A Fundamental Problem...

One of the stark realities addressing U.S. citizens is the unwarranted, reckless excess governmental spending and never-ending printing of more US Dollars to supply this frenzy.

This CNBC.com article was passed on from my good friend Andrey, in Moscow, Russia:

Jim Rogers talks commodities at the World Money Show in London.

"The dollar's days as the world's reserve currency are numbered, Rogers said at the World Money Show conference in London.
The greenback faces serious devaluation as spiraling national debt and a worsening economic crisis undermine it, he said. America's growing debt problem is "out of control" and Federal Reserve Chief Ben Bernanke's strategy of printing money is a "terrible policy," he said. Bernanke "does not understand economics, he does not understand markets … he is going to run those printing presses until we run out of trees," he added. "

Here is the link to the full article: http://www.cnbc.com/id/27717135

Perhaps a bit dramatic, but the cause for concern is very real.

I will state this simply: If you can identify a government representative (President, Senator, House Rep., etc.) who insists on continuing to spend and print money that the US Treasury doesn't have, then you also have identified an enemy to you and your family, as well as an enemy of the State.

We now see how there is absolutely ZERO visibility on the TARP Bailout. They simply carved out $750B to spend as they see fit with absolutely no accountability from Congress nor the recipients of said bailout.

It is time to start bringing these enemies and their failed policies to the forefront. We need to determine a course of action to liberate this country (once again) from Taxation Without Representation. It is not King George we should worry about this time, it is George W. Bush, Barry Obama, Nancy Pelosi, Harry Reed, and Ben Bernanke... Can you identify any other enemies of the State? It's like shooting fish in a barrel, give it a try!

Geo. W. Bush's fiscal policies (as well as that of the US Congress over the last 8 years) speaks for itself: It is a national tragedy. However, if you think a vote for Barry Obama was a ticket to freedom, you are sadly mistaken. His wanton spending policies and need for money that doesn't exist will be the capstone to this failed fiscal methodology...

Time for this to end...

Best,

Mike

On "Hope and Change"...

Friends,

I have been asked a lot over the past week about "why don't I give Obama a chance?" and "what if he does turn it around?", etc.

First, let me ask a few questions: If you were flying on a commercial flight would you want a pilot who "hopes" he can land the aircraft? Or would you prefer to have one who knows he can?

Would you go to a heart surgeon who "hopes" he can make a "change" for the better with your arteries? Or one who knows he can cure you?

In the corporate world, executives are not selected for their ability to "hope for change", they are selected for their ability to execute a measurable, demonstrable improvement. If they fail, they are fired - simple as that.

Somehow, some have allowed themselves as voters to be convinced to let someone "hope to change" the Nation's economic woes and lack of ability to govern itself effectively and responsibly. We "hope" he will do some good... What about making this "hope for change" a mandate? Or is that too much to ask of somebody? Are we going soft on on an even softer candidate? Seems to me that we are...

As to the original questions posed by many: "Why don't I give Obama a chance?" and "What if he does turn it around?"

My rationale is simple for what I forecast will be (another) failed administration... Follow me for a moment:

We are, by the estimation of most credible economists, heading for receding growth as a country as measured by GDP (forecast to decline over the next two years to as low as 1.8% or even 1.5% growth). Yes, that is a recession, folks...

Given a declining GDP, we can also assume that Corporate Tax, Capital Gains, and, likely, Personal Income tax revenues to the US via the IRS/treasury will be on the wane (assuming the Tax rates are left the same).

Now, if you accept that fact pattern, let's examine the new administration's platform going forward and see how it interlocks with the above logic. Barry (and his crack team) have promised the following:

• Personal Tax rates will increase for Personal Income Tax rates at somewhere around $250K per annum income. ($97K if you consider FICA a Tax - I do)


• Corporate Tax Rates will increase, to include F500 level firms down to small business levels.


• He will initiate a sequence of "Bailouts", "Emergency Measures", and other Income Redistribution programs. (We have already seen evidence of this new approach to capital destruction via the current Congress).


• He will increase spending and programs without regard to current record Federal Budget Deficits and a US Debt to GDP ratio nearing 50% (Wow!!! =-0)

So, given this stated policy of the new administration and the current global economic situation, it leaves us with only a couple possibilities:

• Possibility 1: Barry will raise taxes, as promised and place additional burden on jobs creation and capital investment into new business opportunities. This, coupled with no stated desire or plan to cut other federal-level expenditures to lower the record expenditures of the current and future Congress, both of which will exacerbate the Federal Budget Deficit and National Debt, while further weakening the US Dollar and the Nation's economy.


• Possibility 2: No (or few) tax increases and moderate cuts on Programs and Bailouts. Not very likely and this would, of course, render Barry a liar on his campaign pledges. Not a likely scenario, but we must consider the possibilities!

So, possibility 1 is essentially a roadmap for failure without a real chance for "Hope" of "Change". His only real hope is to have massive shift in the US (and Global) Economy into a real growth situation, such as the one Bill Clinton experienced in the 90's. That likelihood is, however, outside the boundaries of current mainstream economic thinking.

So to answer the questions posed: "why don't I give Obama a chance?" and "what if he does turn it around?"

I don't give him a chance because he has not given himself a chance for success. There will be a combination of lies and failed policy (sounds familiar, no?) as a result of his flawed and misguided plans. He won't turn it around because the building blocks for success are threefold and Barry misses on all three counts:

1. Restore the US dollar's strength through budget deficit reduction and US debt payback.


2. Reduce all taxes to stimulate economic growth.


3. Create visibility into Congressional Spending and mandate a balanced budget and a path to US Debt reduction.

Barry sees it differently and the country will suffer as a result.

