Tag Archives: US budget

2 Cents Worth On Life Its Ownself

Spring beckons in the near term and like the buds promise full blooms soon and ideas and ruminations sprout from the mind after the winter lull…..

As the comments over “sequester” roil the headlines it is useful to remember a fact or two.  First sequester comes from the law and means in plain English that an asset is held or frozen until a later ruling.  This sequester does not automatically result in a reduced Federal spending level.  It merely authorizes it to a certain lower level of growth.  Even that modest reduction does not occur until directed and that comes in later March with the Continuing Resolution funding bill.   If the reductions occur it will be then.   Recall also that we are already half way through this fiscal year so the immediate reductions will not be the full 120 billion (average over ten years) but cut about in half because we have  been spending this fiscal year at the old higher rates.

Speaking of spending why can’t each and every department of the Federal government take a real, honest to God 1% cut in its budget?   Just 1% lousy per cent.   That would be out of a 3.8 Trillion dollar budget.

Liberal Democrats love to look to Europe as they model for so much of our social and economic policies with one glaring omission–immigration.  We are about to allow 11 million or so illegals citizenship simply because they are here in violation of our laws.  France, Germany, Switzerland, the Netherlands and several more have much stricter immigration policies.  They usually do allow a fairly generous guest worker program and those folks have legal status in the respective countries but they are never allowed citizenship.  Look at the record for yourself.  Many Turks and others from Eastern Europe have come to work legally but they don’t get to vote or have full benefits of citizenship.

The current controversy over the use of drones to kill bad people is confusing to some of us.  Sure we all want our rights respected and protected but we’ve killed bad guys for years even in the US borders in violation of the 5th Amendment right to protection of life, liberty and property without due process of law.  Today many are concerned that the US citizens who might be killed in a drone strike are denied those rights and that is true, their rights are ignored.  Check a little history though and the actual circumstances of taking out bad guys in times past.  John Dillinger was assassinated not arrested as were many over notorious criminals over the years.  They weren’t read their Miranda rights or offered a chance to surrender.   How about those nuts in Waco twenty years ago?  Women and children were there and they were assaulted with military weapons.   A drone is just another weapon like a cannon or hand gun in the hands of our military or law enforcement.  Regrettably our leaders will always have this power and we can only hope it will be used wisely.   For political reasons it likely will never be used inside our own borders unless we spotted a pack of terrorists moving to a specific target like a nuclear power plant.

This week the politicos at the top-level of the Pentagon, the top generals and admirals, announced that the Navy will be reduced down to under 300 ships in the near future.  Yes, that level Romney talked about being lower than what we had during the WWI era.  Sure those ships are more powerful, run faster and can do more.  But they are still ships and vulnerable to attack.  Most of the modern defense systems for those ships have never been tested in real combat conditions.  They have missile defense and those automated gatling guns to bring down incoming aircraft or missile but they’ve only done test.  What if an enemy like Iran attacked a flotilla with four missiles at once?  How about if they attacked with 20 all within a couple of minutes of each other?  Even the gatling guns can’t fire straight up only at elevations of less than 90 degrees.  The most recent episode of “modern” warfare at sea was the Falkland’s War of 30 years ago.  You may recall that those relatively unsophisticated Exocet missiles (compared to today) wreaked tremendous havoc on the British fleet.   That was only a few missiles.   Just as at Pearl Harbor there should be serious concern that a significant part of our fleet in the Persian Gulf area could be eliminated in matter of minutes.   Quality is wonderful and to be sought, but a little bit of quantity even if of a lower capability could be comforting and very useful.  A large gun on ship could still inflict real damage to a potential enemy using WWII technology.

As the East gets buried in a huge snow storm this week it is noteworthy that the UN, yes, the UN, recently gave an update on global warming.  It noted in the back pages that at least 25% of recent weather changes can be attributable to the effects of the Sun and its cycles.   Hmm,  perhaps we should pass a Sun Regulation Act to make the Sun conform to our notions of friendly renewable energy standards.  Someone should make the EPA form a committee to investigate right away.

