Wednesday, June 29, 2011

MSM Hoping for a Black Swan event...

This is why people question the MSM.  Their unabashed support of their supreme leader, Obama is bordering on lunacy.  Does anyone believe this drivel?  Really?  Obama and his cronies in the lame-stream media are putting all their "hope" in an economic black swan event, while their policies are doing everything to ensure none will happen.
The best thing for this economy will occur in November 2012 when this president is defeated.  Once he is defeated by a candidate who has a solid grasp of economic reality and knows that you have to squash Obamacare before the genie gets too far out of the bottle and current tax rates are made permanent, then the economic engine will at least begin to fire on some certainty.  As long as this uncertainty remains, we will be in Obama's Great Recession....

Here's the crazy article from the nearly defunct Time Magazine:

Getting Ready for a Black Swan

The biggest stock market surprise could be an unexpected economic rebound.
Successful investors take account of all known economic facts, but also try to be prepared for the most unlikely events. And as bad as trends look right now, it actually wouldn’t be impossible for the economy to surprise everyone with a rebound over the next 12 months.

Can you hear the the "hope" in the author words...?

Tuesday, June 21, 2011

Balanced Budget Amendment

I wrote the following in response to a Wall Street Journal Article: 

The Fiscal Pledge We Need: Cut, Cap, Balance

Congress has never failed to increase the debt limit. 

This makes having a debt limit functionally useless.

My fear of a constitutional amendment requiring a "balanced" budget stems from the fact that the historically the Democrats have controlled congress for most of the last 60+ years.  If Democrats are required by law to balance the budget, they will do so on the backs of the citizens.  No, I don't think now is the time to force a balanced budget amendment.  I do believe we must do the first two items on the list NOW.  However, I think there are several even more fundamental problems with congress. 

1) Term Limits.  The power of being a member of congress appears to be too much of a high for most of the members.  Once term limits are in place (6-terms as congressman, 2 as senator, but no more than 12 years for any combination) the heavy lifting can proceed, with full knowledge that despite their votes they can see the end of their political careers from their very first day in office.  Serving in congress was once considered a sacrifice that a person felt compelled to do out of a sense of duty to one’s country.  Now it is a get rich slowly scheme, where they spend their entire careers running for office and consolidating power & influence so that if they ever get booted from office, they’ll land in a nice cushy position with a favored constituent.

2) Abolish the income tax.  Everyone knows that you get less of what you tax and more of what you don't.  Everyone (mostly) also knows people ought to work and be productive.  So, why do we tax people's labor?  Taxes ought to be collected on what individuals spend.  Instead of a mammoth bureaucracy to police 330 million individuals, you would collect taxes from 10's of millions of businesses, most of which already have a tax collection/payment process in place because of state taxes.  The largest benefit of the system is not even the system itself.  It is the fact that congress would have no power to create special classes of people or provide special benefits for particular industries, thereby stripping most of their power.  This, in effect, neuters congress. 

3) Balanced Budget Amendment.  Now you can pass a balanced budget amendment because when spending gets out of control, then congress would have to sell increasing a tax on every individual, rather than only the current remaining 45% or so that still pay taxes.  This makes cutting spending the easier route to balance a budget.  

These three items will ensure the U.S.A., as founded in 1776 will continue to exist for another couple centuries.

Monday, June 20, 2011

Hold on your wallets, here comes raising food prices!

Corn Stocks Plunging to 1974 Low as China 

Adds Brazil-Sized Crop to Demand

By Whitney McFerron and Jeff Wilson - Jun 20, 2011 2:02 AM ET

Even a fifth consecutive year of record global corn harvests will fail to meet demand for food, fuel and livestock feed, reducing world stockpiles to the lowest in two generations.

This article is a perfect example of the lunacy of not including food & fuel in the government's official inflation calculations.  The number the government reports bears no resemblance to what people experience in real life.  Of course, I suppose there are the hand full of people, including the president, who have no idea what food and fuel costs because they never go the grocery store or the gas station. That is for their servants and the rest of us "little people".

The funny thing about this article is that it hardly mentions the relationship between corn and fuel prices.

Because of our (the U.S.) screwed up ethanol policy, some 25% of corn produced in the U.S. is used to produce ethanol.  The ratio of fuel used to produce ethanol to actual ethanol produced is 1:1.5 (meaning for every 1 unit of energy  consumed in production of ethanol only 1.5 units of ethanol energy are actually produced).  I suppose that sounds good to most people.  I mean if I could invest a dollar and get back a dollar fifty, who wouldn't do it right?  Wrong. 

In Brazil, the world's largest ethanol producer (& exporter) they make their ethanol from sugar cane.  Sugar cane produces roughly 7-8 units of energy for every unit consumed in production.  This is what has allowed them to become such a large producer/exporter.   Oh, by the way, the U.S. imposes a $.54/gal tax on all imported ethanol from Brazil, so you can forget the free market taking over.

In the meantime we subsidize our own inefficient production of ethanol up to $.45/gal!  (Note: that makes U.S. ethanol $.99/ gallon cheaper that Brazilian ethanol.) Yes, you heard me right, the U.S. government (USDA, actually, though you would think this ought to be handled in the Dept of Energy - but I digress) pays between $.10/gal & $.45/gal  to the ethanol producer as a Volumetric Ethanol Excise Tax Credit (VEETC), to the tune of  "$22.6 billion in ethanol subsidies since 2005. [With] Another $31 billion will be spent in the next three years."