(With "Hope" for the) Best,

Mike

The Street Votes: "No Confidence"

Short post here...

Today's Market reaction to the news of Barry Obama's victory was swift and sure:

"The stock market posted its biggest plunge following a presidential election as reports on jobs and service industries stoked concern the economy will worsen even as President-elect Barack Obama tries to stimulate growth.

The S&P 500 tumbled 52.98 points, or 5.3 percent, to 952.77, erasing yesterday's 4.1 percent rally. The Dow retreated 486.01, or 5.1 percent, to 9,139.27. The Russell 2000 Index of small U.S. companies fell 5.7 percent to 514.64. The MSCI World Index of 23 developed markets decreased 2.5 percent to 982.98. "

Here is the complete article from Bloomberg:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aj_ayFUP0riQ&refer=home

To be generous, there were also other factors for today's drop, but the "Hope and Change" promised will clearly not be immediate.

Best,

Mike

A Confederacy of Dunces...

...or League of Morons?

Hard to choose between John Kennedy Toole's classic Southern Novel or John Malkovich's brilliant character's utterance in The Coen Brothers' film Burn After Reading.

I'll choose the latter as I can still hear Malkovich uttering the words "League of Morons" with such sublime disdain... However, though you can choose phrases, you are stuck with the results that the League of Morons, otherwise known as 52% of the voting populace of the US who cast a ballot for Barry Obama (who will quickly inherit the "worst President in the history of the USA" mantle from George W. Bush).

How can you say that, Mike? He went to Harvard! He must be smart! Yes, and so begins the many parallels between the last president and Barry O.

Let's explore some of them, shall we?:

Each are readily able to gut their opponents in back alley inter-party dealings and sell it under the guise of "party unity". Just like a young Dubya's crew did to McCain back in 2000 in New Hampshire ("Live Free or Die" State gives Obama its delegates? Are you kidding me? Time to recall the State motto and press some new license plates, no?!?), so does a Barry-infatuated Democratic party gut the Clinton's in 2008. More party unity you ask, well let's explore the world of Will Bower, founder of PUMA (Party Unity My Ass) in this CNN article:

http://politicalticker.blogs.cnn.com/2008/11/04/puma-founder-obama-is-democrats-bush/

"I see Barack Obama as essentially being the Democratic George Bush," Bower said. "It's a reactionary movement. People like John McCain and Hillary Clinton represent mores stability and sensibility to me."

Gotta love that kind of "Hope and Change"!

But let's get to brass tacks now... Until now George W. Bush presided over the largest increase in Federal Spending in history, destroying the Clinton-led surplus created in the 90's. Shameful, at best, this mismanagement condemns Dubya to the RINO (Republican in Name Only) Gallery of Buffoons. Sure the tax cuts were a good start, but not coupled with the spending debacle.

Now, the "League of Morons" (or did we decide on Confederacy of Dunces?) has elected a dilettante, lackluster, small-town journeyman as President of the United States. His main approach to solving the woes of the US? Raise taxes, increase federal spending, and add millions of illegal aliens to the citizenry further impacting the federal benefits depleted state. raise taxes in a Recession? Are you kidding me?!? Harvard?

Let's see... The Rookie will stride into the Oval Office, high on the glib press adulation and fresh full of ideas from recent meetings with Oprah and Gail (Haven't seen much of Steadman these days...) and will promptly be worked over by Nancy Pelosi and Combover Joe, representing the House and Senate to sponsor and sell the American Public a few more of these inane US Mint printing press exercises called "Economic Stimulus Packages". Why, Nancy is already talking about upping her $150B version to $500B. WTF?!?

Can someone please explain to me how more Treasury Bond issuance will strengthen the US Dollar and assist the US Taxpayer? Oh yes, that's right... Barry will shift the tax burden to the large corporations, the high income and net worth individuals, and small business owners and they will happily absorb the demented budget overruns that continue to be signed into law by these slaphappy, drunken-sailor Democratic lawmakers. Well, here's the thinly veiled secret: Corporations will find even more creative ways to shuffle profits and relocate earnings and HQ's, individuals will defer capital gains recognition and defer salaries, and small business owners will... Hmmmn... Well, they will just have to take it on the chin since they can do neither of the above. Well, they can always just cut costs by reducing employee headcount.

A happy tale, yes? Well buckle your seat belts, it gets much worse: The budget deficit is now 7% of the US GDP (most respectable economists would classify 5% as "code red"). The national debt is 38% of GDP, not the highest by percentage in history, but certainly the highest in absolute terms...

Further, The Economist Magazine of Oct. 25th 2008 (not the most Conservative publication in the Universe!) reports the following, "... much of the deficit is still financed by foreigners, and global capital flows are now being rocked by the financial crisis. The next President will no doubt find deficits of 7% or more of GDP sobering enough. Without a plan for cutting that high figure back once the financial crisis and the recession pass - and with the inexorable climb in Medicare and Social Security costs as the Baby Boomers retire, now underway - investors may need to be compensated much more than they are now to keep on buying America's debt."

So, Barry has either of two choices: renege on his numerous campaign promises or further stall the recovery of this country by adding additional debt to the heap... Oh, the Joy!!!

So, we look to new vision and leadership as the mirror ball's glow dims and the smoke clears (the smoke from the machines, not the smoke Barry has blown up your ass... and not the smoke from the 'base pipes the Confederacy of Dunces puffs on)... But instead of inspired visionary, we are faced with the same hapless, untalented, stuttering buffoon they gave us last time. So get ready for more OJT (on the job training) and more deer-in-the-headlights vacant stares as we plod along carried only by the momentum of the world's largest GDP (on the wither).

Have fun at the party tonight... It may be the last time in four years you will be able to smile!

Good Night and Good Luck!

Best,

Mike