How to return America to greatness

The fiscal dilemma America faces is one of the government trying to guarantee all things to everyone. Where has self reliance gone? Where is the peoples willingness to buckle down, tighten their belts, pull themselves up by their bootstraps?

A return to greatness will necessarily involve some very painful lessons for the American people. We will have to realize that the government is not there to "save us". The federal government, as well as state and local government, will have to undergo serious, painful cuts in programs, across the board. The sooner we make them the sooner we will return to fical soundess. I was always taught that "your first loss is your best loss". Time for Americans to take the pain, shrink government drastically and move forward. If our "leaders" fail us, the US dollar and economy as we know it will deteriorate into a disaster by 2016.

The Debt Ceiling Nonsense

Do we all understand that the debt ceiling discussions and more specifically, the $1.0 to $4.0Trillion debt reductions being discussed, are reductions in the projected ADDITIONAL $10Trillion in debt the US expects to add to its debt over the next ten years?

The discussions are not a real discussion of reducing debt, they are a discussion about slowing the growth of our debt. This is absolutely ridiculous. We need an immediate 35% cut in the federal budget just to get close to a balanced budget now.

Obama the oilman

As anyone with even a modicum of economic intelligence would have known, West Texas Intermediate (WTI) crude is now trading higher than the day Obama authorized the SPR release. ON June 22, WTI traded at approximately $94.96 a barrel. The next day the President ordered the Strategic Petroleum Reserve sale of 30 million barrels of oil. WTI dropped to $90.70. Fantastic!! However, here we are on July 5, 2011 with WTI trading at approximately $96.50, almost a full $1.54 per barrel higher than June 22 and $5.80 per barrel higher than where it traded on June 23 (WTI closing spot prices from the U.S. Energy Information Administration (EIA)). While the wholesale price of gas dropped immediately in the aftermath of the news release, the wholesale price has already moved higher, and is now above the June 22 price per gallon.

The decision to release the oil was not based on sound strategic analysis. The SPR was created primarily to make sure oil was available for strategic military purposes, and secondly, for public use. There was and is not any strategic military need for the oil, and the oil will be sold on open markets to the highest bidder. Will the public benefit in the long run? No. Gas prices may drop as a result, but that will be temporary as we have already seen. The real reason for the oil release is purely political. Obama wanted this Fourth of July holiday to be a travel bonanza, thereby pumping up the economic numbers by showing increased holiday driving and creating a general "feelgood" atmosphere due to somewhat lower fuel prices. As reported earlier today, Americans actually drove 2% less miles this Fourth of July than in 2010. How much lower would it have been if there hadn't been a little added "juice".

Greece rioting to come to the US??

Will the union members calling for "more activism" in Wisconsin resort to the rioting being seen in Greece. For those not following Greece, the Greeks are near a default on their sovereign debt brought about by massive social programs and government union employment. As the political leaders have been forced to take austerity measures, i.e., cutting pensions, salaries, and jobs, the unions have rebelled, rioting in the streets and fighting with riot police. Many believe Greece is approaching civil war if not a breakdown of society. Is this what the US will see as its political leaders attempt to rein in public spending and overly generous union salaries and benefits?

Habla ingles? A sad commentary

Texas State Senator expresses the view of the vast majority of Americans. If you emigrated to this country in 1988 and are testifying before a legislative body, should you speak English, especially if you are able to speak it?

See link for details

http://www.ktrh.com/cc-common/news/sections/newsarticle.html?feed=121300&article=8719378

"We own it"

Florida Congresswoman and Democratic National Committee Chairman, Debbie Wasserman Schultz stated, "We own the economy". You sure do. I couldn't have said it any better myself. The Democrats own this disaster of an economy. The Democratic party line is that Pres Obama's actions averted a Great Depression and turned the economy around. Tell that to the millions of unemployed and under-employed who have been looking for work. The US economy, after the Obama stimulus and other spending boondoggles, appears to have stabilized, but the only "stability" and/or "growth" has come from government. Strip out the government spending and inflation from the data and the US economy continues to shrink. We are very close to the whole ponzi scheme known as the treasury funding mechanism, blowing wide open, which will lead to the destruction of the dollar. Then we will see how much the Democrats want to have ownership of the economy.

