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Was Keenes Right in a Quote Liberals Ignore?

Former Reagan Administration White House Budget Director David Stockman. who wrote a book titled “Trumped” predicting a Trump victory in 2016, said in a recent interview as reported by retired economist Charles Hayek (not to be confused with the world famous famous economist Frederich Hayek, the patron saint of Milton Friedman) responding to questions about Trump’s programs for spending money on military, etc.and assertions that under his amazing leadership the economy would soon really rebound,

“I don’t think there is a snowball’s chance in the hot place that’s going to happen. This is delusional. This is the greatest suckers’ rally of all time. It is based on pure hopium and not any analysis at all as what it will take to push through a big tax cut. Donald Trump is in a trap. The debt now is $20 trillion. It’s 106% of GDP…Trump is inheriting a built-in deficit of $10 trillion over the next decade under current policies that are built in. Yet, he wants more defense spending, not less. He wants drastic sweeping tax cuts for corporations and individuals. He wants to spend more money on border security and law enforcement. He’s going to do more for the veterans. He wants this big trillion dollar infrastructure program. You put all that together and it’s madness. It doesn’t even begin to add up, and it won’t happen when you are struggling with the $10 trillion of debt that’s coming down the pike and the $20 trillion that’s already on the books… 

“I think what people are missing is this date, March 15th2017. That’s the day that this debt ceiling holiday that Obama and Boehner put together right before the last election in October of 2015. That holiday expires. The debt ceiling will freeze in at $20 trillion. It will then be law. It will be a hard stop. The Treasury will have roughly $200 billion in cash. We are burning cash at a $75 billion a month rate. By summer, they will be out of cash. Then we will be in the mother of all debt ceiling crises. Everything will grind to a halt. I think we will have a government shutdown. There will not be Obama Care repeal and replace. There will be no tax cut. There will be no infrastructure stimulus. There will be just one giant fiscal bloodbath over a debt ceiling that has to be increased and no one wants to vote for.”

He also noted,

“The S&P 500 has been trading at 26 times earnings while earnings have been dropping for the past six or seven quarters. There is no booming recovery coming. There is going to be a recession and there will be no stimulus baton to bail it out. That is the new fact that neither Trump nor the Wall Street gamblers remotely understand.”

If that is an accurate assessment, then Trump’s plans are simply unattainable.  His base seem to think that he can, by the strength of his claimed unique expertise, turn the U.S. economy around because he says he can and because so much of this country desperately needs him to pull it off.  But if we hit that new debt ceiling quickly and become 20 trillion dollars in debt, all the while we, as we are currently,  adding about a trillion dollars a year to that total, I don’t see any possible way that Trump can cut taxes, increase military spending, build a border wall, spend much more on veterans much less spend an extra trillion dollars on rebuilding our crumbling infrastructure.  We already are technically bankrupt as a nation (more debt than we have revenue via production to cover).  So it is possible that in a VERY short period of time, Trump (and the rest of the country) will get a very hard economic slap in the face.

Before you think of this as an anti-Trump rant, let me be clear: I don’t think it would have been any different under Clinton; the end date of that “debt ceiling holiday” was already set into law by Obama and she would simply have wanted to spend as much as Trump just on different programs.  He will, of course, be blamed for it since it will happen on his ‘watch’ regardless of when it was set in motion.  I don’t think he or Clinton could have stopped it without Draconian measures that would loose their respective basses as their pet causes were gutted. His ego and her conviction we can spend our way out of debt would have precluded either from tackling the problem appropriately.

And there is too much pain to go around for the weak willed and desperate-to-keep-their-cushy-jobs congress to even propose such austere measures as would be needed. And the people as a whole, in direct contradiction to JFK’s admonition, simply want to know how the government can better take care of themselves and relieve them of all consequences for their personal choices and behaviors.

So it will be interesting to see if Stockman’s prediction comes to pass as predicted and it is not like we will have to wait very long to test them.  Unfortunately he did not also say what would be the outward effects on us all if he was right, just that Trump’s plans would be made unattainable.  But their unattainability is due, in his view, to the government essentially running out of cash.

From a practical standpoint I’m not exactly sure what that means since we already know there is not enough currency in circulation to cover the debt already (the Federal Reserve says we have about $1.5 trillion in circulation).so where does the rest of the $18.5 Trillion come from to retire the debt were it called in? Can we continue forever addicted and euphotic from overdoses of what he calls “Hopium?” Much of the debt is intergovernmental to agencies such as Social Security and held in the form of Treasury Bonds.  If that failed then they would have to shut down.  THe current administration would, of course, be blamed for “shutting down the government” but the policies and situation that came to that was set in motion well before they had any say in it.

Over $6 Trillion of the debt is foreign held.  Some pundits assert that China would never simply call in its $1.1 Trillion debt because it would basically kill the dollar on the world market which would hurt everyone including themselves.  But if they had sufficiently divested themselves of dollar holdings to allow their own currency and gold to sustain them trough a rocky period, and the world reserve currency was now also held in Chinese currency, (which, thanks to the IMF it now is a part of their Special Drawing Rights currencies mix), and the result was to essentially destroy the U.S. economy and with it our ability to wage even a defensive war to stop their expansion into other areas (think about the economic ruin of the Soviet Union and its effect on them), I am personally not so sure of their benevolence on our behalf.

Whether anything happens on Match 15th or not, I think this could be a VERY interesting year… and, for us, not an altogether positive one.  And it has nothing to do with Trump or Clinton as it has been set in place and grown over a long period of time.  THe economic patron saint of liberals, Charles Maynard Keene, in a quote liberals ignore, wrote that the easiest way to destroy a country was to debauch the currency.  We have done that with reckless abandon and I think we shall soon see whether or not he was right.

 
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Posted by on February 27, 2017 in Uncategorized

 

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Are Voters Mathematically Challenged?

San Diego — Tomorrow the world as we know it ends.