One of the major Japanese car makers is apparently seriously considering abandoning totally the lithium-ion batter or any similar battery and looking into the hydrogen powered car for the future.  Makes sense, the battery cars didn’t work 100 years ago and they aren’t the best path to the future now.  They are too heavy, to slow to recharge and too expensive to replace when the time comes as it always does because all batteries wear out.  Don’t know what the future will bring but it will happen one day–just not next year or the next decade.  Be patient, it will happen.

“When a Government takes over a people’s economic life it becomes absolute, and when it has become absolute it destroys the arts, the minds, the liberties and the meaning of the people it governs”  M. Anderson–American dramatist  http://www.olcranky.wordpress.com

 

 

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2 Cents Worth On Life Its Ownself

The world turns a couple of times and the headlines change, or at least appear to, and there is more fodder for the thought mill.  Let’s see if we can get some grist from the fodder.

Let’s talk some numbers and facts when it comes to whether or not the Democrats are indeed a party of tax and spend.  BO is the top dog Democrat and he has issued his budget for the next ten years.   We won’t list all the tax increases but there are many including the Bush tax cuts elimination, the Buffet Rule increase, upping the death tax and of course the restoration of the FICA tax and the increase in Medicare taxes and the increases in the capital gains and dividend taxes.  The budget assumes that all these and more taxes will be implemented and collected for ten years.  That is sure taxing the “rich” as they want.  The result–the national debt after that ten-year period goes from the painful number of 16 trillion now to the ridiculous and astounding number of 29 trillion in ten years.   It their numbers and their calculations and they obviously are completely happy with the national debt moving to a level that can’t be paid without serious pain or indeed revolution  in the streets, a la Greece.

A couple of years ago we predicted that the interest rates for our debt would be moving back to historical levels or even higher–around 3 or 4% for the ten year Treasury note.   I never dreamed the Fed would work in cahoots so closely with the WH and monetize our debt the way they have with quantitive easing.   They have bought those Treasury notes out the wazoo to the tune of over a trillion dollars in the last two years and that is the main reason our interest rates have remained so low.  Sooner or later that game will have to stop or the inflation rate will be horrendous.   That is not just my opinion but check the views of at least some of the Fed board members and their comments regarding QE.  If the Fed hadn’t bought all that debt of the government to fund its deficit spending do you believe that there would have been investors around the world who would have loaned us that money at that interest rate?  If the average interest rate on our debt increases only 1% that will cause an increase of 160 billion per year just to service it without regard to the principle payments due.  Either our interest rates will go up or the Fed will have to simply print more money and neither of those options are good for us.

Every time anyone including even Democrats like Senator Wyden propose any changes at all to Medicare the rank and file Democrats start screaming–“They want to destroy Medicare as we know it”.   Let’s all hope someone will destroy Medicare as we know it because it and we are going broke with the current system.  Those are the facts regardless of ideology. 

Iran going to war with its neighbors is nothing new.  They have been at it since the beginning of recorded history with no let up except for relatively short intervals of truce.   Read your Bible for some early examples of this.  Then there were the wars with the Greeks.  Recall who Alexander the Great fought with in his campaigns.   Then the Romans were more or less at war with Persia throughout most of its history.  When the Prophet was first emerging in Saudi Arabia the Persian were again at war with the remnants of the Roman Empire in Constantinople. Heraclius led the Romans in years of war with them during the 7th century AD and then they fought with the Muslims as they rose to power.  The Israelis are apparently more attuned to the history of their adversary than we are and believe their threats carry real danger.

Right on time again the trees and shrubs have put out their blooms in my part of the country.  You can set your clock by it.   They come out within 48 hours either side of Valentine’s day in the Dallas area and have all my life (70) regardless of how cold or warm the winter was.   Nice to know some things  are dependable.