Congressman Weiner is finally roasted. His wife must have told him to stop the endless lying, shut his trap and get out of town. Her humiliation is almost over. Now she just has to ditch the hotdog and move on to a better man (anyone would do).

GM stock continues to move lower. $28 and change today. Even after the debt was stripped out, and the union pensions and healthcare plans funded by taxpayer dollars, the company continues to show poor performance. I guess the union running the ship is about to see it fonder again.

Weiner or brat(worst)

The real story here is Congressman Weiner's continued arrogance and total lack of ethics. Actions speak louder than words and Weiner's actions, from his sexting to the constant stream of lies right up until the moment the truth was about to be exposed, belie his false apology and underscore his continued belief that he is better than the rest of us.

Only a truly self righteous, self absorbed individual could stand in front of his family, the nation and the media and throw out false accusations of computer hacking, "it must be a prank on my name", these reporters following "a story that isn't there", and furthermore belittling anyone who dares to question him.

We should have been able to see the facts from the outset as Weiner refused to answer questions, instead going on the offense against legitimate questions. The whole lurid display brings into question the man's character and judgement. Then again, in my opinion, he always has been suspect.

Delusions of grandeur? The real ugly part of this story is just who is Anthony Weiner? From some of the reported sexting, it seems he is either a misogynist or a user of women. Did being characterized as one of New York's most eligible bachelors go straight to his head, or has he always had this view of himself as God's gift?

A note to wife Huma Abedin: Do you really think you can believe anything this guy says?

Obama Fiddles, World Burns

While Team Obama mouths U.S. support for the Japanese and Libyans, the reactors continue to burn, exposing continental U.S. to radiation laced winds, and Libyans die by the thousands as a ruthless murderer snubs his nose at the U.S. and the world. When will our Dear Leader decide to lead? Does he not have the ego to lead? I doubt that, given his ego comments regarding Bill O'Reilly. I think he just doesn't have a clue as to what to do. His 3A.M. phone calls have been ringing from midnight to 6A.M. yet nobody answers.

GM stock price drops below IPO

GM drops blow $32 (IPO price $33) today. It will go lower as dealers start to push back against the channel stuffing the company has been doing. In the "Bad GM" news, the taxpayer is on the hook for another $51MM as the old GM faces additional environmental liabilities stemming from the cleanup of old GM plants.

Government Motors and its union employees continue to gorge at the federal taxpayer feed trough.

http://www.marketwatch.com/story/old-gm-hit-with-another-cleanup-bill-2011-03-07?reflink=MW_news_stmp

Government Motors - Another Union Dud

Volt deemed senseless by Consumer Reports. Just goes to show how the government continues to waste taxpayer money. Who in their right mind would buy a car for almost $50,000 that can transport you maybe 50 miles and then needs a recharge? This is asinine.

http://detnews.com/article/20110228/AUTO01/102280401

Wisconsin A little Union badgering could go a long way....

The governor has called for public sector union members (excluding policeman, fireman and the state police) to contribute approximately 5% of their pension costs and 12% of their health care costs for the next two years. The unions have agreed to this. While this may seem like a lot, remember, most of us have no pension plan and we typically pay 20% of the health care insurance costs, if not 100% or we have no coverage at all. These issues are small potatoes and the union knows it. The major issue as reported by the media is the governor wants to end collective bargaining on everything except wages. The union leadership call this an attack on human rights. This is bullshit. Why? First of all collective bargaining is not a human right. As the media has not bothered to point out the collective bargaining issue is an issue of money and political power. The governors plan include the following changes:

1) The Gov. wants to end the ability of the unions to charge MANDATORY dues to it union members. If the union is so great, why are the dues mandatory? Because the unions need this money to contribute to Democratic legislators who they hope to elect. They hope to get them elected so the Democrats can then repay the union with more and more benefits and protections. This makes the mobsters actions of the 1920's and 30' s look like childs play. Come to think of it isn't this essentially paying a bribe for future considerations. "Hey you rub my back I'll rub yours". The process has essentially become a rigged system of vote buying through continued lavish benefits.
2) He wants the unions to have to recertify every year, i.e., have the union members vote for whether they want the union anymore. In addition, this would change the way the union counts votes, requiring the majority of union members to vote for recertification, not simply the majority of voting members as is currently the practice.
3) He wants to end the practice of the unions forcing the state to buy union members health insurance through the union health insurance company, which allows the union to skim 20% off the top of the premium the state pays.
4) He wants to let the local school committees have the flexibility to determine which teachers are the best and worst respectively for their school systems, and be able to reward/terminate them respectively, regardless of tenure or seniority. This is called bringing performance based criteria to bear on the teachers (something that is sorely needed in every school system in this country!)

