Mr. President: Show Me Now

I am absolutely flabbergasted at what I am reading on the editorial pages of the newspapers as they turn on Obama one by one. What is fascinating is they view the failure of Obama’s policies as the failure of Obama rather than the failure of the policies. These policies should have worked. They didn’t. Therefore it must be Obama’s fault. He didn’t fight hard enough. He caved too often. He should have done more.

The reality is that, outside of closing Gitmo, Obama gave his left wing base pretty much everything they asked for: Obamacare, global warming regs through the EPA rather than through legislation. Although he didn’t get card check for unions, he sued Boeing for building a plant in a non-union state. He increased banking regulations…stymied oil drilling growth (notwithstanding rhetoric to the contrary), and gave them the most massive spending bill in the history of the United States the effect of which was to double the national debt. Hidden in that bill was every pet project his base ever wanted and was denied. Now the economy is headed back into recession, and there are no more bullets in the liberal gun except for MORE spending…and that don’t work!!!!

Here’s the dirty little secret for those liberal media types criticizing Obama for his failures. It isn’t just Obama’s policies that have failed. It is YOUR policies that have failed. You can’t spend your way into prosperity, tax the people who are generating the money, sue the companies that generate the jobs while slapping more regulations on them, and turn the health care system upside down through a bill which I believe will ultimately be declared unconstitutional, and then wonder where the jobs are!!!!!

Every twenty years or so America flirts with liberalism and progressives hoping for that utopian life painted by these folks. It’s not there. It’s a lie. Life is hard. Government can help ease pain and nudge the country in various directions, but it cannot be the be all and end all of life as we know it without smothering the country using coercive efforts to get people not to do what people normally do naturally. If Prohibition taught us anything, it may look good on paper, but the cure is usually worse than the disease. Another generation has now learned the facts of life, and moves back to what made this country great, individual initiative and hard work. Here is the golden rule of economics: If you tax it, you get less of it. If you subsidize it, you get more of it. Not a hard lesson to learn, but one that this country needs to learn over and over again.

I feel sorry of Obama. He physically looks bad. His lofty rhetoric doesn’t sound so lofty anymore. Hope and change are gone and replaced by despair and vindictiveness. The riots in England are a morality play showing where this country is headed. The credit downgrade is embarrassing. The death of the Navy Seals in the helicopter tragedy in Afghanistan brings into the question his self declared “right” war and his strategy in waging it (Here's a hint: Don’t tell the bad guys when you are leaving). His economic team deserted him. The one remaining, Tim Geithner, has lost all credibility. And now his media groupies are saying he didn’t do enough. What’s an Obama to do?

Pragmatic politicians would naturally shift to the center, but he is so dogmatic he can’t. So he is once again turning to his “political” abilities. He goes on vacation, then goes out campaigning. It won’t work this time. People have gotten sea sick following your head alternating between teleprompters. In the immortal words of Eliza Dolittle in My Fair Lady:

Don’t wait until wrinkle and lines

Pop up all over my brow

Show me now!!!!

Three Things the Government Can Do NOW to Save our Economy (and won't cost a cent!)

Whether we like it or not, America is the economic engine that drives the rest of the world. As of late, we have failed in our responsibility. As the country stood on the precipice of economic disaster in 2008, a knee jerk reaction elected a man who has no business sense, no business background, and whose political ideology is rooted in the social justice rhetoric of the 1960’s. Now our credit has been downgraded. The following stock market “correction” is investors voting with their feet, walking away from a deficit that has skyrocketed out of control and is perceived as being beyond repair.

I disagree. With the downgrade in our credit rating, further stimulus is a non starter. On the revenue side, the country needs tax reform, not tax reduction. That makes either of the approaches problematic. But there are three things the government can do that won’t cost us or it one solitary dime, and push the economy into overdrive.

1) Remove restrictions on energy production NOW. Tens of thousands of direct jobs, and hundreds of thousands of indirect support jobs would blossom within months. Drill here. Drill now. It would have the added bonus of driving down gasoline costs, keeping the money here at home instead of being sent to OPEC. This is a no brainer, but Obama’s EPA director said this morning that she is only interested in training for green jobs. Like all others in the Obama administration, the EPA is clueless.

2) Rein in the EPA so manufacturing can experience a rebirth in the country. Speed up the approval process. All permit rejections and/or new regulations must be subject to a test of reasonableness. The loss of tens of thousands of jobs to save some obscure snail is not reasonable. Congress created the EPA, and Congress can limit what it does. Any bets on this one?

