There has been much furor over President Obama's visit to Asia, in particular his deep bow before the Japanese emperor. Sometimes you have to bow when you travel to Asia to thank them for continuing to buy much of our debt. What else is this diplomatic mission for anyway? We are borrowing like fiends to save the country and China and Japan own close to 50% of that debt.
Throughout this economic crisis, economists have continually compared America to Japan. Japan's lost decade and prolonged recession are held up as an example for why we needed more government stimulus; the claim is that Japan's government did not invest enough internally to prop up the country and avert a deep recession. So the logic has been that we must do the opposite and so we are plowing in trillions to save ourselves. But, we should be frightfully aware of the difference, they own nearly a quarter of our debt so they are still solvent.
China is considered the successor to our throne and not only are they weathering this global recession well, they own nearly a quarter of our debt also. We must keep in mind that neither of these countries is spending a third of their budget on their military and another third on entitlements like Social Security and Medicare. Hello! Obama had better follow cultural custom and bow, in fact, he technically needs to get down on his knees.
Only in America do we think that we are all that and a bag of chips and rightly so for up until the last few years, we were the envy of the rest of the world. However, due t0 our most recent and disastrous foreign policy, we absolutely need to fix our mystique, something that Obama has nearly accomplished in less than a year. But, people over here have forgotten why that is important, they still think that America is the center of the Universe. I'm sure the people of Rome felt that way too before it fell.
I don't think the end of the world is around the corner, history unfolds much more slowly than it seems. All of the empires that previously fell like the Ottoman, Roman & British are still thriving. They are not number one but they are quite robust. America is not falling tomorrow, it may be in decline but it will still take a while. And while we may lose #1 status, we will remain close behind and may even reclaim it. America has iron balls and vast wealth and the combination thereof may, in fact, save it.
Showing posts with label Federal Deficit. Show all posts
Showing posts with label Federal Deficit. Show all posts
Wednesday, November 18, 2009
Tuesday, November 10, 2009
Washington to the Rescue
With the jobless rate at alarming levels, 10.2% officially but depending upon who you consult unofficially, it is upwards of 20% when the under-employed and discouraged workers are included, the Keynesian economists and others are advocating that Washington spend more to create jobs. Recently the Obama Administration claimed that the stimulus has saved or created 640,00 jobs but unfortunately this falls far short of the numbers required.
Now that the banks are saved and the economy is stabilizing, the private sector has failed to create any jobs as expected. In fact, there has been a net loss in private sector jobs this decade so I don't know what Washington was expecting when they set out to save them. Instead, companies are continually cutting payroll to balance out their bottom line. So, if Corporate America cannot or will not create jobs, the belief is that the government should step in to remedy the situation. Besides, the Democrats have a stake in getting people back to work else their dominance of Congress and the Presidency may likely evaporate as the populace becomes more disgusted.
Meanwhile the government, in the face of declining tax revenues, has ratcheted up its ever burgeoning debt in its efforts to save the economy, save the banks, save current homeowners and encourage future ones among other stimulus efforts. Yet, despite the backlash against continued government spending, given the massive $12,000,000,000,000 debt and the $1,400,000,000,000 annual deficit, the government is being urged to spend more on job creation a la FDR's work programs during the Great Depression. Theoretically, the government could have spent more money on job creation and less on cash for clunkers and homeowner tax credits. After all, if jobs are created people will naturally have money to spend instead of enticing them with perceived "savings."
But there is more to consider when it comes to job creation. I came across a statistic recently that 58% of Americans receive some form of income from the government - public sectors workers, social security & pensions recipients, members of the military and military contractors and so on. Corporations are telling us that cutting costs is the only way to balance the books when revenue falls. If so much of our tax dollars are going back into paying ourselves, how can the government ever balance its books?
Now that the banks are saved and the economy is stabilizing, the private sector has failed to create any jobs as expected. In fact, there has been a net loss in private sector jobs this decade so I don't know what Washington was expecting when they set out to save them. Instead, companies are continually cutting payroll to balance out their bottom line. So, if Corporate America cannot or will not create jobs, the belief is that the government should step in to remedy the situation. Besides, the Democrats have a stake in getting people back to work else their dominance of Congress and the Presidency may likely evaporate as the populace becomes more disgusted.
