expectations for the US Financial Future Really Be?

From the end of World War II through the end of the century, the United States economy enjoyed what can only be described as one of the longest cycles of expansion ever experienced. Sadly, during that period of time something went wrong. We used to save money for things we wanted. When we bought on credit, lenders expected us to put something "down" in order force the borrower to share the risk of loan default. Lenders also expected that the borrower show proof that they would have the means to repay their loans.

However, we turned into a nation of people who were not satisfied to wait to buy what we wanted. Credit companies were happy to feed our addiction to buy whatever we wanted, whenever we wanted, at an APR from 8.99% to 29.99%. Banks and mortgage lenders, desiring to get in on the action, decided that it was OK to approve a loan for 100% or more of the value of a house. Worse still, they also decided that those mean-old tests for determining if the borrower actually had the capacity to repay what they borrowed.

With the glut of easy credit and what apparently seemed to be little or no threat of financial danger, Americans gladly spent like drunken sailors on shore-leave. What was there to worry about when the home bought last year for $200,000 was now worth $225,000?

The danger was always there. With all that easy credit around, our voracious appetite for consumer goods superheated the manufacturing sector. To provide all the stuff we wanted, those companies had to expand at unreasonable rates. They had to hire people, build plants, expand lines of supply and distribution. And Americans were perfectly happy to buy homes and goods they couldn't really afford at a percentage of their income that left no room for saving.

Simply put, we built an economy that could not survive through any kind of slowdown. Our demand for instant gratification left us with providers of goods and services who could not afford even the slightest contraction of growth.

I believe that the following things are going to happen:
1) Housing values are going to continue to drop until they are once again in line with the Gross Domestic Product. I do not believe there is anything the federal government can do to prevent that. I further believe that TARP, AR&RA and further stimulus will only prolong the pain by attempting at great cost to our descendants to stop the unstoppable.
2) Americans are not likely going to forget what they are living through right now. Saving money is going to again become a priority. Debt will again be seen as a bad thing, not something to be accepted in order to have the bigger house or Beemer in the driveway.
3) Unscrupulous lenders who followed imprudent business practices are gone or they are being propped up by TARP money and now subservient to the American taxpayer through the federal government. Lenders who were more prudent have watched and learned . The have already begun tightening the requirements they will hold borrowers to.

And what that means is that this will take time. As a society it will take time for us to become credit-worthy to borrow. We will have to buy smaller. We will have to save, because we will be required to put money down on goods we buy with other people's money. House values will increase slowly only as the huge surplus of foreclosed homes are sold off at values that are only a fraction of what they once sold at. Our recovery must come with the expectation that our society will look different than it did before 2007/2008. We will spend less of our discretionary income on consumer goods. We will apply for less credit either because we as a people recognize that this is the correct thing to do or because we simply will not qualify for credit under stricter lending guidelines. And after all is said and done, we will have one heckuva whopper bill that we will have to pay. At MY last count, we are talking about two-thousand two-hundred MILLION dollars of debt that our future generations will have to repay.

Oh yeah. Government will have to spend less too. I'll talk about that sometime in the future.

2nd Stimulus Package...

The current administration is simply on a spending spree. After ramming the $787 billion American Recovery and Reinvestment act into law, which contains billions and billions of dollars that have nothing to do with stimulus and everything to do with perpetuating government control into our lives or to continue using federal taxpayer funds to pay for social engineering programs, we hear today that President Obama is investigating the possibility of a second stimulus package.

What the heck for? What do we need a 2nd stimulus for that isn't covered by the AR&R act? This is EXACTLY why House and Senate Republicans were trying to put the brakes on this act. Why? Because we wanted to make sure that THIS act would be sufficient for our needs, or that it fit into an overall larger, coordinated effort.

I would suggest that any American taxpayer that is alarmed by the amount of money our government is printing, the amount of credit our government is borrowing from foreign investers, especially China and the Middle-east, that you should immediately contact your Senators and House Representative and tell them that a second stimulus package will only be passed over your strongest objection.

"Little Tiny, Yes, Porky Amendments"

http://www.youtube.com/watch?v=JEfICUoWKBw

Don't read further until you watch the YouTube video above.