3) Repeal Obamacare. It is a disaster. The general public doesn’t know what is going on because it is hidden by an ignorant and/or corrupt press. Obama has given compliance exemptions to all of his cronies, but not to the average small businessman, and not to you and to me. As business find out what’s in this monstrosity, many are making decisions to eliminate health care as a benefit and pay a penalty, or simply close up shop. THERE IS NO FREE RIDE. Obama lied to the public as to what this bill does, and he will continue to lie until it is operational and bankrupting businesses and the nation. Eliminating Obamacare has a shot. The Supreme Court will take it up this fall with a ruling expected as to its constitutionality next spring or summer ( I believe they will kill it). The debt commission this fall may address many of the more offensive parts of the bill. And if the Republicans take the Senate and the Presidency in 2012…bye bye bye Obamacare in 2013.

These three things will add nothing to the national debt, and stimulate in business in ways that will bring a windfall into the US Treasury. If you want to give them a steroid boost, eliminate the capital gains tax and the money will rush into this country like water through a broken dam. Capital always finds the easy sweet spot.

But that assumes Obama will finally figure out his whack job Keynesian economics didn’t work. And if you believe he is capable of doing that, would you be interested in a bridge in Brooklyn?

The Triple Noose Around America's Neck: OPEC, China, the EPA

By the time you read this, Congress may or may not have passed legislation relating to the debt ceiling and budget cuts. All of this is interesting, but it is the symptom and not the problem. All of the cutting and raising and easing doesn’t mean a thing. The problem is energy, China and the EPA. Until those things are resolved, you might as well bend over and kiss your behind goodbye.

The root of our problem is energy. Instead of listening to common sense, we have buried our heads in a bunch of environmental crap and junk science global warming.  Recent statistics compiled by NASA show that computer models used by the United Nations predicting global catastrophe are based on heat dissipation figures that are pure fiction.  NASA has the real figures, and those UN models are not even close. The transfer of money from the United States to OPEC is in excess of $1 billion/day. It is the largest transfer of wealth in the history of the world, and we let it happen while listening to every whack job do-gooder that comes down the pike rather than our good common sense. Until we become energy independent, including opening up the country for drilling, establishment of wind farms, building nuclear energy plants, solar energy production, and building an infrastructure to allow for the development of natural gas, hydrogen, and electric powered cars…NOTHING WILL GET BETTER. We cannot continue to allow the greenbacks printed by our treasury to be converted into petrodollars controlled by our enemies.

China is not our friend. Is it a military competitor like the Soviet Union? No. It is a commercial predator that has systematically horded most of the world’s cash reserves using slave labor and violating human rights. It has violated every financial convention there is by manipulating its currency. And it doesn’t even deny it!!! It just says it will address the problem in due time. ENOUGH. What isn’t going to OPEC is going to China. America…wake up.

And one of the reasons everything is going to China is what little is left of our manufacturing base in this country is being smothered by the EPA. The EPA is strangling us. The environment is the religion of the left, and used to punish those evil capitalists who are wasting the world’s resources. Horse manure! The EPA has turned into an institution geared towards wealth redistribution at the behest of the loony left. One volcanic eruption can spew as much junk into the atmosphere as all the cars in the world can produce in year. If you want to America to prosper once again, the EPA has to be reined in as it starts to implement by fiat the cap and trade regulations defeated by Congress. FYI, China has surpassed the United States in energy consumption, yet you won’t hear the do-gooders complain about that. No, that is still the worker’s paradise. If you think for one minute China gives a rip about the environment, think again.

America has turned into a pauper nation through bad energy policy, bad trade policy, and bad environmental policy. No monetary or fiscal policy can fix the problem.  There is no money left. It’s time for America to wake up before it is to late. I have seen the enemy, and it is us.

Nixon's the One!

In one of the more interesting television commentaries last week, CNN pundit Fareed Zacharia had an interesting take on who is responsible for the nation’s ills: Richard Nixon. I almost fell out of my chair. He claimed that the Watergate scandal changed the culture in Washington. Congress enacted all of these sunshine and disclosure laws requiring the people’s business be done in the light of day instead of in the smoke filled room. All of this disclosure means the public can see how its representatives are actually voting and conducting themselves. This prevents said representatives from obtaining compromise in private where that compromise might cost them the next election back home. Really?

Because I am a true believer in the smoke filled room and power politics, he may be right. This country has moved steadily towards ideologically pure political parties for the past thirty odd years. If you do a timeline, you will probably see the trend towards polarization picked up speed with Nixon’s resignation, and the Carter’s election after Ford pardoned Nixon. That, plus residual distrust in government after the Vietnam War, led to not only institutional changes in Congress relating to how it conducts business and lobbying rules, but to changes in the how Presidential candidates are nominated.  Out with the power politics and in with those annoying primaries where people actually get to vote.