Meanwhile the government, in the face of declining tax revenues, has ratcheted up its ever burgeoning debt in its efforts to save the economy, save the banks, save current homeowners and encourage future ones among other stimulus efforts. Yet, despite the backlash against continued government spending, given the massive $12,000,000,000,000 debt and the $1,400,000,000,000 annual deficit, the government is being urged to spend more on job creation a la FDR's work programs during the Great Depression. Theoretically, the government could have spent more money on job creation and less on cash for clunkers and homeowner tax credits. After all, if jobs are created people will naturally have money to spend instead of enticing them with perceived "savings."
But there is more to consider when it comes to job creation. I came across a statistic recently that 58% of Americans receive some form of income from the government - public sectors workers, social security & pensions recipients, members of the military and military contractors and so on. Corporations are telling us that cutting costs is the only way to balance the books when revenue falls. If so much of our tax dollars are going back into paying ourselves, how can the government ever balance its books?
Wednesday, October 28, 2009
Afghanistan: Graveyard of Foreign Armies
I don't like to weigh in about war because I do not like war and the rationale for war. I thought the entry into Iraq was a bad idea and the obvious contrivances foisted upon us in the run up to the war had me shouting at the television. Then George Bush threw down the gauntlet, we were either with him or against him and Rummy (Donald Rumsfeld) enthralled us with his surefire shock and awe strategy and the next minute we were watching the biggest fireworks show ever, the bombing of Baghdad.
The whole thing was supposed to be easy, the mighty pyrotechnical weaponry of the greatest and most expensive army in the world would take out Saddam Hussein and his weapons of mass destruction and deliver unto the Iraqis a freely democratic state that would also serve as an American foothold in the region. Six and half years later, we are still there. Are we?
There has not been much press on the Iraq War lately because the Iraq War, all that it is, ended up being a very expensive trillion dollar distraction, siphoning off troops and resources from the war in Afghanistan, where we were fighting the good fight against Al Qaeda and Osama Bin Laden, the architect of the September 11, 2001 terror attacks, and their state sanctioned sponsor the Taliban. Now, Afghanistan is front and center again, for eight years later, we are still there as well.
Both the Iraq and Afghan wars are of the same ilk. We invaded sovereign nations, destabilized their dictatorial regimes, tried to impose a system of democracy that resulted in weak, ineffectual and corrupt governments and where we have whipped up brutal insurgencies. Now, if we pull out, both of these fledgling states, Iraq and Afghanistan, can easily be overrun by power-hungry anti-American factions that will reverse all of our efforts, undermine our foothold in the region and imperil the lives of the inhabitants, not to mention becoming full out breeding grounds for terrorist cells.
The only existing military logic is to hold the line against insurgency by sending in more troops and training the national armies to manage the fight themselves allowing us to withdraw. We have been training the Afghans and the Iraqis for eight years and six years respectively and their armies are still not ready to take the reins. We send our soldiers into battle after six weeks of basic training but it seems virtually impossible to bring those national armies up to speed.
We are supposed to draw down troops in Iraq next year and right now, I don't know if that is still the plan. Whatever the case General McChrystal has now asked his Commander-in-Chief for 44,000 more troops in Afghanistan. Sending more troops will be a tacit acceptance of prolonged war. We must note here that Afghanistan has been known as the "graveyard of foreign armies" for several hundred years. Historically, foreign armies, including the British and the Russians, have jeopardized their empires trying to defeat the Afghans in lengthy contests, without success.
We cannot continue to fund both of these wars as we have already gone into considerable debt funding them and if we continue, in light of the current deficits and amid our current economic collapse, we run the risk of utter financial ruin. The President has a hard choice but in the end, I think, he should not send more troops. He should let the military manage with what they have while finding a solution for America to withdraw as expeditiously as possible before we all go down in flames.