You've watched it. Good. Now, is this the "change" that the American people voted for in 2008? The Democratic Party now controls the Presidency and the House of Representatives, and if Norm Coleman's challenge in the Minnesota Senate race fails, they will also control the U.S. Senate.

This video shows Senator Charles Shumer, D-NY telling the Senate Chamber that the American people "really don't care" about the "little, tiny, yes, porky amendments" in the stimulus act. Are you kidding, Senator? How can you describe these amendments as "little" or "tiny"? Like 88 MILLION dollars for a new Coast Guard vessel design? Like a 246 MILLION tax break for Hollywood movie producers? Like 650 MILLION dollars for digital TV converter box coupons? Like 6 BILLION dollars to make federal buildings "green"?!?

In terms of the whole 800+ BILLION dollar stimulus package, on top of the existing 750 BILLION dollar TARP program from last year, hundreds of millions of dollars for individual programs may seem like "little" or "tiny" but in terms of the amount of money that must be collected from all revenue sources like personal income taxes, corporate income taxes, tarriffs, bonds, and the like, this is still a LOT OF MONEY. More importantly I think that somebody needs to remind the Honorable Mr. Shumer that this isn't HIS money. It's not the Federal government's money. It's MY money, YOUR money. It's OUR MONEY!!!!

Is there some reason why the American people can't get a funding package from our ELECTED REPRESENTATIVES that doesn't have a bunch of earmarked special pet-project funding? Is that really too >expletive delete< much to ask?

Real Stimulus.

You want to put people to work right now?

Fact: As of 2003, 27.1% of the nation's 590,750 bridges were deemed structionally deficient of functionally obsolete. Estimated cost to repair: $9.4 billion per year for 20 years.

Fact: As of 2003, 33% of the nation's dams, or around 3,500 of them are deemed "unsafe", with the number of dams on the "unsafe" list growing faster than the rate we are repairing/retrofitting them. Estimated cost to repair: $10.1 billion over the next 12 years to address all critical non-federal dams. Critical being deemed as posing a direct threat to human life in case of failure.

Fact: As of 2005, the nation is dealing with an $11 billion shortfall annually to replace aging facilities or bring them into compliance with Federal regulations.

Fact: Maintenance expenditures for the U.S. power grid has fallen at a rate of 1% per year since 1992. Existing transmission systems were not designed to handle the current level of demand. Estimated cost: We don't even know.

Fact: We still have 1,237 contaminated sites on the National Priorities "Superfund" list for hazardous waste. There is a potential listing of 10,154 sites that were identified as of 2003. Cleanup and redevelopment of these sites could generate nearly one-half million new jobs and generate $1.9 billion for the national economy.

Fact: We have 12,000 miles of navigable inland waterways managed primarily by the U.S. Army Corps of Engineers. Nearly 50% of the 257 locks are functionally obsolete. The current estimate is that this number will increase to 80% by 2020. The cost to repair or replace the present system of locks: $125 billion.

Fact: Our national public parks and recreation system is slowly falling apart, with most of the initial construction or roads, bridges and utilities completed over 50 years ago. It is estimated that the maintenance backlog needs $6.1 billion in investment. This does NOT include money needed for state park and public recreation sites.

Fact: Rail freight tonnage is expected to increase by 50% by 2020. As of 2005 limited rail capacity has already created either chokepoints or downright delays. Additionally many municipalities are leveraging existing railbeds for expansion of commuter rail in an attempt to get people out of their cars. The freight railroad industry needs to spend $180 billion over the next 20 years to maintain existing infrastructure and to accomodate expanding freight tonnage. Expansion to develop intercity corrider passenger rail service is estimated to cost nearly $60 billion for the next 20 years. All told, estimated annual cost would be $12-$13 billion.

Fact: The U.S. Highway and road system is deteriorating at an alarming rate. Poor roads are believed to have cost U.S. motorists nearly $54 billion a year in repairs and additional operating costs, or $275 per motorist. As of 2005, current spending levels of $59.4 billion annually is well below the $94 billion estimated to be needed annually to improve the transportation structure.

Fact: U.S. school system has not been assessed since 1999, but it was estimated THEN that $127 billion to bring all facilities to good condition. This is believed to be a LOW estimate.