If we ever get the chance to colonize Mars we will have to dig deep or construct some elaborate structures to protect those pioneers.  Mars doesn’t have a magnetic field like the Earth.  Thus the radiation of the Sun would be lethal.  Our magnetic field protects us from the worst effects of solar radiation but that won’t be available there.   Again something you never think about but which is essential for our existence.  You think Mother Nature provided that just to make us happy or was there another guiding hand involved.

The current budget request 70 billion for the Department of Education.  The Federal government has no Constitutional authority to have anything to do with education.   That is strictly a State matter.  Again, let’s totally eliminate that agency and get the Feds out of all education.  Let the States tax their citizens as much as each may choose–they could tax up to the 70 billion number or not depending on the wishes of the citizens of each State and let them spend the money however they want on their educational system.  It would be more efficient and produce better results.  Why do we send our money to Washington and then allow distant bureaucrats to dictate how we spend our educational funds?   What next– are we going to allow Washington to tell us what our real estate laws must be or whether we can have sheriffs or what our hunting laws  must be?

Why have college tuitions risen so dramatically in the las 30 years or so?  Student loans.   Any time you have gazillions of dollars going out the door you will have price inflation for that product or service.  Sure the colleges can raise their tuitions and just have the students apply for those government loans and that is exactly what they have been doing for decades now.  Eliminate those loans and the tuition inflation will stop and there would not be a flood of qualified students dropping out of college.   Yes, the operative word is qualified, those who realistically can manage a college education.  It is ridiculous to assume that 100% of us are capable of a college education and there is nothing wrong with that.  Any and all work is noble with or without a college degree.

Each of us should aspire to the advise of Kipling to the young man–“To walk with Kings–nor lose the common touch”  www.olcranky.wordpress.com

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Debt, Default And Dementia

We are awash in predictions, warnings and twisted numbers in the current debate about our debt ceiling and how to deal with it and the budget issues that cause the debt to rise continuously.   The smartest guys in the room often make this more complicated than  it is.  Yes, we do have a very large and complex economy with many moving parts but even the most complex of systems will response to a few rational and basic anchor points if they are clear and predictable in the future years.

The debt is enormous at over 14 trillion but it could be managed with prudent financial planning.  The Feds do have a substantial income stream and will have.   Anyone who has passed 6th grade math, at least in the old days, can calculate a method to reduce the deficits which will in turn reduce the debt.  Yes, that means that the Feds will have less money to spend on some programs.  Other than Defense, the Treasury and the Dept. of Justice how many of the other departments of the Federal government are necessary to the well-being of the nation?    There should be no sacred cows.  The question should be asked if the benefits (if they exist at all) couldn’t be delivered more effectively and cost efficiently by the respective States.  

We need to quit allowing the politicians to propose a budget with a 10% increase in spending and then later reduce that budget amount by 5% and call that a “cut”.  A cut in common understanding is when you spent $100 last year on something and then this year you only spend $90 for the same purpose.   That is a cut.  The world will notice those reductions and the increased strength of the Federal balance sheet and fiscal policy.  When the Federal Reserve quits buying so much of the Treasuries in another month it is far from certain who will step in to loan us money by buying our bonds.   It is one thing to say you will borrow money to fund the operations of the Federal government but quite another to find someone who will actually loan you the money.  There are quack conspiracists out there already who think we went to war in the Middle East to get our hands on oil and soon they would be postulating that we are forcing other nations to buy our bonds at the point of a bayonet.  China has cut back its buying, Japan will be slowing down due to the earthquake and the need to spend their money at home.  Markets may not always act rationally but individual investors usually do.  They will assess their risk of repayment and our future ability to service debt is clearly on a decline.  That decline cannot be seriously disputed.