The whole thing was supposed to be easy, the mighty pyrotechnical weaponry of the greatest and most expensive army in the world would take out Saddam Hussein and his weapons of mass destruction and deliver unto the Iraqis a freely democratic state that would also serve as an American foothold in the region. Six and half years later, we are still there. Are we?
There has not been much press on the Iraq War lately because the Iraq War, all that it is, ended up being a very expensive trillion dollar distraction, siphoning off troops and resources from the war in Afghanistan, where we were fighting the good fight against Al Qaeda and Osama Bin Laden, the architect of the September 11, 2001 terror attacks, and their state sanctioned sponsor the Taliban. Now, Afghanistan is front and center again, for eight years later, we are still there as well.
Both the Iraq and Afghan wars are of the same ilk. We invaded sovereign nations, destabilized their dictatorial regimes, tried to impose a system of democracy that resulted in weak, ineffectual and corrupt governments and where we have whipped up brutal insurgencies. Now, if we pull out, both of these fledgling states, Iraq and Afghanistan, can easily be overrun by power-hungry anti-American factions that will reverse all of our efforts, undermine our foothold in the region and imperil the lives of the inhabitants, not to mention becoming full out breeding grounds for terrorist cells.
The only existing military logic is to hold the line against insurgency by sending in more troops and training the national armies to manage the fight themselves allowing us to withdraw. We have been training the Afghans and the Iraqis for eight years and six years respectively and their armies are still not ready to take the reins. We send our soldiers into battle after six weeks of basic training but it seems virtually impossible to bring those national armies up to speed.
We are supposed to draw down troops in Iraq next year and right now, I don't know if that is still the plan. Whatever the case General McChrystal has now asked his Commander-in-Chief for 44,000 more troops in Afghanistan. Sending more troops will be a tacit acceptance of prolonged war. We must note here that Afghanistan has been known as the "graveyard of foreign armies" for several hundred years. Historically, foreign armies, including the British and the Russians, have jeopardized their empires trying to defeat the Afghans in lengthy contests, without success.
We cannot continue to fund both of these wars as we have already gone into considerable debt funding them and if we continue, in light of the current deficits and amid our current economic collapse, we run the risk of utter financial ruin. The President has a hard choice but in the end, I think, he should not send more troops. He should let the military manage with what they have while finding a solution for America to withdraw as expeditiously as possible before we all go down in flames.
Monday, July 13, 2009
Healthcare Reform Threatened by Simmering Bailout Regret
It seems that we Americans are starting not to appreciate the fact that the economy was rescued from the brink of disaster. With the furor over fiscal discipline becoming a soundpiece on every conservative media outlet, many are forgetting that the collapse of the financial system and the economy would have ruined all of us. But, as the recession wears on, it is getting harder to accept that the massive infusion of taxpayer funds barely made a dent in the survival of the average American.
Unemployment continues to rise and is on track to top 10% and now there is talk of a "jobless recovery." Clearly this is a bitter pill to swallow for the nearly 3,000,000 unemployed since the beginning of this year. The housing market is still in shambles and Americans already deeply in debt are being slapped with increasingly egregious penalties for carrying this debt. Finally, the cost of healthcare and health insurance has hit the tipping point where it is completely unaffordable for those who have lost their jobs and some 50,000,000 Americans are completely without it.
From the standpoint of the rich, they have been saved. From the standpoint of the poor, nothing has changed, they essentially receive the same assistance. The people who stand to lose the most are the middle class. These are the people losing their jobs, losing their homes, losing their healthcare and losing their minds. These will be the people who will have to shoulder a greater tax burden to pay the national debt and to prop up all the local governments and taxing authorities that are also suffering from revenue shortfalls. These are the people who are slowly being convinced that the government debt and deficit is too high to make any more changes to save the economy like funding a vital overhaul of healthcare and health insurance that will ultimately reduce costs and provide access to all.
When the average American is feeling so much financial pain, the collateral damage stemming from the bailouts - the skyrocketing national debt and the tripling of the annual deficit, already inflated under George Bush - does not seem worth it. Let's hope our weariness does not derail healthcare reform, at the very least.