These are the main points behind the governors collective bargaining changes. The Democrats and unions, as they are tied at the hip, fear the loss of money and with it the loss of political power. This is not an issue of the Koch brothers or big bad corporations. The unions are public sector employee unions, being paid and receiving benefits at the expense of the taxpayer. The governor and the Republican legislators were voted into office after running on a platform of change and reduced spending. The union protesters, and even moreso, the Democratic legislators who have fled, are the ones who should be ashamed of their actions. To repeat a phrase from our illustrious President, the Republicans should simply say "We won" and ram the legislative actions through, just like the US Senate and House did with Obamacare. Difference is, the US people support the Wisconsin governor and they do not support Obamacare. If the Democrats and the unions do not like the legislative changes, then they should run the next time on a platform of more benefits from the taxpayer.

Capitalism Shortcircuited

Capitalism is the finest creator of wealth the world has ever seen, when it is allowed to run its course. The problem has become the desire of politicians to "protect the little guy" and smooth the business cycle. Capitalism will always be characterized by booms and busts. This is the true essence of capital formation, concentration, massive uneven wealth creation and then the inevitable bust as too much capital is deployed in a concentrated manner. Proving the axiom of too much of a good thing is a bad thing. Applying this truism to the mortgage banking debacle, "free money" in the form of zero down payment mortgage financing, no income verification mortgages and the panoply of other ridiculous mortgage financing schemes, led people who had no business getting a mortgage to obtain one. The federal government through the CRA, and Fannie and Freddie facilitated the great housing bubble. The builders, real estate agents, mortgage brokers and banks all piled in, seeing the money they could skim at every point in the process. To not jump in they would have had no business sense. Legislators of both major political parties were more than happy to receive campaign contributions from all the associated parties, and keep the financing wheels greased. Of course, the investment banks were the ones who made the most money off the mortgage fiasco, as they sliced and diced the bonds to sell to investors. However, as is true of everything in life, all good things must come to an end. This is where the problem started.

I cannot state the following clearly enough: The investment banks should have been allowed to fail. They should have been forced to bear the burden of their losses as they all took in the previous gains from the business. The main reason they were not forced to fail is not because of fear of systemic failure. The primary reason was the United States had a Secretary of the Treasury named Hank Paulson, former Chairman and CEO of Goldman Sachs. He along with the many hundred if not thousands of ex Goldman employees who staff government positions, saw that their huge retirement plans, stuffed with Goldman stock, would be crushed. If essence, he and his cronies throughout the government pressured a know nothing Congress to bail out the banks and thereby save their own asses. A failure of the investment banks would surely have caused disruption in banking markets, but other banking entities in the US and other countries could have stepped forward and taken up the slack. Instead we have a chicken coop run by the foxes periodically slaughtering the chickens and saying a fisher did it.

What this results in is the privatizing of the gains by the banks, and the socializing of the losses to the taxpayer. A colossal ripoff if there ever was. We should have let capitalism run its course. Banks would have failed, homes would have been lost, but the US taxpayer would not have been left holding the bag.

Wisconsin MayHem and Haw

As I look at the union workers protesting in Wisconsin, having their "day of rage", I have to ask, what is it they are protesting against? Is it the fact that they will have to "sacrifice" by having their benefits cut to match (or most likely still exceed) the average private sector worker benefits? Are they sacrificing their job as many of their counterparts in the private sector have over the past three years? Are they really sacrificing by not being able to bargain for the "collective" anymore? It is about time these unions and their workers realized that the high pay, benefits and time off they receive as "public servants" is over. They can start to feel the impact of stagnating wages, and having to actually pay for their benefits like most Americans do. They will not be able to get fat any more at the public trough. This next part will really irritate them, they will no longer be able to just take from the private citizens whose taxes pay for their wages, health benefits and pensions. So much rage at having to live like the common non-unionized American.