At least that is what the whiner in chief and his sycophantic minions are telling us.  When the sequester — that was his idea in the first place, which, in an interview in October with the Des Moines Register, he said was part of the grand bargain that included the cancelling of the Bush tax cuts and would set on a balanced road to stability – kicks in he is now trotting out his department heads to prophesy everything from closing school to closing airports to cutting back on military capabilities to having to set free illegal aliens held in jails for other infractions.

But in order for that to happen, or even come close to happening, one of two things would have to occur.  Either the laws of mathematics would have to change significantly or the administration would have to make specific choices and decisions designed to bring about the greatest harm to the country while ignoring solutions that really should have an effect only on those wasting money or defrauding the system.

Since I am skeptical of the first option occurring, I am left with the second.  And why would I say that?  Simple… I own a calculator.

We have a current debt of about $16.6 Trillion dollars (which is currently much higher than it was when Obama first proposed the sequester idea as a means of forcing action which was, to his enormous surprise, accepted by the opposition.  But that increase and the increases currently planned are extra-budgetary meaning they are planned by the administration but are not contained in any budget initiated or approved by congress which is what the Constitution requires for a budget to be valid.

We have not had a budget for over 4 years; the lack of which allows the President and his departments to sneak in spending increases under the radar and such is the case with the increases currently being proposed.   They have never been approved by congress.  Nevertheless the President proposed and congress accepted a plan to decrease the RATE OF INCREEASED SPENDING over the then $15 Trillion debt by 2% across the board, exempting those areas that, by law, cannot be cut without specific congressional approval.

What is critically important for you to remember is that was not 2% of the total budget; it was 2% of the rate of increased spending being planned over the current expenditures.  Now the debt is up another $1.6 Trillion from the data of that plan’s acceptance.  Money being committed for which there is no budget and no revenue to cover it.

When one factors in that by the time this happens what was calculated to be a total decrease in increased spending of $85 Billion is actually only about $44 Billion, and not a penny of that cuts into the budgetary base line, it still works out to a reduction of the national indebtedness figure of about 2 cents per dollar.

Additionally we are told that all cuts must be made equally “across the board.”  But that is not precisely true.  The bill itself the cuts to be equally made across the non-exempt DEPARTMENTS’ budgets but makes no mention of any restrictions on how, WITHIN a department the cuts are allocated.  Those decisions can be made sensibly with a sort of economic triage or they can be made based on politically desired outcome.

The Defense Department spokesmouth said, for example that Coast Guard rescue missions would be cut.  But later the commandant of the Coast Guard said he could find the money from other non-essential areas.

FAA talks about cutting air controllers but does not even look at such things as a subsidy they pay for snacks on flights (you thought the airlines paid for that, huh?).  The FDA talks about health issues but does not talk about cutting subsidies for tobacco growers while the Health Department then also pays huge amounts for anti-tobacco campaigns.   Or how interior pays some farmers to NOT grow a crop it pays others TO grow.

And if ANY part of the government is able to be called “non-essential” why are we paying for it anyway?

Bottom line even if all of the apocalyptic cuts are made as prophesied, we will still be spending more in 2013 than we did in 2012 because we have only cut the rate of increase not the actual existing budget items.

So get a grip people!  And hold your elected folks’ feet to the fire to allocate the cuts wisely, as you would expect.  As it is now, it is as if an individual had a cable contract but when their bonus check was cut, they decided to deal with it by cutting back on food for their kids and leave the TV offerings alone.  But when the government does an exactly analogous thing it is OK with you and you just accept it because you think the enlightened folks leading it have an imprimatur from God to act wisely in all things?

In the end it is all in YOUR hands.  You can tell the representatives that how they allocate money and how the President’s minions allocate money in their departments is going to have an effect on your voting.  And if you do that I can nearly guarantee things will get better.

If you don’t, if you remain minimally informed about the details of these things that can, if used poorly – or maliciously – have a very bad effect on you, then you have only yourselves to blame for whatever the outcome will be.

 
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Posted by on March 1, 2013 in Uncategorized

 

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More BS Flowing Down The Political Sewer Pipe

San Diego – Oh how soon we forget when it serves our purposes…  But sometimes there is that pesky videotape that someone forgot to erase when the agenda changed.  And now we have a glaring example of it.

The year was 2006.  The President was the hated Bush demon and in his evil machinations sought to raise the debt ceiling.  The left was simply apoplectic.  Senators Reid, Pelosi and, yes, Senator Barrack Obama each took to the dias and bloviated in soaring rhetoric how this was an outrage!  This was, they ALL chanted, simply so we could spend more money but we did not need to raise it for current spending obligations because all of those had to have been approved under the debt ceiling as then defined.  This was, they shrieked, merely a way to allow the administration to spend NEW money on the wars in Iraq and Afghanistan beyond that already approved, which they hated.

In fact, they were right.  Congress cannot approve borrowing more money than the debt ceiling in place at the moment will allow.  So every debt and liability incurred by the country at the moment has had to fit within the debt ceiling when the liability was enacted.  And, sure enough, we have the revenue to at least service the current debt even though we do not have the revenue to pay the principle down or to fund new debt.  That was true when Reid, Pelosi, Obama, et al rose to say it in 2006.  And it is still true today.

It was still true in 2008 when Obama, on the stump, called the Evil Bush Demon irresponsible and unpatriotic for allowing the national debt to reach $4 trillion on his watch, to create, he noted, a debt exceeding the total debt run up by all presidents before him.  He was correct.  But that was $6 Trillion ago.  And that additional $6 Trillion was run up not by the Evil Bush Demon but by the benighted Obamessiah,  How can that be when he was telling the truth back then.

However, he was not telling the truth today or anything even close to it.  He had to be assuming, (and with every reason to make the assumption based on the election results), that the populace is so ignorant and so burdened with short attentions that they will not only have forgotten it but those few who remembered will think they remembered in error, our Spender in Chief rose Monday morning to warn the people that if the evil right wing continued to hold America hostage by refusing to raise the debt ceiling unless some equal cuts in spending were added, we would fail economically, fail in our promises to the world, our credit would be shot, and we would no longer be a powerful nation.

