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