Unemployment continues to rise and is on track to top 10% and now there is talk of a "jobless recovery." Clearly this is a bitter pill to swallow for the nearly 3,000,000 unemployed since the beginning of this year. The housing market is still in shambles and Americans already deeply in debt are being slapped with increasingly egregious penalties for carrying this debt. Finally, the cost of healthcare and health insurance has hit the tipping point where it is completely unaffordable for those who have lost their jobs and some 50,000,000 Americans are completely without it.
From the standpoint of the rich, they have been saved. From the standpoint of the poor, nothing has changed, they essentially receive the same assistance. The people who stand to lose the most are the middle class. These are the people losing their jobs, losing their homes, losing their healthcare and losing their minds. These will be the people who will have to shoulder a greater tax burden to pay the national debt and to prop up all the local governments and taxing authorities that are also suffering from revenue shortfalls. These are the people who are slowly being convinced that the government debt and deficit is too high to make any more changes to save the economy like funding a vital overhaul of healthcare and health insurance that will ultimately reduce costs and provide access to all.
When the average American is feeling so much financial pain, the collateral damage stemming from the bailouts - the skyrocketing national debt and the tripling of the annual deficit, already inflated under George Bush - does not seem worth it. Let's hope our weariness does not derail healthcare reform, at the very least.
Tuesday, June 9, 2009
Stranger than Fiction; America Must Continue its Debt-Fueled Ways to Survive
When I read all of the literature about how to solve the financial system, I realize that any rational solution cannot work. We have too many extenuating circumstances to return to a normalcy of spending because we have simply gone too far with our debt fueled existence to dial it back; without increased government spending, our economy as we know it will sink like a stone.
Right now we have a convergence of consequences from the various forks of the economic road requiring the largest outlay of deficit spending in the history of the country. We have corporate welfare with the bailout of the banks, insurance and auto companies. We have an escalating national debt, initially inflated by George Bush and his policies but now alarmingly exacerbated by President Obama's stimulus efforts. Finally, we have entitlement costs - social security and health care - and military spending that will bust the national budget in a few short years not to mention the interest payments on the national debt.
We are a nation depending on the kindness of China and Japan, the largest purchasers of our treasury bonds, to finance our debt. We are a nation completely unprepared to spend within our means. When times were good, our previous President, Mr. Bush, racked up annual deficits and doubled the national debt in his 8 year tenure. Now that times are bad and there is little real money flowing in our economy, our current President, Mr. Obama, needs to spend big and it is scaring the bejesus out of us because the debt that he inherited was already incomprehensible.
Unfortunately, we were all happily flush with cheap credit to worry about the debt when it mattered.
Now we have the Republicans, flagrantly disregarding the trillions Bush added while America's fortunes seemed rock solid and who lack a cohesive party agenda, blindly caught up in the throes of a full-fledged deflection of this stark reality and blaming President Obama for his profligate spending though it has apparently saved their bank accounts. Huh? I urge any Americans sucked into this rabid plot to reconsider and understand that the mechanisms for the problems we are facing were set in motion long before Obama.
Anyhow, efforts to balance the budget may well be the final nail in the coffin for the economy. This is an economy based on spending, 70% of it generated by consumer spending alone. The consumer is under siege due to the crash in the housing market, crash in their investment and retirement accounts, crash in credit financing and associated crash in employment. The government has to replace this spending in the interim to save the economy and it has to get us the credit we need so that we can start spending again.
As a result, the Federal Reserve and the Treasury are pumping all the money they possibly can into loosening those credit markets which, much to our distress, places the banks in the enviable position of ruling our economic roost. We cannot do anything about it because we all need the credit to move forward, including the government. It is counter-intuitive to think this way. After all, rational spending should be the basis of a sound economy and the solution of continuing our credit-fueled existence should sound stranger than fiction because it led us to this crash in the first place. But, it truly is our only hope at least until the economy can generate "real" money again. How, what and when will that be?
Sadly and ironically, the banks are cutting their consumer credit lines to shore up their balance sheets thus refusing to realize that by doing so will unleash a deadly negative impact to our consumer economy. They may be happy that they are racking up deposits because the consumer has learned the very hard lesson of not saving for a rainy day and are currently stashing cash but without credit cards and other consumer loans, we will buy nothing and that is much worse for America. So, we have to continue our debt-fueled ways because every other solution is an economic buzz kill. Yikes!