We continue to bailout of AIG, Fannie and Freddie and Government Motors and Chrysler with borrowed money.  All of this against a background of off-the-books liabilities of trillions more for Medicare, Medicaid and Social Security.   Such phoney accounting would put a private person in prison for fraud.  Does anyone really believe we can borrow our way to prosperity?   Are there those who believe if we borrow enough we will make money?    Because of our fiscal dishonesty with the markets and imbalance between collections and expenditures we will face default at some point and sooner rather than later.  Long before the next generations that so many say will bear the burden.   Those debts chickens will come home to roost within 10 years.  That is hardly the time span to talk about the next generation.

Raise the eligibility age for both Medicare and Social Security by a couple of years.  We live longer which is a testament to our medical sector and to our generally rising and high standard of living.  I am willing to even raise taxes. Increase the taxes for those over $500,000 income by 2% but, but, but at the same time reduce the capital gains rate to 10%  and eliminate the estate tax entirely, and totally reform the tax code by eliminating all deductions over a ten year period.   Reduce the Federal payroll by 5% of existing employees; reduce their pay by 5% and make their pension plans defined benefits so they get whatever is there when the retire rather than some guaranteed amount and make them contribute more.  All other Federal departments would have a 5% real cut in budgets and the only increases allowed would be for real inflation not union demanded increases.   Full disclosure none of this  would affect this writer. I am not a big earner anymore nor a big time investor.  But that extra money for the investors of the US and the lower capital gains rate would put a real fire under the economy.  That will produce a new round of investment in new businesses and enterprises and thus jobs–millions of new jobs which we badly need.   Yeah, cut the Pentagon budget too but make it heavy on the paper pushers and civilian personnel.  Make them take the same 5% cut in non-uniformed personnel.

There is one compromise.  Those who want the Federal government to control and run everything will not like it. It takes away their power and ability to do their social engineering and buy votes.  So be it. Here’s hoping they are not the majority.

Exactly what benefit have we gotten for the billions of foreign aid spent around the world?  Why are we funding almost 20% of the IMF budget to aid mostly countries that aren’t really that friendly?  www.olcranky.wordpress.com

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Pentagon Pork And Other Budget Cuts

The news is out about the budget cuts in the Pentagon budget for the coming year and for the outlying years.  The proposed cuts will draw flak from all corners and stripes of the political spectrum.  It is to be expected because that budget affects so much of our economy and our feeling of security or insecurity as the case may be.

When discussing the military budget it is always best to reflect on a bit of history so we have a perspective.   During the Cold War we didn’t have much of a choice about the size of the military budget because we were constantly under direct or indirect assault from the Commies around the world.  The direct assaults were in Greece after WWII, the Berlin Airlift, the Berlin wall, the Cuban missile crisis, the Korean War, the various insurgent and rebel movements all over South America and the unrelenting secret but real war at sea with our Boomer subs and the Soviet navy.  The indirect pressures were the Hungarian revolt, the never-ending presence and pressure all over eastern Europe where the Soviets had dozens of armored divisions within striking distance of the West, Viet Nam,  Grenada, and the clandestine war of the intelligence agencies around the world.   The list is much more than those but they give a flavor. 

Reagan won that Cold War for us against tremendous opposition from the Democrats at home.  They opposed his military build-up at every turn and ridiculed the Star Wars program and drummed the “he’s a wild Cowboy” mantra without end.  But the Soviet Union did collapse due to that pressure and steadfast resolve of Reagan.  He didn’t even back off from calling them “evil” which was also highly criticized by the left as being simplistic.    The fact of the matter though is that the strategy was successful and we began in the early ’90’s to save billions annually on the military budget.   It was called the peace dividend.  That dividend along with other factors, such as a Republican Congress for several years to restrain spending, had much to do with the boom of that decade.   Of course the internet came to life then thanks to Al Gore and that lead to an enormous increase in economic activity.

It was really only after 9/11 that references to the peace dividend began to fade from the headlines.   The  threat we face today is from muslim terrorists which are at the front of the line but there is the emerging threat of the Chinese as they continue to expand their military capability exponentially.  You may have notice the increase in their missile defense systems and the recent news of their own version of a stealth fighter/bomber.   That will be a very serious concern in a decade or so and certainly within the next generation.   It can still be a dangerous world at there.