Sorry Chief, that is simply a bald faced lie.  And worse.  Trying to frighten recipeients of social security and VA benefits is disingenuous because he knows full well that the payment of those specific benefits is protected by Federal law.  It is more than disingenuous, it is sleazy and duplicitous.

And, Dear Leader, it contradicts your own surprisingly well reasoned diatribe against raising the debt ceiling for the Evil Bush Demon which, against all odds, actually caught you doing something unusual, telling… the truth.  Well, some of the truth anyway.

Raising the debt ceiling is wanted and needed solely so we can raise our debt.  Duh.  Obama’s problem is that as a country, we do not take in the revenue to pay for the desired levels of spending especially when the leadership wants to turn us overnight into a Scandinavian model socialist democracy.  But this is not a result of incompetence.  I believe it is an obvious part of strategy 101.

If we continue, year after year to raise the debt ceiling and then borrow up to it so we need to raise it again to spend and borrow more, sooner or later that house of cards will come crumbling down just as it does to a family who tries the same thing.  And then we have a choice.  We can do what we are doing now which is simply push the day of reckoning down the line so our kids and their kids will have to deal with the catastrophe we are creating, or we have to belly up to the bar and cough up the revenues into the public coffers to pay for it.

The problem is then we will have to believe that a Congress known most of all for its profligate spending (and yes, this includes the mainstream Republicans as well who differentiate themselves from the liberals only be want to spend a little less and a little slower, will take that added revenue and put it toward paying down the debt instead of simply expanding new programs.  You do all believe they will all suddenly be bitten by the bug of restraint, don’t you?  I’m sure I do…  NOT!

The only chance this generation has of getting the debt under control is to stop increasing the debt faster than it can be paid down.  And that needs to start now.  Will it happen?  I doubt it.  The citizenry unburdened by any real knowledge of the issues or the consequences, hearing only what they want to hear and even then only if buried in the speech is a promise for more stuff to flow down into the public trough, are apparently clueless.

Obama has an uncanny ability to avoid issues and solutions while successfully painting any who oppose his view as the enemy, not just of him, though that is bad enough in his eyes, but of the country, of the children, of the poor, of the minorities, of women, of anyone whose status allows the inference of some ugly label to be applied to his opposition.

Amazing.  Sad.  Maddening.  I think perhaps we need the object lesson  now rushing at us like an out of control freight train while we, in our economically and ethically broken jalopy sit here broken down on the track.  Maybe those left standing, after they have clawed their way back to fiscal responsibility and productivity will, at least for another generation, remember.

Despite government promises to the contrary, there really is no free lunch.  And this lunch is going to have one Hell of a bill.

 
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Posted by on January 14, 2013 in Uncategorized

 

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The Sheeple Have Spoken

San Diego – Well, the good news is that it is over.  The lies and misinformation that dripped moment by moment from the politicians as they sought to outdue each other in the amount of venom and vitriol they could spew at the other side has been spent and they will have another few years to recharge their reservoirs of political bile.

The end came, unfortunately, too late for me to retain respect for some of my acquaintances who did not just fall into but rather flung themselves full bore into the hateful, distasteful, and often idiotic fray of yet more bumper-sticker intelligence and cartoon level thinking about issues that were incredibly important on a scale broader, obviously now, than their self serving, simplistic, often one-issue intellects could grasp.

And make no mistake, that preamble is aimed in ALL political directions.  The real issues that face us now and will face us in the near future as a nation were all but ignored by both sides as they sought simply to smear each other with the offal they could only be obtaining by scraping it of off themselves.  Both winning and losing sides studiously avoided a confrontation on truly critical issues of national importance.  The winning side did so because they had no standing to claim a shred of integrity or sincerety had they attempted to enter that arena and the losing side did so for reasons totally obscure to me but which could not be all that flattering.

And in the end, we, as a nation, got not what we needed (and probably could not have extracted from either side) but what we most likely deserve and what most likely will be the first major move down the path toward those “step” or “stage” changes prophesied by historians and political philosophers from Polybius to Marx I spelled out in a previous post.

Some of you old timers may recall that years ago, in the late 1990s and early 2000s I predicted that by the time of this election, we would set our nation on a path to reclaiming the shining example to the world our founders gave us or down the road to ruin retracing the same path and for the same reasons previous great civilizations took to their ultimate demise as virtual centers of the world in terms of geo-political importance and economies.  I hoped it would not happen in my lifetime but now, I am sad to say, I think I have lived to see it.

I have now seen the parasitical class out-vote the productive class.  It was bound to happen sooner or later but I truly had hoped it would be a lot later.  I have now seen those who believe they are entitled to the fruits of the labors of others out-vote those remaining few who think they are entitled only to what they can produce and accomplish themselves.  I have seen now those who believe that if there must be some consequence for their actions and behaviors, it is OTHERS who should bear it and not themselves out-vote those who believe  we should all bear the consequences for our own actions and behaviors.

Unfortunately, those feelings of entitlement and social justice have an economic impact.  Of course it does not — or in their minds, should not impact them because it is the others that are expected to pay “their fair share” when some pay nothing at all.  But as the Iron Lady said, pretty soon that approach runs out of “other people’s” money.   Certainly we have run out of our own as a country.

If that were not so we would not have a $16 Trillion dollar debt and be in immediate need of asking to borrow more.  You cannot claim to be solvent and yet require – REQUIRE – additional borrowing just to meet your liabilities.  And the result is each child now alive will be saddled with over ¼ million dollars in personal debt to the country if it is EVER to be settled.

Of course under the new order set in motion at the polls last night it cannot ever be repaid.  Why not?  Here’s a heretical idea, look at the logic.  It is simple Aristotelian logic and not complex at all.  Here are the premises…

  1. The only way to create sustainable revenue to the government is via increases in national productivity.
  2. National productivity is a function of jobs, solid jobs that create the majority of the goods and services needed so that the balance of trade can remain favorable.  And it is those employees who, if the winners of last night are to be believed, carry the major tax burdens and whose taxes keep the ship of state afloat.  So from all standpoints an increase in the productive workforce is mandatory for any sort of national recovery.