Right now we have a convergence of consequences from the various forks of the economic road requiring the largest outlay of deficit spending in the history of the country. We have corporate welfare with the bailout of the banks, insurance and auto companies. We have an escalating national debt, initially inflated by George Bush and his policies but now alarmingly exacerbated by President Obama's stimulus efforts. Finally, we have entitlement costs - social security and health care - and military spending that will bust the national budget in a few short years not to mention the interest payments on the national debt.
We are a nation depending on the kindness of China and Japan, the largest purchasers of our treasury bonds, to finance our debt. We are a nation completely unprepared to spend within our means. When times were good, our previous President, Mr. Bush, racked up annual deficits and doubled the national debt in his 8 year tenure. Now that times are bad and there is little real money flowing in our economy, our current President, Mr. Obama, needs to spend big and it is scaring the bejesus out of us because the debt that he inherited was already incomprehensible.
Unfortunately, we were all happily flush with cheap credit to worry about the debt when it mattered.
Now we have the Republicans, flagrantly disregarding the trillions Bush added while America's fortunes seemed rock solid and who lack a cohesive party agenda, blindly caught up in the throes of a full-fledged deflection of this stark reality and blaming President Obama for his profligate spending though it has apparently saved their bank accounts. Huh? I urge any Americans sucked into this rabid plot to reconsider and understand that the mechanisms for the problems we are facing were set in motion long before Obama.
Anyhow, efforts to balance the budget may well be the final nail in the coffin for the economy. This is an economy based on spending, 70% of it generated by consumer spending alone. The consumer is under siege due to the crash in the housing market, crash in their investment and retirement accounts, crash in credit financing and associated crash in employment. The government has to replace this spending in the interim to save the economy and it has to get us the credit we need so that we can start spending again.
As a result, the Federal Reserve and the Treasury are pumping all the money they possibly can into loosening those credit markets which, much to our distress, places the banks in the enviable position of ruling our economic roost. We cannot do anything about it because we all need the credit to move forward, including the government. It is counter-intuitive to think this way. After all, rational spending should be the basis of a sound economy and the solution of continuing our credit-fueled existence should sound stranger than fiction because it led us to this crash in the first place. But, it truly is our only hope at least until the economy can generate "real" money again. How, what and when will that be?
Sadly and ironically, the banks are cutting their consumer credit lines to shore up their balance sheets thus refusing to realize that by doing so will unleash a deadly negative impact to our consumer economy. They may be happy that they are racking up deposits because the consumer has learned the very hard lesson of not saving for a rainy day and are currently stashing cash but without credit cards and other consumer loans, we will buy nothing and that is much worse for America. So, we have to continue our debt-fueled ways because every other solution is an economic buzz kill. Yikes!
Monday, May 11, 2009
Who is Afraid of the National Debt?
The big stink today is that the projected budget deficits for fiscal 2009 and fiscal 2010 were revised upward by the White House. To put this figure in perspective, the budget for fiscal 2009 is $3,100,000,000,000 with a projected deficit of $1,840,000,000,000 revised upward from $1,750,000,000,000. The 2010 proposed budget is $3,600,000,000,000 with a projected deficit of $1,250,000,000,000 revised upward from $1,190,000,000,000. We are looking at adding over $3,000,000,000,000 to the national debt over the next 2 years all in the name of saving the country from economic collapse.
Of course these numbers are way too incomprehensible for most Americans for many of them have lost track of how many zeros are in a billion or a trillion dollars. We barely speak in millions anymore and the value of a billion dollars, of being 1000 million, does not seem to rankle many minds. In the last decade the shift from speaking in millions to speaking in billions happened almost without alarm as if the move from millions of dollars to billions of dollars was a small incremental, a mere matter of changing from an "m" to a "b".