Ideologically pure political parties have long existed in Europe. It works there because the Europeans use a parliamentary system where the victorious party takes control of the entire government. It sinks or swims accordingly. If they don’t do the job, they get the boot. We don’t have that kind of a system. We have a shared power system which can end in deadlock and gridlock. Whether that is good or bad is in the eye of the beholder. The current deficit debate is the result of that system.

I’m not sure anyone wants to go back to the days of cloak room politics. On the other hand, it DID move politics towards moderation. Party bosses picked who they thought could win. In Presidential politics, the nomination would not be clear sometimes for several days, and often not until two in the morning the night of the nominations. Not now, when it’s time for the party convention, you know who the nominee is going to be by simply adding up who won what primary and caucus. Boring.

The voters in the primaries tend to be ideologically pure activists, especially in states with closed primaries. This is aggravated by the movement of many voters from political party identification toward being deemed Independents. That may be noble on the surface, but the vast number of independents who don't participate in the primary process are left with a general election choice of either someone from the right or left more distant from the center than the Indpendents might wish.

At the legislative level, members of the House are particularly open to scrutiny by the political extremes in his/her party that can run a candidate against the incumbent in a primary. And they are up for re-election every two years making them vulnerable when the heat is on. It’s tough to do what’s right for the country when it may or may not coincide with ideologically pure voters at home.

On the other hand, this is a republic. Our representatives are supposed to represent our views in Washington, good, bad or otherwise. That is the eternal dilemma for all politicians. Should I vote my conscience or vote to please my constituents who might not have access to information that I have? That's a tough question.

Political theory aside, its good to know that as our credit rating is about to be downgraded, as we are about to default on our debt, as we fight three wars, as we prepare to deal with Obamacare, we know who to blame. Nixon's the one!  Damn...I should have voted for Hubert Humphrey!

Hidden Inflation: Gold

One of my clients came into the office last week faced with what she perceived to be some financial issues. She was a woman in her early sixties who lived alone, and had run up credit card debt of approximately $10,000.00 and was having difficulty in paying it back. She was receiving unending phone calls and letters. She came to me contemplating bankruptcy.

We sat and looked at her assets. She rented an apartment. She owed money on her car. She had some savings but was reluctant to wipe herself out. On a hunch, I asked her about jewelry. What did she have? I told her to go home and take inventory.

When she returned a few days later, she had a smile on her face that went ear to ear. In her jewelry collection she had numerous gold chains, rings with fake stones, bracelets, earrings, most of which she hadn’t worn for years. Many of the rings were 18 carat, and she told me many of them were forty years old, heavy, and "butt ugly," her words, not mine.

She took them to her local gold dealer, and she walked away with $13,000.00 in cash. Her jewelry box is now substantially emptier, but her debt is paid with some left over. I asked her what she did with the other three grand, and she told me she went and bought some inexpensive costume jewelry but was stylish nonetheless so she could actually wear it.

Those of us who live in the real world, not the Washington DC world, know that there is inflation in the economy. We see it at the gas pump. We see it in the grocery store. We see it in clothing costs. Of course, the government says it isn’t there. What can I say?

But the real inflation is in precious metals. Gold is pushing $1600.00/oz. Silver and platinum are trading at all time highs. Diamonds are going through the roof. If you want to know what your money is worth, a stack of 18 one ounce American Gold Eagle coins is worth $28,000.00. THAT should give you pause. You can hold those one ounce coins in one hand. That is what your money is worth, and it ain't much.

We should be disturbed that countries like China and India have been steadily moving their reserves out of the dollar and into commodities, and making noises about returning to the gold standard in order to protect the value of their assets. Nobody wants to hold debt denominated in currency that is being devalued. Printing currency and excessive debt, whether held by individuals or governments, is inflationary.

While my client’s story is light hearted and interesting, it is also a cautionary tale. Inflation is insidious, especially when it is occurring in an area in which most Americans don’t have any actual experience. Average Americans are not familiar with precious metal commodity markets and don’t hold gold as an investment.

The markets are out of whack. If the world moves to a new reserve currency based on gold or a basket of commodities, we are screwed in a major way. The financial crisis of 2008 will look like a walk in the park.

Energy: The Hole in the Dike

While Obama and Boehner spar over raising the debt ceiling, unemployment continues to go up. While the debt is a small part of the problem, the real problem goes unabated. Once more with feeling, it is energy, energy, energy.