Olcranky believes we should begin to seriously cut the spending programs of the Federal government and that the Pentagon is not a sacred cow in that regard.   There is so much political pressure regarding the Pentagon budget because it has an effect on jobs in many congressional districts around the nation.   What is troubling about this budget proposal is that it removes the cutting edge of the military.  It proposes reducing the number of troops, the submarine service personnel, the destroyer fleet while only reducing the civilian workforce by 1000.  

Like any large organization the Pentagon grows moldy and calcified and ends up with a redundant workforce.  People are doing things simply because those things have been done in the past, not necessarily because they are useful now.  You can rest assured that there are more than 1000 civilian workers at the Pentagon today who don’t really do anything more productive than shuffle paperwork.  The military mission is not complicated.   It is to destroy things and kills people when the political will believes such action is in the best interest of the nation’s security  How much money is the Pentagon spending to implement the don’t ask, don’t tell repeal for example?  If that is the new policy so be it but do we have to spend money on training and sensitivity programs for that policy.  The money spent by the Pentagon should be audited with one focus.  Does this program or procurement put good weapons and bullets in the hands of our troops, give our airmen the best fighters and bombers to accomplish their mission and provide the Navy with the resources to scare the hell out of tin pot dictators and wanna be tyrants around the globe.   The other expenditures should be eliminated. 

The Pentagon budget could be cut even further in the opinion of olcranky than that proposed but it should be done with the above mandate.  We should allow the various military establishments decide the cutting.  Give them a set budget and tell them to pick what they really need to get their job done.   They can’t have every new “toy” that comes along.   Let them decide how many civilians they really need to assist their operations rather than the politicians.  The politicians will always aim high on procurements and personnel simply to “bring home the bacon” for their constituents back home.  We have to trust someone with making the monetary decisions for the military.  Let the politicians give the cap as they should under the
Constitution but then let the military allocate the money where it is most needed to accomplish their mission. 

The military budget will still be large regrettably for years to come in all likelihood but it could be reduced significantly.   Cut the civilian pork and we all can have some bacon back home.

Please recall that we had a very small military budget during all the 1930’s.  Our armed forces were minimal and thus the costs. It was a great savings at the time.   The issue is though, how did that work out for us in 1941?   www.olcranky.wordpress.com

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VAT Taxes And Fat Government

Well, the unofficial word is finally out now that the current administration is going to pursue the VAT tax strategy to raise even more revenues for Government, Inc.  Under Obamacare and Obamanomics there is no question that taxes will increase dramatically unless other measures are taken to rein in government spending.  Volcker may not be an “official” spokesman for the administration but he is no doubt the straw man for this proposal.  He has been close to the White House and that guy in it for a long time now.  He won’t be throwing out such comments about the need for a VAT without having been given the silent nod of approval to see how well the populace would salute that new flag on the pole.  Plus if you start talking about it , it becomes part of the dialogue and a resigned acceptance begins to seep in.

Of course the government needs certain revenues to operate.  That is obvious.  The first priority should be to discuss and reach a consensus about what the government should be funding and then how much needs to be spent.   Who would want to defend the current Internal Revenue Code?   It is a mess and a true burden on the people and the businesses that supply the jobs for the people.  Many would be more than willing to consider a new method to raise revenues for the government including a type of consumption tax like the VAT,but, but, but that would have to be in exchange for a complete elimination of the current Tax Code, lock, stock and barrel.  Take away all 70,000 plus pages and all those tens of thousands of additional pages of Code regulations and make a fresh start.

Of course with the VAT you will end up with thousands of pages of definitions about what something is and whether it can or cannot be taxed.  That is because to keep it progressive as the left will insist upon, you will have to exclude certain items from the VAT, such as, food, maybe a certain amount of rents, some clothing, etc.   Lord only knows what the “etc” will be.  No doubt it will be an extensive list and then comes those tricky definitions that every special interest group in the world will be trying to craft to protect their self-interest.  Can’t say as I blame them.  For one thing who wants to keep up with all that paperwork that will be required by business to account for and report the VAT taxes due?