Fact: The U.S. currently recycles only about 25% of the 396 million TONS of solid wate of all types produced annually.

Fact: The U.S. wastewater system is discharging billions of gallons of untreated sewage into U.S. surface waters each year. The EPA estimates that the nation must invent nearly $400 billion over the next 20 years or $20 billion annually to replace existing system and also to expand the system to handle anticipated new demand. However, in 2005 the Federal Congress cut funding.

This information was liberally copied from the following website: http://www.asce.org/reportcard/2005/page.cfm?id=103. This website is operted by the American Society of Civil Engineers.

The ASCE estimates that to bring the U.S. infrastructure into compliance with Federal regulations as well as to efficiently handle expected increased demand over the next quarter century, the total cost would be nearly $1.6 trillion dollars.

My point: These all sound like projects that would 1) create jobs and more importantly create jobs in heavy industries that typically pay much better than service/agriculture; 2) dramatically improve the real infrastructure in our country. Much more so than the 890 billion Porkulus package just passed by the U.S. Congress.

The Dangerous Game the Rich and Powerful are Playing.

After reading the accounts on CNN.com and listening to blowtorch radio talk-show hosts like Glenn Beck and local hosts like Darrel Ankarlo (Phoenix) or Mac & Gatos (Phoenix), it is becoming apparent that something very ugly and dangerous is beginning to fester in the national consciousness.

This is the bitter feeling by the majority of U.S. citizens that the rich and/or powerful do not pay taxes.

Now, if you look at the data contained in the IRS's own spreadsheet (http://www.irs.gov/pub/irs-soi/04in06tr.xls), you will see that the rich pay MOST of the taxes in the United States. In fact, the top 5% of wage earners pay 54.36%; the top 10% pay 65.84% and the top 50% pay 96.54%. So the disgruntled middle-class probably needs to consider this when they are sharpening their pitchforks and lighting their torches.

But these statistics notwithstanding three of President Obama's cabinet picks (Tim Geithner, Treasury Secretary; Tom Daschle, Health & Human Services Secretary appointee; and Michelle Killefer, "Chief Performance Officer" appointee) were revealed to have had significant tax payment violations in the relatively recent past. The American people get the distinct impression that what our elected and appointed officials are telling us is to "to do as we say, not as we do". I'm distinctly reminded of the uber-witch real-estate magnate Leona Helmsley who famously declared that "... only little people pay taxes".

Since all of President Obama's appointees have been relatively high on the earnings scale, there is an opinion festering that there is no such thing as an "honest politician", which is especially bad when President Obama campaigned on honesty and transparency. The influential don't pay all their taxes and the American taxpayer (who believe that they DO pay all their taxes) are being asked for nearly one trillion dollars (that's one thousand billion dollars, ladies and gentlemen) for stimulus. All the while, they are paying themselves huge bonuses.

The rapidly shrinking middle-class is the primary buffer between the rich and the destitute that keeps the lower classes from simply deciding that they have nothing to lose and begin to take what they want by force. We are, in my opinion, very close to the boiling point right now. Senate and House telephone lines that typically receive very little inbound traffic from the typical American are burning down right now with the call volumes about the stimulus bill. The typical American does not understand why their tax-moneys are being used to prop up fantastically large and wealthy corporations, investment banks and financial institutions that continue to pay their executives large performance bonuses even though many of them have no growth or negative growth in 2007, 2008 and probably going into 2009.

The American aristocracy which includes the intellectual elite, the super-wealthy and the professional political class is very much in danger of finding themselves facing a revolution not entirely dissimilar from the French Revolution in both terms of it's causitive factors as well as the potential outcome. People who have nothing left to lose also have absolutely everything to gain in a violent upheaval of the status-quo. As the IRS own stats show, the bottom 50% of wage earners in the U.S. paid only 3.26% of the taxes. This means that the median wage earner is just barely above the acknowledged poverty level.

While I do not condone socialism, facism or any other -ism that gives the state broad power to either nationalize private industry or to transfer vast amounts of wealth for "social programs", I think that the extremely wealthy segments of our society needs to do some soul-searching with regards to their obligation to our government, to the laborers whom without they would not be able to achieve the fantastic financial heights that they have reached and to those who are unable to help themselves. A continued attitude of "me, me, me" by these captains of finance, industry and government are going to find themselves looking at the business end of a lot of pointy pitchforks held by very angry common citizens.