    However…

  3. The world that could easily employ lots of unskilled labor is dying at a rapid pace.  Today’s solid jobs depend on skill-sets and knowledge not dreamed of when I was just entering the work force.
  4. The only institution that can properly prepare future workers with those needed skill-sets is education.
  5. The only institutions that can hire and retain those workers, assuming the existence of requisite skill sets are businesses and corporations.

But…

  1. What institution is designated as the first to receive cuts due to those same budget problems that are claimed do not exist?  Education.
  2. What institutions are designated as the whipping boys for all the unfair ills around and so throttled with tax and regulation burdens to limit or stifle their productivity?  Businesses and corporations.

Is not the disconnect apparent to you?  Are you following any of this or am I going too fast and using words that are too big?  The answer has to be that no, you are not following this or the election results would have been different.

Luckily I am an old guy.  My “future” is well behind me and the truth is I had a very good run at it.  In my opinion we took the first big step over the edge last night but we have so much inertia going that even a dedicated transformer like our president cannot undo us overnight.  It will take a little while.  So I may never live to see it all utterly fall apart.

But my students will and I am sorry for them.  They will never see the America I saw as a youth; a beacon to the world as a place of opportunity and hope for all willing to buy into the culture and work for it.  A major nail was driven in the coffin of that old place last night. Maybe it will be the last nail needed.

But my students were and are among those cheering it all on, pleased at the outcome to savor the flow of entitlements and goodies they expect to come flowing down the government food trough.  So maybe I should not feel sorry for them after all.  They will get the results of the actions they have set in motion; actions and results I do not think can be reversed by the time this term will be over.  And it will be what is deserved.  I do not think they deserve the America that was, the America of dreams and fantastic potential.

(As an aside, yes, I do still think that there is the possibility the technology of efficiently extracting oil from shale noted in my last post will still happen… somewhere.  But having vast oil-based revenues, despite the major growth it has twice allowed in this country, is no guarantee of having things move in the best directions.  Riches do not guarantee a benign government.  Think Saudi Arabia if you do not believe it.  It can also provide the power for a tyrant-in-training to solidify their position by now passing out the goodies even more extensively.  We talk about the best politicians money can buy but the real worry is about the most dependent voters money can buy.)

Anyway…  If I were a national politician this morning, my attitude would be, “OK, you voters made your choice… so be it.  If this is what you want, even though you have no idea what you are asking for, then let it happen and happen quickly.”  Since my own pension and salary are secure as a member of congress, I would give the President everything he wanted with no problems whatsoever.  And make sure who is getting the credit (him) and who will, down the road, deserve the blame.

After all, if we are doomed to pass on through to the next stage, then lets get it over quickly so we can then start setting the ground work to move the cycles rapidly ahead and perhaps the next time we reach the point of wonder and power, we will be able to look back to when we through it all away and see what that cost us.  Perhaps next time we will learn from history rather than ignoring it.

Nah…

 

 
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Posted by on November 7, 2012 in Uncategorized

 

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Adrift and Rudderless in a Keynesian Fog

San Diego – Only 8 weeks ago, wrapped in the sacred robes of Keynesian wisdom, Fed Chairman Ben Bernanke asserted proudly that from that the country, following the application of the economic policies of that paragon of financial wisdom who, in the history of the world, though he is adored by socialist and liberal thinkers, has yet to once be correct, was now vindicated by the situation where we were seeing slow but steady progress out of our economic woes.  The sentiment was echoed by White House occupants and sycophants and their heralds in the media.  If you listened to network news or to the policy parrots of the administration at MSNBC, you would have every reason but one to think we were on our way to a splendid if slow recovery.

And that one reason not to think so?  It simply was not true.  Last week, according to the AP, Ben Bernanke admitted that it was not happening and he was clueless as to why not and worse, that the troubles could continue into next year.  Well, OK, to be fair, that is not precisely what he said.  What he actually said was,

“We don’t have a precise read on why this slower pace of growth is persisting. … the weak housing market and problems in the banking system might be ‘more persistent than we thought.’”

I want to remember that phrase for my own use: “We don’t have a precise read on…”  What an elegant phrase to admit you are simply stumped.  But the class of the annunciation does not ameliorate the underlying message.  They have tried what their guru told them and when it did not work, their blinders were so tightly aimed they had no way to analyze the results because they fell outside of the paradigm they had accepted totally.

Now bear in mind this is from the same group of briliant policy wonks that insist the way to help us out of a debt crisis is by raising our credit limit.  In talking about the Democrat’s position debate over raising the debt ceiling, Sen Harry Reid and other Democratic leaders said an agreement should include some spending increases for infrastructure, clean energy and other programs to boost the economy.

Don’t you get it?  There is only one reason to want the debt ceiling to be raised and that is so you can spend more?  If you truly don’t want to spend more money and wish to actually cut some spending, why raise the debt ceiling instead of simply starting to pay down the liabilities?  And don’t try the current red herring on me that if we don’t then we will start defaulting.  Bovine Excrement!!!  This is not about any default; the Congressional Budget office declared we take in more than enough in revenue (read, “Taxes”) to pay the interest on the current indebtedness plus basic essential government operations.

Therefore the only way we would default on our debt is for our dear leader to decide to default on the interest in favor of spending elsewhere.  In other words, an abject failure of proper prioritizing.  It is perfectly analogous to the decision by a person facing bankruptcy who decides, instead of paying off existing debt with his income and cutting his spending, to spend all his money buying a new TV and then buys a new car on the credit card before it collapses.  That is exactly what King Barrack, Baron Bernanke, and Lord Geitner are telling you is the best plan for the country.

And how has it worked out so far, do you think?  Has the investments we were assured would stop the recession and put us on the road to recovery worked?  Have they worked even a little bit?  Has unemployment dropped as promised?  Has national productivity started a noticeable climb?  Have housing costs adjusted properly?  No, no, no, and no.