Fed-up...to no good.

The Federal Reserve is now the largest holder of U.S. Treasury debt. The Fed now holds $1.10 Trillion of U.S Treasury debt, while China holds $896 billion of Treasuries and Japan holds approximately $877 billion. The Fed is not even half way through QE2 and by June could hold almost $1.6Trillion in Treasury debt. Think about that for a minute. One "government entity" is currently the largest holder of U.S. Treasury debt. This is without parallel in the history of civilization.

A little background: The U.S. government is currently spending approximately $3.0 trillion per year under the current administration and congress. However, the government is only taking in approximately $1.6 trillion in taxes from all sources. This means the U.S. government is short about $1.4 trillion or 46% of the entire federal budget. In my experience as a small business lender and corporate lender for a number of large commercial banks, if a company came to us looking for a loan to cover these negative cash flows, the conversation typically didn't last very long, and neither did the company.

The U.S. government typically was financing shortfalls through continued Treasury issuance. It appears however, that the major buyers of the past, are starting to reduce their buying and their current debt positions, thereby leading to the U. S. Fed becoming the biggest buyer of last resort. This will not end well. The reasons are twofold.

The first is that the U.S. government is essentially printing money to cover its operating cash shortfall. If you or I tried this we would be in jail. However, being a sovereign nation the U.S. can print more money if it chooses. In the history of civilization, every country with a fiat currency has ended up the same way. In an effort to inflate away debt, they have debased their currency. In the end the currency becomes worthless and the country defaults on its debts. This typically results in hyperinflation and the destruction of savings.

The second problem, (as if the first wasn't bad enough), is that the U.S taxpayer is on the hook for the debt one way or the other. The government will either try and raise taxes to offset the growing cash flow inbalances, thereby hurting the economy further, or a scheme will be concocted whereby the government will nationalize savings (IRA's, 401K's etc., - study Argentina 2000 crises) and require those funds be invested in U.S Treasuries as a way to offset the debt.

The strategy of the U.S. government, and to a large degree the states, has been to throw money at various groups, report/spin economic data and HOPE that things will return to normal in the second half of 2011 and into 2012. This is not a plan, this is a recipe for disaster, and we are headed toward that at a rapid pace.

The fact is that the federal governments' actions to date via mortgage programs, bailing out the six biggest banks in this country under TARP (they should have been allowed to fail), bailing out GM and Chrysler to save union jobs, pensions and heath care benefits, Cash for Clunkers, the $800BN+ Stimulus Plan, QE1 and QE2 and others have at best only delayed the day of reckoning. In the end, the result of all this wasted money ($3.2 trillion and counting), will be a financial debacle the likes of which have never been seen in the history of man.

This additional major step of monetizing the debt via the Fed buying U.S. Treasuries, will lead to the destruction of the U.S dollar and the middle class in the U.S.

I am not one to offer advice, on the belief that most people don't want any, and the ones looking for it never listen anyway. However, if I can offer some potentially life saving advice (for the good of your families if not yourself), please convert some of your hard earned money into precious metals, i.e., silver and gold U.S. Eagles.

Transparently Opaque

The most transparent White House ever has just blocked the White House press corps from covering President Obama's recent speeches. A President who claimed his administration would be the most transparent ever has just shut down Q&A from the national press corps. I guess the teleprompter could not be loaded with responses to reporters questions fast enough.

Actually this follows a pattern:

A) July 20, 2009 - White House delays report on budget update as unemployment rises.
B) December 28, 2010 - White House delays 2012 budget
C) January 22, 2011 - White house delays Fannie/Freddie report.

Is there a problem in the White House nobody wants to talk about? Could it be that nobody is running the asylum? Is an administration staffed by career politicians and civil servants in way over its head? How can the most transparent administration this country has ever seen, presided over by the most intellectual President ever, have such a hard time generating reports and budgets. Better yet, it doesn't trust its leader to do even simple things like respond to reporters' questions.