"Enough" Needs to Become Part of our Culture Again.

http://www.breitbart.com/article.php?id=D958II200&show_article=1

The following excerpt is pulled from the article hotlinked above:

"Boy, it really looks ugly for the start of 2009," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.

"It's really difficult to find something between now and inauguration time that says people are going to feel better, they're going to drive more, they're going to ship more packages," Kloza said.

What Mr. Kloza was referring to is price of oil on December 22nd, which closed at about $38.00 per barrel.

I had a very good friend by the name of Monty King who expressed one of the most profound aphorisms I have ever heard. We were talking about how perverted the use of the 1st Amendment of the US Constitution had become. Specifically, we use it to silence Political dissent but we use it to defend people spraying graffiti on other people's property or to publish smut. What he said was "Glen, we are killing ourselves with our liberty." Wow.

What he said is just as applicable here. Just read what Mr. Kloza said: "... going to feel better, they're going to drive more, and they're going to ship more packages...". What he is saying is that he wants Americans spending more of their money. What he is lamenting is that Americans are no longer exercising their freedom to spend borrowed money. We've been doing that for over four decades now. And right now, the American people and/or American lending institutions are speaking loud and clear by keeping their wallets closed.

Here's a stat: According this CCN/Money article, American consumer debt fell .08% in the third quarter of 2008. A large part of this was due to home foreclosures. It also is the result of jobs being lost in a shrinking economy. While people losing homes and jobs is never pleasant to consider or worse, to endure, we need to really think about what this means.

1. Americans and their Government have been spending like drunken sailors for over four decades. American household savings are at their lowest in the last century. Instead, we've been buying new cars and flat-panel tvs and home theater system and game consoles. Worse, much of this spending has been on revolving credit debt, which can easily spiral into 24% to 35% interest rates per year.
   
2. The one factor buoyed our economy for the last ten years is the housing sector, specifically new house construction. These houses were being 100% financed using risky lending products (ARMs, sub-primes and interest-only loans) to buyers who were not being scrutinized with regard to their ability to satisfy their loan agreement. Hence, when ARMs started increasing or house values started dropping and people suddenly saw that they were in a negative equity position they simply walked away from their house loan because they had no real interest in the house.

Like all major events that occur in our lives this crisis will leave an effect. Banks and other financial institutions are now requiring a sizable down payment on house loans and proof of employment before a loan will be approved. Cars are a different matter. It sounds like we will continue to see 0% interest loans for some time, but I believe that we will continue to see a tightening in the approval process as banks require that the borrower prove that they can pay back their loan.

The larger question facing our nation is: Do we really need a new car every three years? Do we really need three flat panel TVs in the same house? Do we really need our houses to stay at 72 degrees all year long? Our whole economy and in fact our culture is based on who has the newest most expensive things. As an example, when I bought my house in Phoenix Arizona because of a relocation in 2007, the real-estate agent and the loan officer kept pushing me towards $500,000 houses when I only needed three bedrooms and two bathrooms. In other words, my wife and I made the decision that a $280,000 house was enough. Now, with home values plummeting the fact that I put 20% down and that this house is only 8 miles from where my wife's office is, I am thankful that I stuck to my plan.

Our generation (and the one before it) are now harvesting the crop we sowed for ourselves when as a nation we forgot our history (the Great Depression) and abandoned fiscal common sense. I can only hope that the youth of today will remember this crisis, that they will change their own personal policies towards financial discipline and FAR more importantly demand that the U.S. Federal Government does the same.

The true tragedy would be that after having experienced this crisis, that we would listen to people like Mr. Kloza who lament that we aren't spending more of our money driving or sending packages. Through our freedom to borrow money we ought not to spend on things we don't really need, we have been forging chains of indebtedness that will hold us thrall to our national debt, foreign investors and our own banks for decades to come.

Trump, Madoff and Greed

I don't like Donald Trump. He's not a nice person. But he's a darn shrewd business man and has done extraordinarily well in the hotly contested New York real-estate market because people trust him and he delivers.