The argument is we need to do MORE “investment” (spending) to boost the economy.  But that is exactly the plan Greece adopted and we all know how that is working out for them,  Ditto Portugal, Ireland, Spain… and we would be different why?

Every word this gang utters about wanting to get spending under control is a bald faced lie or exhibits galactic level stupidity.  The way to get spending under control is to stop spending.  Period.  There is no other.  The way to control debt is to cut up the credit cards not to increase the limits on the ones you have or, worse, get some more.  This is about priorities in a rational spending budget.  Period.  To get us out of this via taxes would require, using CBO, IRS, Census bureau, and Government figures, about $47,000.00 (that is $47 thousand dollars) from every individual in the country including those not now paying any taxes.

The math is, again as i’ve pointed out over and over, incredibly simple.  The only way to not “get it” is to not WANT to get it and be blind to it.  And how about those rich folks including the truly rich plus those owning small business as sole proprietorships whose income is listed at over $200,000.00 (and note the missing item you are not told is that people who want this figure as a criterion do not mention this is “Before Tax” income)?  Well then since it is a smaller number, each of them would have to cough up $3.5 million in taxes.

Sure there are some that could pay it out of pocket change but the majority of people in that income bracket are small business owners and do you seriously believe it would not have a detrimental effect on the same small businesses that are the major employers in this country?  I honestly do not have a problem closing true tax loopholes, but anyone who thinks that will solve the debt problem and let our profligate  spending continue unabated is either hopelessly stupid or sim[ply does not want to face or acknowledge the reality involved.  I’m in favor of the fair flat tax approach but it will not get us out of this mess.  As noted in another post using 100% of our tax revenues will not get us out of this.

So we remain adrift.  Or… as I have suggested before, we are not adrift at all but in the hands of a Captain Ahab, purposefully setting sail after the white whale of democracy and capitalism following the compass of Keynesian/socialist ideals and willing to take us all down with the ship for his ideology which he believes will, in the end be better for us after the ship sinks and he rebuilds us a better boat from the flotsam.  And who is to stop him except us voters?

I just was sent a “civics” test from an inter-collegial studies course.  The friend who sent it to me scored an 87% and I scored a paltry 86%.  But here comes the really frightening statistic.  Of the college professors who took it, the average score was 55% and the overall score of general citizens was 49%. It terrifies me to think our education is in such hands as those professors and worse, that our future is int he hands of those average citizens.   You can take it for yourself at this URL:

http://www.isi.org/quiz.aspx?q=FE5C3B47-9675-41E0-9CF3-072BB31E2692>

Good luck to the rest of you who, along with me, is drifting on the ship of state we need to rename the Pequod!

 
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Posted by on June 27, 2011 in Uncategorized

 

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The Government Wouldn’t Lie to Us… Would They?

San Diego – This might be a long one so get a cup of coffee and setle in a bit…

I’ve been asked,  since I claim only to be an image maker, where I come up with the ideas and conclusions I espouse in this blog and in personal discussions.  How is it that nearly all of my colleagues in the arts and in education, are almost diametrically opposed to me.  It’s a fair question.  I cannot speak for my colleagues and how they arrive at their own conclusions, but in my case I have experience in the real world that most of them lack and I try to follow the advice of my old philosophy instructors in college now summed up nicely by John Mauldin, a major financial figure in this regard when he explained his willingness to quote from those with whom he disagreed by saying,

“… if we only read what we already think, then how can we learn? It is only when your ideas are challenged and you seek (honestly) to determine why the other guy is wrong and you are right, that you can either become more firm in your beliefs or change [as the facts dictate].”

So I try to keep abreast of as many perspectives as possible, assuming hyperbole from each according to their obvious biases, and seek first to find any common ground, which is nearly always correct, or to find the dots that need to be connected whether the piece i am examining has done so or not.  In addition to online versions of the NY Times and Wall Street Journal, I check out the online English versions of La Monde (French), Der Spiegel (German), Daily Mail (England), and even Al Jazeera and Al Arabiya.  I read the political drivel from all sides ranging from NewsMax to Huffington to Politico.  I also devour intelligence reports, especially from Stratfor, financial ideas from John Mauldin’s “Outside the Box” newsletter which as noted above presents ideas all across the spectrum, and, when I am home to do it, try to scan the blather from MSNBC, CNN, and Fox.

Unlike mainstream channels those sources do not seek to hide their biases so you can hear ideas “from the horse’s mouth” so to speak and not hear just an edited version of it.  And finally, my personal library contains many of the foundational documents of the various political philosophies and also the texts driving theocracies such as the Koran/Qur’an or however one choses to Anglicize the spelling.  I have read all of them, sometimes several times.

Of course I cannot read everything out there so I search quickly for articles in the areas that interest me: geopolitics, oil, security and terrorism, and sovereign finances for the most part.  Obviously I cannot do it every day since I have a real job that is, itself, taking more than normal times.  But I can spend a few minutes here and there, cut and paste parts i think are salient into a file and then at my leisure on weekends, such as now, try to make sense of it.

Is it possible I have missed something important?  Of course. But I would argue that whatever else I may be or may not be, I am not completely uninformed as to the events transpiring around us in this most dangerous (in my opinion) of times.

I would dearly love to posit that I think the greatest danger to our country, society, and culture is, as it used to be, an external threat and those certainly do exist in abundance.  But I have come regretfully to the opinion that our greatest threat is internal and that we are, as one financial pundit phrased it, “…trending toward unwitting self-destruction.” Those external dangers, while all very real, poised, and waiting their opportunity, would never have that opportunity if somehow we did not, through internal idiocy or malice, open the gates for them and haul in the modern versions of the Trojan Horse.

You really should re-read (I’m making a possibly invalid assumption about the quality of your education here) the section of the Iliad describing what the Greeks did to entice the Trojans to accept and embrace the vehicle of their own destruction, and then look for the parallels to our current situations.  The only difference is the “Greeks” in this case are not outside the walls, they are already in the walls and in the palace.