Now, in the short span of a couple of years, we have graduated to speaking in trillions, too overwhelmed to comprehend the new valuations, afraid but mired in our own mathematical and financial ignorance. Imagine an individual or a family making $50,000 a year and spending $125,000 - overspending by $75,000 in just one year. That is how our government is spending right now and that is how it has been spending over the last decade and that is how it will continue to spend over the next. Every year, we are promised a reduction in government spending and every year it overspends. Until it can get to the point of spending less than what it brings in, the national debt will just continue to skyrocket. Bill Clinton famously balanced the budget at the end of the 90s and delivered a surplus to the incoming President Bush nevertheless, he still increased the national debt.
Of course, the only way to solve this problem is to cut spending or raise taxes. But, no one wants to see their taxes raised and no one can agree on what to cut from the budget. At the end of the day, every group has a vested interest in keeping the status quo; government employees do not want to see their jobs cut, the citizenry does not want to see any of its programs or services cut and most of all, elected officials won't dare offend either group in order to get re-elected.
While we are patently afraid of saddling the next generation with potentially insurmountable debt, we are unwilling to take any real action to prevent it. Instead we resort to the same pipe dream solution that has been in place for decades; that with the right economic and fiscal policy, we can grow ourselves out of our financial mess. We fail to accept the reality that the only thing that has grown is our collective debt; that of government and individual alike.
Of course these numbers are way too incomprehensible for most Americans for many of them have lost track of how many zeros are in a billion or a trillion dollars. We barely speak in millions anymore and the value of a billion dollars, of being 1000 million, does not seem to rankle many minds. In the last decade the shift from speaking in millions to speaking in billions happened almost without alarm as if the move from millions of dollars to billions of dollars was a small incremental, a mere matter of changing from an "m" to a "b".
Now, in the short span of a couple of years, we have graduated to speaking in trillions, too overwhelmed to comprehend the new valuations, afraid but mired in our own mathematical and financial ignorance. Imagine an individual or a family making $50,000 a year and spending $125,000 - overspending by $75,000 in just one year. That is how our government is spending right now and that is how it has been spending over the last decade and that is how it will continue to spend over the next. Every year, we are promised a reduction in government spending and every year it overspends. Until it can get to the point of spending less than what it brings in, the national debt will just continue to skyrocket. Bill Clinton famously balanced the budget at the end of the 90s and delivered a surplus to the incoming President Bush nevertheless, he still increased the national debt.
Of course, the only way to solve this problem is to cut spending or raise taxes. But, no one wants to see their taxes raised and no one can agree on what to cut from the budget. At the end of the day, every group has a vested interest in keeping the status quo; government employees do not want to see their jobs cut, the citizenry does not want to see any of its programs or services cut and most of all, elected officials won't dare offend either group in order to get re-elected.
While we are patently afraid of saddling the next generation with potentially insurmountable debt, we are unwilling to take any real action to prevent it. Instead we resort to the same pipe dream solution that has been in place for decades; that with the right economic and fiscal policy, we can grow ourselves out of our financial mess. We fail to accept the reality that the only thing that has grown is our collective debt; that of government and individual alike.
Tuesday, March 24, 2009
De-Pressed Conference
President Obama staged his second prime-time press conference this evening. The purpose of which was to provide insight into the new $3,600,000,000,000 budget and to assure the American people that while the price is high, the intentions are noble. The two-pronged approach is geared to stabilize the economy and plant the foundation for future growth, by investing in renewable energy, infrastructure and education.
With respect to education, the President referred to America's falling behind stating "countries like China and India will be running laps around our young people" which is true as far as my anecdotal evidence points. The fact that Americans do not realize that the playing field is globally level now and that our self-indulged young people will face serious competition in the future job market seems to be lost on them. Emphasis was also made that finding savings in the healthcare and defense sectors and repealing tax cuts back to Reagan-era levels for the top 1% of wage earners will help to offset new spending in other areas.
Most of this we have all heard in the last few weeks but it is always nice to see the President answer questions from the press; this is where his intelligence and thoughtfulness shine. He does know what he is talking about and perhaps this is the only consolation. What he proposes is costly and scary but as he points out and as I pointed out yesterday, there are lots of critics but no alternate solutions.