Regrettably we all know that the Internal Revenue Code will not be eliminated.  The VAT will be an additional tax to be borne on the backs of the people and a restraint on the growth of business.  It will still come with all those new definitions and regulations.  Of course that VAT will be a new tax on the middle class in spite of the repeated promises of the current administration that they would not have their taxes raised and indeed would receive only tax reductions from the Administration currently in power.   Taxing folks on what they consume with a VAT wouldn’t be all bad because its operation would tax the “wealthier” more because they would consume more.    If the Income Tax were gone you wouldn’t even have to file a return.  That would be nice.   The tax lawyers and accountants would be looking for new specialties. 

That VAT would be a percentage of the GDP and even after you eliminate all the government spending and the exemptions you would be taxing probably 5 trillion dollars worth of transactions annually.  You can make your own estimate from our current GDP of about 14 trillion.   The VAT will probably start pretty low but then be increased by subsequent Congresses as the appetite for more money for government programs grows.  We can’t even make the federal government workers take a pay cut because of their political clout even though they earn much, much more than their private counterparts, why do we think we will ever rein in government spending.  Remember when the Income Tax amendment was first proposed the fellow who said it should be limited to 10% was laughed out of the room. 

It has become a cliche lately that we are becoming like Europe but the cliche does appear to be accurate if these proposals along with all the other expansions of government are implemented.  Cap and Trade, the health care law, EPA rules on carbon dioxide emissions and the tax increases on everything that moves, breaths or exist all combine to turn us in that direction.  Look at their situation, chronically high unemployment because employers are so reluctant to take on new employees, very slow economic growth, and little innovation.  Yes, they have some innovation here and there like Nokia or the Hadron collider but it is paltry compared to the history of the US.  Nanny will be there to look out after us and guide our every step through life but it seems a drab and dreary life to many of us.  It will be a safe secure existence without any spark of inspiration or joie de vivre.  Welcome to our Brave New World.

Give me my free health care, my free education, my subsidized housing and mortgage, my food stamps and my free lunch.  www.olcranky.wordpress.com

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Right Stuff Wasted

If you haven’t read the book you surely have seen the movie “Right Stuff” about our early astronauts. You also have seen “Apollo 13” at some point. Those movies and books do a great job of capturing the essence of what it is to be an American and our national psyche. We have from the inception of our nation been a people with a stirring, a thirst for exploration, innovation and risk taking to not only see the horizon but to seek out what lies there. Our earliest settlers were never content to sit on the coast and be fishermen. Our nascent merchants and traders sought out new markets and always were on the frontier of invention and development of the engines of enterprise and science.

It is not by accident that we are the land of Franklin, Edison, Bell and Salk. Yes, other nations have produced their great men of the sciences and arts and explorers. But our passion for looking for more, seeking more, searching for more was a group attitude. The whole nation rejoiced in Franklin and his achievements and we were proud of Edison and Bell. Some would say it is only because we were blessed with great natural resources that we always achieved so much and reached out even onto the stars. But that would be wrong. Africa is blessed with more natural resources than any continent on earth and it and its people never achieved any great advancement. They were not seekers and searchers. Their curiosity ended at the village walls or the scope of their hunting range. We imagined what might be and what might lie beyond the next mountain range or the next industrial advancement.

Other nations had a few men who worked on the airplane but it was the Wright brothers who made them fly, really fly. Some thought the telegraph was merely a play toy of the rich and that you could communicate by land mail anything needed. Others saw it for what it was and knew that knowledge had to be communicated and done so quickly. Many thought rockets were interesting amusements for the idle dilettante but our Goddard took it to a new level. Von Braun admired him and took much of his inspiration from him. Regardless of the competition of the Cold War it was not surprising that the US became the leader in space exploration. That type of endeavor was indeed our destiny. We made those explorations, of all kinds, our destiny. We believed that there was more to learn, more to see and more to know if we kept pushing the limits of our knowledge and were brave enough to dare and challenge the unknown.