Sometimes I feel like Cassandra in this regard.  (Oh, all right, for God’s sake, I’ll just tell you. She was the Trojan oracle who spurned Apollo and was cursed to always tell the truth and never be believed.  She warned Priam and Hector about the Greek trick but was not believed.  No wonder we are such “fair game.”)

So here is my “Cassandra Report.”  Our economic situation is dire and getting worse and if we do not turn this ship around, quit dealing with symptoms and short-term political feel good “solutions” while carefully avoiding addressing the cause of it because the solution is viewed as political suicide and painful in the extreme, we will see our great culture self destruct and open the gates for all of the dangers out there who seek to destroy us and see us join them as just another third world country that is just a bit bigger and see the Orient once again take its place as the major world power.

Whatever horrid pain we will have to face to solve the current problems because we waited too long, are nothing compared to the pain we will all suffer if we do nothing.  And the solution begins by admitting the problem.  You cannot — CANNOT — solve a problem that you will not acknowledge exists.  Period.  And we have a huge problem that in the last few years has been exacerbated to an extreme degree and is now being covered up with a combination of lies, band-aids, and panaceas in the form of misdirections.  We hear each side blaming the other for setting this in motion when the truth is both had their hands in it and there are no innocent parties here.  Good Lord, get over it.  The point, in the end, at least at this desperate point, is NOT who started it… history can sort that out later.  The point is what are we going to do about it and it appears to me our deadly partisanship will prevent this group of so-called law makers from really doing anything.

The problem that the problem is causing is that it is generating such angst that we are losing our ability to keep an eye on the powder kegs in the middle east where the fuse is already lit and inching toward disaster.

(As a teaser, when the current king of Saudi Arabia dies or is killed and if Khamenie is still the high Ayatollah in Iran, keep your heads down because all Hell is likely to break out led by Iran.  Ah but that is a story for another day because it really will not make any difference to us if we are, by then, at a place we are sure to be if we do not reverse course and quickly.)

So what is about to — or at least likely to happen on the economic front?  Well, here is a quote from David Gallard of the Casey Report, a widely read financial newsletter whose conclusions have rarely been wrong:

“The Fed has been extremely supportive of the U.S. government’s insane spending, polluting its own balance sheet by buying up toxic loans by the hundreds of billions and by pumping enormous quantities of cash into the money supply.

” …(you) don’t have to look very hard to understand why we have seen some small recovery in the economy, much of which has been driven by the financial sector that has been the recipient of so much largess – it was bought and paid for by the government, working hand in glove with the Fed.”

Why is this a problem?  Because to support a flawed economic policy, it has resulted in what even Keynes himself feared, a “debauchery” of the currency.  The monetization of the debt by printing money and loaning it to one’s self via purchasing your own bonds, called, euphemistically,  “Quantitative Easing” or QE, is (a) inflationary on the face of it because it debauches (debases) the value of the currency and (b) should it stop after it is depended upon and fundamental problems are not solved, will generate, in, at most (if history remains true) a couple of years, a secondary market collapse because the whole scheme was not used to address the real problems but to prop up the parties complicit with government policy in fomenting the collapse in the first place.

And it appears highly likely that as they approach the end of QE2, the Fed, ever terrified of inflation even through their own filters, will not immediately go to QE3 but will stop to assess the success of the plan.  Success or failure, it will be labeled as a success because it is what King Barrack and Count Bernanke wanted to happen. Given a little time though, the incredible problems impacting our economy will resurface so that the economy will be back in the tank in a way impossible to cover up.

At that time the Fed will be forced to do some further monetization, though they will likely try to pretend it is something else other than more quantitative easing when they describe and label it.  It is all they know to do and have little choice since the politicians at ALL levels are refusing to address the core issues are looking to them to somehow, magically fix it so they (the politicians) can claim innocence of the pain and thereby keep their jobs.  And it appears that the public, on both sides of the aisle, is dumb enough to buy into it so long as they keep being promised protection from their own pain.

I believe however that QE1, 2 or 3 or 4 or 28, by any name or label, are all stop-gap measures that in the end will backfire badly and the inflation feared will come at us like an onrushing freight train and make Japan’s experience look like a Sunday School picnic… unless we change course.  They are treating the symptoms not the cause.  It is like putting a bandaid on a festering wound… it hides the reality for a while until the gangrene sets in to force some really ugly decisions that could have been avoided early on.

So why do I believe that?  I believe it because i believe we are being lied to on so many levels that it is nearly pathological in occurrence.  And that if you look beneath the curtain of this well-woven fabrication all of the signs of disaster are there to be seen clearly.  Here again is David Gallard,

“…the problems that made the economy stumble in 2008 have not been solved. As I said before, most have gotten worse. Have the impossible levels of sovereign debt and trillions in unresolved bad mortgages embedded in the balance sheets of Fannie, Freddie, the Zombie Banks and even the Fed been resolved? Hardly.

“Is there any real sign coming out of Washington that the deficits will be substantively tackled? You don’t have to be as active a skeptic as I to understand that the deepest spending cuts being discussed don’t even scratch the surface of the $1.5 to $2 trillion deficit. As for the $60 trillion or so in debt and unfunded obligations, forget about it.

“The U.S. government and the governments of most large nation-states are fundamentally bankrupt. In time, they will have to default on their obligations. While there will be some overt defaults, I expect most of them to follow the path of least resistance, which is to try to inflate the problem away.”

The truly worrisome deficit is the deficit of government accountability.  Here’s another dot for you to connect.  On February 10th CNNMoney reported the IMF issued a report encouraging replacing the US Dollar as the world’s reserve currency.   China has said, “we don’t want to make any more foreign exchange reserve of any paper currency, because all the paper currencies are government debt currencies.” In southern China, the “BRICS” group, Brazil, Russia, India, China, South Africa, recently met in a sort of mini-summit and agreed “to transact all of their mutual trade and investment in their own currencies” effectively minimizing the need, at least in the short-term, for a global reserve currency and because of, in their view, the volatility of the US Dollar under current fiscal policies.  They didn’t replace the dollar as reserve, they sidestepped it.  But the result is the same.