So when "the Donald" calls a guy like Bernard Maddoff (Investment scammer who bilked nearly $50 billion from people) a "scumbag" I think that he's right on the money.

"The Donald" also had a word of warning. When asked about people who had placed 100% of their investments, even mortgaged their houses to give Madoff more money to "invest", he had one word to describe them; "Greed". When asked what he thought of people that had completely trusted Madoff with 100% of their assets, he responded with "But when you think of a person putting up 100 percent of their net worth and even mortgaging their house, even though they had a lot of cash -- mortgaging their house to get more cash to this guy." and "The word is very simple. It's a word called "greed." Greed. That's all it is. People were greedy."

Yup.

Greed can inspire and motivate. But like so many other things in our lives, unbridled and uncontrolled greed will bring disaster.

Update On March 12, 2009, Mr. Madoff plead guilty to the charges of running a "Ponzi" scheme and bilking thousands of investors out of billions. There is a very real chance that he will be sentenced to enough time in prison that once he goes in, he will never experience freedom again. OK by me.

So are Low Gas Prices Bush's fault too?

Hey! Mr. Lefty Liberal Bush-haters!

Gasoline is selling nationally for around $1.80 per gallon and oil (today) was trading for around $43.00/bbl. Since Bush is still in the White House, is it Bush's fault? Funny, I haven't heard a single libby source (CNN, DailyKOS, MoveOn, MSNBC, etc ad nauseaum) crediting the Bush Administration with lower fuel prices.

OK. I'm being a little capricious. I know EXACTLY why gas prices are down. It's because Americans (as well as people in other nations) are buying a LOT less fuel because of the economic melt-down.

But what really steams my taters is that when gas prices were high, nobody was blaming it on the true culprits, which were low supply, high demand from Americans driving cars that only get 12-17 mpg because they love their muscle cars, trucks, SUVs and big luxury sedans.

Americans have become so poorly educated that they are swallowing the swill being provided by the main media outlets without doing their own fact-checking or even using their natural ability to reason. The President, influential though he is, can no more control our economy than flap his arms to fly to the moon. CONGRESS has much more influence over economic policy. The President is, by design, our chief Law-enforcement executive. Other than by collecting fines for traffic tickets, since when did any law-enforcement agency ever contribute to our economy?

Lower Gas Prices: Can this be Bad?

http://www.patriotledger.com/business/x1881115149/Gulf-Oil-CEO-says-lower-gas-prices-ahead

According to the linked article, Gulf Oil chairman Joe Petrowski said that it's possible that oil could be trading for around $20 per barrel and that gasoline could sell for around $1.00 a gallon at the pump by "early" 2009.

While I would love to see gas go to a buck a gallon, it actually wouldn't be good for us, for the following reasons:

1) The US automakers (if they survive) are now heavily invested in alternative fuel cars. I believe it is in our best national interest to push these programs forward and offer these alternatives to gasoline or even diesel powered vehicles. Unreasonably low fuel prices will cause us to take our "eye off the ball" just like we did after the 1974 oil crisis. The United States needs to become a leader in economical vehicle construction. I should point out that the fleet MPG for GM is actually lower than the fleet MPG for Toyota. IN FACT, American-made cars made to sell in Europe compare favorably to their European counterparts. The problem is the American car-buyer wants a BIG car. On the non-automotive side, heating oil and gas being cheaper will be a welcome relief to people on fixed income, but at the expense of losing focus on developing alternative energy sources to augment what petroleum-sourced energy can provide. Solar, hydrogen, fuel-cell, wind, biofuel: All these can help reduce our dependence on petro-energy but none of them can replace it.

2) Americans are now seriously looking at alternatives to automobiles for daily transportation to-from work. Cheap gas will only encourage us to get back in our cars.

3) At $1.00 per gallon, we're not collecting enough in taxes. "What!?" you say? Glen is saying we need more taxes? Well, no. But I realize that for certain things, like infrastructure maintenance and growth, we need a certain level of taxation. Even with the taxes that were being collected when gas was $2.50+ per gallon we were unable to keep up with the maintenance needs of our existing infrastructure.

4) With oil generating significantly smaller profits for their producers, there will be less money to put into R&D for the very alternatives that we so desperately require.

So yes, $1.00/gallon gas is not as good for our economy as you might initially think.