It was a sobering press conference as usual, times are tough, the solutions are difficult to comprehend and there is still a chance that it all might not work out the way we planned but something has to be done. Perhaps our expectations are too high? At the end of the day, Americans do need to believe that the fundamentals of the American economy are strong and that we will return to economic prominence and world dominance once we lick this crisis. I hope so but we have a long way to go, probably longer than we dare admit.
It is nice to see the President acknowledge that the gains of the last decade were artificially fueled so on the one hand he does get it but on the other hand his belief and optimism in America's future requires an audacity of hope that a culture mired in greed and deceit may not have the patience to muster.
With respect to education, the President referred to America's falling behind stating "countries like China and India will be running laps around our young people" which is true as far as my anecdotal evidence points. The fact that Americans do not realize that the playing field is globally level now and that our self-indulged young people will face serious competition in the future job market seems to be lost on them. Emphasis was also made that finding savings in the healthcare and defense sectors and repealing tax cuts back to Reagan-era levels for the top 1% of wage earners will help to offset new spending in other areas.
Most of this we have all heard in the last few weeks but it is always nice to see the President answer questions from the press; this is where his intelligence and thoughtfulness shine. He does know what he is talking about and perhaps this is the only consolation. What he proposes is costly and scary but as he points out and as I pointed out yesterday, there are lots of critics but no alternate solutions.
It was a sobering press conference as usual, times are tough, the solutions are difficult to comprehend and there is still a chance that it all might not work out the way we planned but something has to be done. Perhaps our expectations are too high? At the end of the day, Americans do need to believe that the fundamentals of the American economy are strong and that we will return to economic prominence and world dominance once we lick this crisis. I hope so but we have a long way to go, probably longer than we dare admit.
It is nice to see the President acknowledge that the gains of the last decade were artificially fueled so on the one hand he does get it but on the other hand his belief and optimism in America's future requires an audacity of hope that a culture mired in greed and deceit may not have the patience to muster.
Wednesday, January 28, 2009
Rose-Colored Glasses
Today I did not pay much attention to anything. Somehow, the market went up 200 points on the news that the Federal Reserve would keep pumping money into the financial markets because the several trillion dollars that they have already put in still has not eased the liquidity crisis and the house passed the newly proposed $819,000,000,000 stimulus plan; more money above and beyond the $700,000,000,000 plan passed last September and the additional trillions that have been injected by the Treasury Department under its own programs. So the answer still is to throw even more money at the problem.
Maybe the GOP is right, maybe this is too much debt to take on despite the state of the economy. It is ironic that the GOP presided over the run-up of federal debt during the last 8 years and now they are the ones crying that the debt is too high to spend any more dollars to help boost the economy. I don't know, it is all going in circles and no one is guilty; all the corruption was on the fence but was it all really illegal? Now the enriched have enough money to convince us that they should be allowed to keep the money, no matter how ill-gotten; as long as you have enough of it, money talks.
Speaking of money, I have now spent way too many hours, probably to the detriment of myself, trying to find a good deal on hotels for my trip next week. So far I am fairly satisfied with my flight plans and rental vehicle costs. I have reserved a hotel but I'm not 100% convinced; I am surprised that in this economy hotel rates are still so high and they charge for every additional amenity; in many cases after paying an exorbitant room rate, you still have to pay for internet, breakfast, parking, beach chairs and towels and other resort fees. Excuse me but aren't those fees included in that exorbitant room rate? Then again, the last time I went on vacation was years ago so I must not have kept up with the inflation.
Years ago you would call a travel agent and that would be that. Now, there are so many internet sites to check, it is impossible to feel comfortable with your choices. I checked all the sites, I'm sure I did not miss any: AAA, American Express, Hotels.com, Kayak, Orbitz, Expedia, Travelocity, Priceline (except I did not want to bid and end up with someplace I really didn't want), Trip Advisor for all the reviews, Yahoo Travel, Away.com and numerous others. I am compelled to check daily to see if there is a better deal.
Nevertheless, it does seem that there must be enough people going on vacation to justify these room rates and charges. Some people must still have some cash lying around somewhere. Or maybe we're all doing the same thing, escaping now before the real crash and burn.