In a wonderful bit of political misdirection the Administration’s pet sycophantic “economists” have rushed to assure us that the dollar is not in danger of collapsing.  I think they are probably right.  But that is not the issue: it does not have to collapse per se to have a catastrophic effect on our economy.  All it has to do is devalue significantly due to inflation and the spiral is on.  But we are also assured by the anointed one that the economy is back on track and inflation is not a problem.  And if you just slightly cook the books, that is more or less true.  But to do it you have to change the rules of how such things are measured and that is precisely what has just happened.  And Bernanke assured us recently that deflation was not likely.  Duh.  But deflation is not the problem yet everyone read into that, “Hey the Fed said there was no problem so relax; it’s all under control.”  That is the equivalent of the lookout on the Titanic telling everyone, “No problem, we’re made of steel and that is just frozen water so there will be no problem.”

First of all, a “jobless recovery” is NOT a recovery at all.  Unemployment remains very high.  Of course if you are a blind partisan and buy into the government’s figures, it is moving steadily in the right direction. But the government has never entertained any reservations about juggling actual figures to suit itself. One telling statistic they avoid like the plague is, unfortunately, the only real way to look at it: unemployment as a percentage of the employable population, which screens out many of the government’s self-serving adjustments to its official figures. Looked at that way, you can see that unemployment is continuing to rise alarmingly, even though the government is reporting that it’s falling markedly.  What is the basis of their declaration: the number of people applying for unemployment.  Period.

Plans to help solve problems (especially as in California) by raising productivity, which means raising the tax base, are simply pie in the sky when, in fact, the tax base of employees is going down because business — you know, those nasty entities that actually hire people –are being driven to places like Texas.  Anyone willing to do the research to find the real numbers can see that both unemployment and inflation is going up. With the web at hand it is incredibly simple to do the research.  For example, just pull up a chart of the CRB (Commodities Research Bureau) Index for Commodities which tracks the prices for the real stuff required for life – and one can see it has been on a steep upwards trajectory. Inflation is very much here and alive.  As I noted a few posts before, oil is rising rapidly and with it the costs of food production so food cost is also going up.  And so is most everything else.

John Williams’s (another high level financial consultant/analyst) “Shadow Stats” chart (www.shadowstats.com) reveals that inflation is at nearly 10%, while the Bureau of Labor Statistics is reporting 2.1%.  But, and here is a really interesting kink in all of this,  even Williams’ statistics don’t report actual percentages but rather what it would be if the government reported inflation the way it used to, before it started “improving” its reporting in the 1980s. It’s still an incomplete view, because the government’s original reporting was flawed to begin with and skewed to minimizing the numbers even back then.

How can the government skew these figures? Easy, they added in Housing to the CPI (Consumer Price Index). In 2008 housing was dealt a huge blow and it will be there for a very long time, because government had (and continues to) encourage and facilitate bad decisions on the part of both lenders and borrowers. This has left trillions of dollars of bad debt hanging out there, much of it now in the government’s ledger.  So the inclusion of housing prices, which plummeted as that bubble burst, as a component of official CPI, pulls the official inflation figures down, even though those figures don’t sync up with the actual cost of living.  And et viola, a magical and instant drop in inflation numbers.

i once did work for a Fortune 100 company whose CEO made the balance sheets look wonderful by selling off core business departments of the company until there was nothing left to sell.  That company then went under, no longer exists, and to the end the stockholders, told only of the incredible “revenues” while costs dropped, kept voting for HUGE annual bonuses for him.  Hmmmmm, sounds like the government to me…

This is precisely the same approach used to indicate global warming by eliminating, from the list of gathering stations, those that are in colder areas.  And if you leave that little important bit of data out as  you are calculating the figures, they do seem quite plausible.  Ah but now we are bumping into another topic for another time. But is it possible there is a trend here?  Surely not.  Say it isn’t so… and then back that up with some hard data.  Please, go for it.

Many economists from different perspectives are predicting oil prices to continue rising.  Some blame speculators not fully understanding the difference between spot markets and normal market speculation, some blame foreign issues, and others note that in addition to those influences on oil prices, our government seems to actually be facilitating it by refusing to allow us to get at our own reserves or refine what we have in order to push its green agenda onto the backs of people who are trapped in their positions.  With inflation gobbling up large chunks of one’s paycheck, King Barrack’s laughing while telling a worker he needed to trade in his SUV for a hybrid van, is like Marie Antoinette telling the starving French who could not afford bread to “let them eat cake.”

I do hope some of you remember the French Revolution and not only what led up to it but the Reign of Terror that followed.  The next time you ‘neocons’ want to set in motion some protective law please re-read Robespierre’s letter that allowed him to set up the security apparatus that led to job security for Madame Guillotine and see if you recognize any of it.  And you far left people wake up and see the revolution that is possible when you get the people mad enough because they are feeling helpless because that is where you want them to be to justify your creation of the government village to take care of them.

People underwater with their homes and vehicles could not trade up to a hybrid vehicle even if they wanted to.   What a stupid, irresponsible response that was but it is totally revealing of the agenda and of the connection King Barrack has with real people. Telling the people here in southern California to use public transportation where a 20 minute commute by car would then take 2-3 hours — assuming it was even an option — is ridiculous and out of touch. But then so are the proponents of such ideas.

Before you can demand that change you have to build a workable system and that takes… oh wait, I’m beginning to see it now… that takes higher taxes to pay for it.

Why no, they wouldn’t lie to us… much…
.

 
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Posted by on April 16, 2011 in Uncategorized

 

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Extremist & Draconian Math

San Diego – We all know about “New Math.”  That is the math that has left our kids without the ability to count change and depend on calculators.  But now we have Extremist Math.  Since good ol’ Chuck Shummer told his fellow Democrats to label anyone who wanted to cut spending as extremists and their ideas as Draconian that has been the obligatory label used for nearly anyone who disagrees with them.  “Draconian” is a fitting label for them to use since they also accused their opposition of coming to town to kill women and old folks.