So, here's the summary:

  • We are channeling 25% of our U.S. corn production away from food and export production to produce a product that;
  • is not very efficient to produce;
  • provides fewer mpg of fuel and;
  • must be subsidized to remain profitable while we;
  • exclude the importation of cheaper ethanol into the U.S. by imposing tariffs.
The result is corn prices expected to hit $9/bushel next year which will result in:
  • higher food prices for anything containing corn;
  • higher feed prices for protein producers (beef, poultry & pork) which will in turn;
  • force protein producers to reduce herd/flock sizes which will in turn;
  • make protein (beef, poultry & pork) more scarce and therefore much more expensive.

But, not to worry, our government knows how to control markets....  Those folks in Washington D.C.can run things better than a free market.  I mean they did such a great job with cash for clunkers.  

Sure they do...  Sure they do...

Besides, excluding food & fuel, inflation in remaining quite steady.  Just don't eat anything or use any energy....

Friday, June 10, 2011

This is a MUST READ by Thomas Sowell....

Seductive Beliefs: Part II

Thomas Sowell has been a very keen thinker on the conservative movement for decades.  I believe he has really hit the nail on the head with these very specific descriptions of BHO's stealth messages he spot lights in this article.

Here's just one:

"They say a picture is worth a thousand words. A photograph that should tell us a lot about Barack Obama shows him on the phone, talking with Israeli Prime Minister Benjamin Netanyahu.
Obama was seated, leaning back in his chair, with his feet up on the desk, and the soles of his feet pointed directly at the camera. In the Middle East, showing the soles of your feet is an insult, as Obama undoubtedly knows.
This photograph was no accident. Photographers cannot roam around White House, willy-nilly, taking snapshots of the President of the United States as he talks to leaders of foreign nations.
It was a photograph with a message. No one would have known who was on the other end of the line, unless Obama wanted them to know -- and wanted to demonstrate his disdain."

As Mr. Sowell so aptly points out, BHO knows exactly what he is doing.  He does everything for a reason.  He is not prone to go off script like "Plugs" Biden.  BHO's every move, every utterance is very calculated.   When will the MSM pick up on this?  (I know, it's a rhetorical question.)

Thursday, June 09, 2011

Is living in a "Post-American World" inevitable?

Back to the Pre-American World

Here's the skinny:  

"....if American abrogates its preeminent leadership position of the last 65 years, wouldn't the world look a lot like it did in the pre-American days of the 1930s? Then, a Depression-era United States was just one of many powers and reluctant to assert leadership abroad."

Here's some interesting parallel's - then vs now:

"Eighty years ago, a newly Westernized and anti-democratic Japanese powerhouse, in the fashion of today's rising China, was carving out uncontested Asian spheres of influence. An oil-, rubber- and iron-hungry imperial Japan claimed it needed more natural resources to fuel its industrial revolution, and so spread an authoritarian Asian co-prosperity sphere of influence as an alternative to alliance with an economically depressed and psychologically withdrawn America.
Most Americans then were tired anyway of overseas commitments. Our ancestors felt that their considerable sacrifices in World War I either had gone unappreciated or had solved little -- not unlike the way we are becoming exhausted by Afghanistan, Iraq and now Libya.
A newly confident, united and ascendant Germany was growing angry at other European countries. It nursed a long list of financial grievances over feeling used and abused. Sound familiar? A weak Britain and France had almost no confidence in their own declining militaries -- sort of like the sad spectacle of their impotence in Libya that we have witnessed over the last two months.
Much-vaunted international institutions, like the bankrupt League of Nations, were about as effective in the role of world watchdogs as the corrupt United Nations is today. Europe and America were emerging from the nightmare of financial insolvency.
The so-called international community cared as much in the 1930s about rising, aggressive totalitarian states in Germany, Italy, Japan and Russia as it does today about ascendant China or Iran. Millions of Jews, then as now, heard crazy threats of their annihilation, and desperately -- and in vain -- looked to the protection of the United States."
Having said all that, he's lists the reasons we don't have to have history repeat itself:

America's known fossil-fuel reserves -- natural gas, oil, coal, shale, tar-sands -- are larger than ever. The problem is not finding more energy but marshaling the will to use the vast new sources of energy we have recently discovered.
"Our military is not just larger than the alternatives, but vastly larger and ever more lethal. Given the enormous size and productivity of the U.S. economy, we have the means -- but not yet the will -- to rapidly pay down our huge debt. In a world short on food, America is the world's greatest agricultural producer.
Other industrialized populations age and decline; ours is still growing. America is widely criticized abroad even as it remains by far the favored destination of global immigrants. Diverse religious practice is still vibrant in the United States. Elsewhere, it is fossilized in Europe, nonexistent in China, and intolerant in the Middle East.
While riots, strikes or revolutions sweep southern Europe and the Middle East, the United States remains stable and quiet -- despite far greater racial, ethnic and religious diversity. Globalization is still mostly a phenomenon of American innovation and originality to be licensed and outsourced abroad."

 So, I don't believe our decline is necessary, much less inevitable.  What we need is a leader who will lay the groundwork for the U.S. to become economic juggernaut it should be.  If the leader is really great, say on the level of Ronald Reagan (aka, Ronuldus Magnus), they could lead countries like China and Russia to shed their communist ways and allow freedom and the rule of law to reign.  Is there a leader out there like that?  Maybe....