Picture the United States in the 1960’s as a vast reservoir of money sloshing around North America. Then OPEC comes and pokes a hole in the reservoir by violating American anti-trust laws. The money starts to leak out of the reservoir. First a little bit, then more, then even more. By the 1970’s it turns into a crisis, and the government makes a half hearted effort to the plug the hole out from which American money is leaking…except now they are called petro-dollars.

Rather than actually fix the problem, America looks the other way as the government sticks a finger in the dike rather than permanently fix the leak. Over the years, the leak has become bigger and bigger, and the money continued to flow out…until there was no more.

Financial derivatives may have been the tinder that started the financial in September of 2008, but it was the complete draining of money from the reservoir to OPEC that prevented the fire from being put out. The reservoir was empty.

But once again, rather than fix the problem, the Federal Reserve opened the spigots and tried to fill the reservoir with water by pouring money into the dry lake bed. Funny thing, because the hole was still there, the money flowed out of the reservoir as fast as the Federal Reserve could pump it in at the other end. The money was worthless.

And now there is no money. The Fed shut off the tap. And the nation is broke with a national debt equal to the entire GDP of the nation. And so long as we are energy dependant on OPEC, things cannot and will not get better. The reservoir cannot refill itself so long as the leak is still there. We send $1 billion/day to OPEC to pay for our oil. The figure is unfathomable...and the EPA blocks all efforts to plug the hole.

It is fixable.  We can do it.  But our political class seems to be dealing with symptoms, badly I might add, rather than fix the problem. While the national debt and the debt ceiling are important issues, neither can be fixed without first becoming totally energy independent. It would keep the money at home.  The reservoir could fell again…and that would resolve most of the problems.

The largest reserves of natural gas and coal are in the United States. We have the capability of producing safe nuclear energy. The second largest reserve of oil in the world is in Canada, not the mid-east. And we haven’t even begun to touch oil reserves off shore and in Alaska.

Now it is time to cage the environmentalist. Challenge the nation to become energy independent within five years with infrastructure spending to support cars and trucks powered by natural gas, hydrogen, diesel, and electricity. Fund by selling energy bonds to the public, not to China.

This effort will create millions of jobs funded by Americans rather than the Chinese, and make us wealthy and prosperous once again.

It’s time to plug the hole in the dike.

Senate Bill 5

It is the lull before the storm over Ohio Senate Bill 5. The Democratic Party, with much aplomb, had its million signature march in Columbus whereby it presented to the appropriate state officials over a million signatures to repeal Senate Bill 5. Leading the pack were the Democratic Party representatives from the Mahoning Valley. They claim they are fighting for the middle class. That getting this issue on the ballot is a victory for the middle class.

How is this a victory for the middle class? To me, it looks like a victory for public employees. As it stands now, if the vote were held today, Senate Bill 5 would be repealed. On the other hand, when each of the component parts is polled, the public overwhelmingly supports the provisions of Senate Bill 5. Therein lays the challenge for the election. The Republicans must educate the public as to what Senate Bill 5 does. The Democrats must confuse the public with emotion and false information.

This is NOT a referendum on the middle class. At the base level, Senate Bill 5 does the following:

1) Outlaws strikes by public employees.

2) Sets minimum standards for employee contributions to benefit programs, including health care and retirement programs.

3) Introduces merit pay for teachers.

4) Eliminates binding arbitration by third parties in disputes whereby the third party can ignore the current fiscal situation of any government body in dispute resolution. It can’t force a township to put a tax levy on the ballot to fund a labor arbitration award.

5) Comparable salary determinations are eliminated, particularly in university situations. You can no longer base a salary on comparable pay including areas where the cost of living is substantially more than the area in which the university is located. You can’t look to a comparable wage in New York City, with the highest cost of living in America, to justify a similar salary in Youngstown, Ohio, which is among the lowest for cost of living.

Under Senate Bill 5, Ohio public employees will be treated exactly the same as current federal employees, and the same way they were treated in Ohio up until twenty years ago when public employees were granted the right to strike.

At the end of the day, the only folks who will benefit from the repeal of Senate Bill 5 are the public employee unions. And the rest of us will be left to pay the continuing rising cost of local government.

If you voted against the last county sales tax levy; if you voted against the last local police levy; if you voted against the last school levy; if you are tired of levies being place on the ballot over and over and over again after they have been defeated one, twice, and more…then you will vote to retain Senate Bill 5.

Given the history of levies in Mahoning County, my money is on Senate Bill 5 being around for a long time… a million signature march notwithstanding.