I hear a deafening silence… “Draconian?” you ask.  Oh come on, all of you ever-so-educated and informed voters surely are so steeped in history you remember the Athenian Greek, Draco?  In 621 BC Draco was asked to codify all laws so that everyone would know them and not be able to claim ignorance or to break them unknowingly.  His code decreed death for virtually every offense.  He stated he believed death was appropriate for ANY crime and could not think of something more severe for the bigger crimes.

So lets put the Draconian objectors to the budget deal to the microscope.  it has become pretty well established that Americans. almost somewhat uniquely (and, in my opinion due in part to new math) cannot comprehend or deal with really big numbers.  A million is slightly out of grasp and a billion or more are just abstractions.  THe only way to make sense of what is really at play is to deal in percentages and bring down examples into the realm of the understandable.  That is what I tried to do when I showed that, following the math done by a friend, using the Democrats’ reasoning, my own $3,000 credit card debt could be properly dealt with by my cutting $.08 (that is eight cents) from my annual spending.

Well here is another example.  First the reality as described here in an article on the issue:

“Currently, the Federal debt amounts to $14.2 trillion. (Washington has) borrowed every penny the law allows. In fact, that’s the reason for the current war of words. If Congress won’t raise the debt ceiling, the government can’t borrow any more money. If it can’t borrow any more money, it can’t pay for all the boondoggles and giveaways that are already law. [DK: And that means that expenditures and liabilities were passed into law knowing full well they were above to so-called debt limit and now they need to hike the limit to pay for them. So much for any real debt ceiling: you just authorize the spending and then tell the people they will be devastated if they have to “cut” the programs.  Can we spell “fraud?”  Oh well, back to the quote… )

“The deficit is already scheduled to grow by $1.6 trillion this year. In other words, even if Congress can’t agree on spending one more dollar this year, we taxpayers are already on the hook for our government to fork over $1.6 trillion more than it collects in taxes.

“The deficit for February (the shortest month of the year!) was $223 billion. That was the largest single deficit of any month in our country’s history.  Let me put it another way: The same day that Republicans in the House voted to cut spending by $6 billion, our national debt jumped by $72 billion. That’s $72 billion in new deficits, every day of the week, every week of the year.”

So lets convert that all to pennies where one penny equals a trillion dollars (from an analogy first presented by Chip Wood). The debt is roughly 15,000 pennies or a pile of 300 of those red penny rolls. And the pile is growing by 72 pennies a day or about a roll and a half. (for those who have never been in business or saved their change, a penny roll/wrapper holds $.50.  Oh, I’m sorry, that is 50 pennies.

The nasty evil Draconian House wanted to cut 10 pennies from that pile of 15,000 pennies
but had to settle on less. The Dems were willing to cut 4.5 pennies and in the end settled on about 6 pennies or 1/16 of the amount of NEW debt being racked up that very day.  Draconian?  Extreme?  And in following our analogy how do the liberal folks tell the tale?  They say those nasty Draconians are trying to cut all of ten pennies at once (can you even imagine?) which will be disastrous because we only increased the deficit this month by 1.44 rolls. And the sychophants readily buy into that bit of verbal mis-direction.  The nasty conservatives want to cut 10 but only increased 1.44.  Uh, but wait a minute… the cut is 10 pennies but 1.44 rolls is 72 pennies… you have to not let them keep you from reading the fine print.

When it looked like they actually might lose the fight Dems accelerated the misdirection approach and added an old staple technique… they lied.  they lied by also started telling people that if the government shut down then soldiers in the field (“America’s flowering youth now in harm’s way”) would not be paid.  That is a lie.  The Law is clear that active duty military are considered essential personnel and exempt from furlough or layoff without pay.  And who else is excempt?   I know this will surprise you.  Congress and all of their staffs are also exempt.  Reality is not kind to the liberal position but they can happily (for them) rely on voter ignorance and short-term memory and their fear of nasty labels.

King Barrack loves telling the world he inherited a Trillion Dollar deficit, as if that somehow excuses boosting it to the current levels.  But it is a lie.  $800 billion of that deficit was the one time, never to be repeated TARP bailout.  But the new administration, instead of keeping it as a one time expenditure, rolled it into the base line for the continuing budget and then rolled their own additional “Stimulus” money of several more trillion into the base line.  In a truly bizarre and utterly ironic twist of events, the idiot Michael Moore was partially right: we are not as broke as it seems because the reality of one-time expenditures has been rolled forward on paper as if we should be spending that money EVERY year, and God knows King Barrack wants to do just that.

Anybody know of a small isolated island needing a Photo Professor where the national budget is counted in fish and coconuts and one cannot run a deficit because the exchange is based in tangible goods?  No one can say that a pound of fish is, today, worth 1.8 pounds of fish.

I want to declare a moratorium on the use of all labels and personalities used in place of national political debate.  I want to make it mandatory that only the facts be presented and let the voters decide based on facts, not on fear-based labels and emotional arguments.

P.S. – re local/State issues.  I do not support a tax increase; we are driving businesses out-of-state in record numbers and with them, losing the tax base on both corporate and employee levels.  But I do believe the voters have a right to decide for themselves and it should be put on the ballot. and if, according to law, 2/3 of them vote to increase specified taxes then that should be allowed.  Plato referred to pure Democracy as “the rule of fools” but the petition/referendum process in California has already totally subverted the 3-part government approach and created a third branch which is totally unaccountable and has consistently refused to pay for the schemes their petitions have put in place.  Now I think we should give them a choice to face reality.

On the budget ballot we should list the amount that needs to be raised to pay for all of the schemes and let them chose to pay for them with additional taxes or not.  Those that do not get the votes would be scrapped the day the votes are counted.  For those that do, taxes will be raised accordingly unless enough are dropped to make up the difference.

 
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Posted by on April 15, 2011 in Uncategorized

 

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