When Neil Armstrong stepped on the Moon it was an American achievement. We all felt a part of that great adventure. It was one more footstep in the tradition of Lewis and Clark, the Mountain Men, Powell, and our great barons of industry and the science lab. We have historically had the attitude that if we can dream it, we can do it. Those great and sometimes seemingly impossible dreams are what has made us great. We are not the most populous nation, others have the equal of our resources, but none to date has been able to match the American “Can Do” spirit. That has been our catch phrase for generatioins.

The recent announcement from the administration to cancel our Moon exploration program is sad. That also means the cancellation or generational delay of our hopes to visit Mars. We need the Moon as the staging base for that venture to another planet. Lord knows we have budget problems of staggering and unimaginable size at this time and our Government, Inc. boys need to rein in the spending by huge amounts. There are plenty of areas where we are spending billions to support more government employees to be union members to support the Democrats who in turn will give them largesse with increased salaries or jobs. They make way more than the private sector already. The affront here is that the buget cut to make political hay and tout paring the buget is a direct attack on the very spirit that propels Americans to greatness. Cut the department of education, commerce, interior, labor and yes, even the civilian side of the Pentagon but don’t cut out our heart.

Attitude and pyschology are important. Take a look at the stock market these days with all the uncertainty about the direction Washington will take. Our adventurous spirit is the well spring of American achievement. Who the hell gets inspired by another few thousand paper pushers at the EPA or OSHA or Commerce. The current administration really doesn’t understand what we are or who we are. This decision is a retreat; it is a retreat not merely from space exploration but it is turning our back on the very animal spirit of the nation. If the question was asked with your next income tax return “Would you like to designate 2% of your taxes to the space program?” I have no doubt that the money would pour in. As an aside it would keep and create jobs, lots of them and that is a announced goal of the administration. What good will all those social programs like food stamps and welfare and unemployment do us if we are have lost our heart to dare, to seek, to attempt the not-yet-done? We might have food, shelter and clothing provided by Nanny government but we will be drudges and aimless souls seeking only the comforts of the moment. Our history has been one of stepping out of the comfort zone. We can ill afford to turn our back on our historic spirit. When we lose that spirit we will have already become second rate and ordinary. We will not be a shining city on a hill but a hovel in a swamp.

It is interesting that new phrases pop up with the media, prompted by the Administration to describe some of our current financial dealings. A year of so ago all the borrowing to finance every dream project of the Democrats was called an “investment”. You will note now that the new phrase to decribe the overwhelming borrowing of our government is referred to as “selling debt”. Now that is a new one. Gee, I didn’t know that debt had a value and you could sell it. I guess I am a lot richer than I thought. I can sell tons of my debt. Why don’t they simply say what it is–borrowing money, living on credit, asking creditors for even more money? http://www.olcranky.wordpress.com

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Stocks Slump, Washington Shrugs

Since the election last fall the market has plunged farther and faster than many  would have anticipated.  About half the country liked the new guy and you would have thought that they at least would have been optimistic enough to put their money where their mouth and votes were and invest in the new administration’s economic proposals.  But then the proposals started emerging on an almost daily basis and lots of people decided to remain on the sidelines or sell.  More than 55% of American households do have ownership in the stock market.  That is millions of people.  More than half of all people earning over $50,000.00 a year are invested in the stock market.  The slide in values has only accelerated after the inauguration.  Does Washington care?  From the public responses so far it would appear that they don’t.  The more that Wall Street diminshes the greater the power of  Washington. 

The new guy clearly believes in big government and an ever expanding role of government in every aspect of our lives including the economic affairs of companies and individuals.  It is scary that Washington has now become the center of economic policy and investment strategy.  Politicians are making the fundamental decisions regarding which industries will thrive or survive and which are to be punished with higher taxes or more onerous regulations.   It is daily becoming a centrally planned economy rather than one that is composed of thousands and millions of individual decisions made by employees, employers and investors.  

The lack of confidence of investors is palpable at the moment.  Why should they be confident?  The governemnt is spending without regard to any sense of responsibility and proposing regulations like cap and trade that will cost hundreds of thousands of jobs and impose hidden taxes on all consumers.  It is not an exaggeration to say that everyone who uses gasoline, runs the home dryer, buys any product that uses plastic, or buys groceries will see the cost of these and virtually everything else rise dramatically in the very near future if the proposal is passed.   You may have cleaner air, maybe, and who knows the temperaturs might cool (unless the Sun has other ideas) but you well could end up living in a hut hauling drinking water from the neighborhood well.   But not to worry the Government will pay for the hut and the water will be free. 

Many years ago when I had nothing invested in the market I still paid attention to it.  I believe most people pay attention to it today whether or not they have money invested in stocks.  For years I simply didn’t have any extra money to invest but I knew the health of the economy affected us all and did have a bearing on my life.   I wanted the market to do well and for people invested there  to make money, lots of money.  I think the current administration only wants to see a “weak” Wall Street now and forever.  It is a competitor for policy direction of the economy, almost like another political party.   Having the people afraid of Wall Street encourages many to look even more to Washington for the solutions to all their troubles rather than to the private market place.  That suits the pols in power now just fine.  They do want a dependent people.  Those types are malleable and make perfect and loyal serfs. 

You have noticed how the Washington gang talks every day, rolls out new ideas and budgets, proposes and travels around constantly and the market continues to drop.  There has been nothing so far from the new administration that would enthuse investors to believe that private enterprise is going to thrive and be able to create the new jobs we all need.  I truly think those pols believe they can strip the so-called rich of all their wealth and redistribute it through their power and dominate the economy and the people for as far as the eye can see.    I urge you to take your own serious look at the market.  It is not only one segment of the market that is suffering but it is wide spread.   Financials are falling off the chart; Citigroup is now under a dollar per share.  The oil and gas industry is being clobbered and that is an industry we desperately need to function well for many years to come before alternatives become viable.   Coal?  Dying, and remember that coal provides roughly a quarter of all electricity power in the country.  Health care companies that so many thought might do well under the new guy’s proposals are collapsing, including the pharmacueticals.  It is very very expensive to do research and development for new drugs.  Soon we will have government bureaucrats in charge of that it seems.  Autos will be a government subsidized industry forever to prop up the unions and a drain on the economic health of the country.  The list goes on.  If you find an area that is doing well or you predict will do well let us all know so we can invest.  Millions will appreciate your advice.

The recent budget reveals everything you need to know about the intention of the new guys to dominate American economic life and therefore our very freedoms.  It is a clear blueprint of what they want to construct.  It doesn’t have anything in it to promote private enterprise, indeed it hampers or punishes private enterprise.  That is not good for the bus driver, farmer, doctor, painter or even those pointed headed economists.   The debts that will be accumulated under the budget proposal will be so staggering that the argument that only Government can deal with the economic crisis will continue in finitum.  The government is creating a problem so it can cure the problem.  How long will we let them get by with that?  

Many say that the new guys inherited all these problems.  True to a great extent.  But market decisions are not made on last year’s news.  Markets are all about the future, never the past.  When the market sees the direction of the gang in Washington, it shudders.  The continuing drop in market values is NOT due to past problems.  If the market liked the monetary, regulatory and fiscal proposals it would at least hold steady and more likely have been climbing.  It doesn’t like the picture of the future and is cratering. 

Interesting to note that the head tax cheat at Treasury can’t even get his deputies and top assistants on board and  new guy will have to look elsewhere to meet his diversity goals in his administration it seems. Gupta is gone as Surgeon General.

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