Maybe the GOP is right, maybe this is too much debt to take on despite the state of the economy. It is ironic that the GOP presided over the run-up of federal debt during the last 8 years and now they are the ones crying that the debt is too high to spend any more dollars to help boost the economy. I don't know, it is all going in circles and no one is guilty; all the corruption was on the fence but was it all really illegal? Now the enriched have enough money to convince us that they should be allowed to keep the money, no matter how ill-gotten; as long as you have enough of it, money talks.
Speaking of money, I have now spent way too many hours, probably to the detriment of myself, trying to find a good deal on hotels for my trip next week. So far I am fairly satisfied with my flight plans and rental vehicle costs. I have reserved a hotel but I'm not 100% convinced; I am surprised that in this economy hotel rates are still so high and they charge for every additional amenity; in many cases after paying an exorbitant room rate, you still have to pay for internet, breakfast, parking, beach chairs and towels and other resort fees. Excuse me but aren't those fees included in that exorbitant room rate? Then again, the last time I went on vacation was years ago so I must not have kept up with the inflation.
Years ago you would call a travel agent and that would be that. Now, there are so many internet sites to check, it is impossible to feel comfortable with your choices. I checked all the sites, I'm sure I did not miss any: AAA, American Express, Hotels.com, Kayak, Orbitz, Expedia, Travelocity, Priceline (except I did not want to bid and end up with someplace I really didn't want), Trip Advisor for all the reviews, Yahoo Travel, Away.com and numerous others. I am compelled to check daily to see if there is a better deal.
Nevertheless, it does seem that there must be enough people going on vacation to justify these room rates and charges. Some people must still have some cash lying around somewhere. Or maybe we're all doing the same thing, escaping now before the real crash and burn.
Tuesday, October 14, 2008
Presidential Debate #3: Truth or Smear?
Tomorrow, the 3rd and final Presidential Debate will take place at Hofstra University, one of Long Island's premier institutions of higher learning. Once again Americans will have high hopes of hearing a meaningful discussion about the issues. After all, both Obama and McCain have introduced brand new addenda to their economic plans this week and we want to hear about them. Also, the debate has been painted as McCain's last attempt to shine given that recent polls show an increase in Obama's lead.
McCain, fresh off his pandering-to-the-base tour, has offered up yet more gems of economic inconsistency touting benefits that still tilt toward reducing the tax burden of our wealthier denizens. He has also hinted that he will bring up Obama's connections to Bill Ayers. Does he not realize that Obama's lead has increased exponentially since those attacks began? Well, Obama did say that he was surprised that McCain did not bring up those negativisms to his face during the last debate and now, McCain the man seems compelled to respond. This is the conclusion we all would make, I suppose, if we were coming off the same tour as McCain; egged on by his narrow-minded rabid fans.
McCain seems to have forgotten that he has plenty of guilt by association skeletons in his closet too so he may want to leave that stuff on the redneck trail where it belongs. Moreover, he had better be mindful that he will be in a blue state tomorrow with actual thinking people who will not respond to anti-intellectual cheap shots, or will they?
Obama also has plenty of explaining to do because I swear the man is on democratic liberal crack unveiling reams of spending plans to help everybody. I don't know how he expects the taxpayers to pony-up that kind of dough now that we have guaranteed all the bank deposits in the world. After all, that $500,000,000,000 deficit that has already been projected for the 2009 U.S. budget is definitely double by now.
Irrational exuberance has now taken over the U.S. government; the national debt clock in Times Square has run out of digits but somehow we have unlimited funds to guarantee the world financial markets and give tax breaks to poor Tom, healthcare-less Dick and jobless Harry. All hands are out and less money is supposed to come in? I hope these candidates find some financial rectitude and tell it like it is tomorrow.
McCain, fresh off his pandering-to-the-base tour, has offered up yet more gems of economic inconsistency touting benefits that still tilt toward reducing the tax burden of our wealthier denizens. He has also hinted that he will bring up Obama's connections to Bill Ayers. Does he not realize that Obama's lead has increased exponentially since those attacks began? Well, Obama did say that he was surprised that McCain did not bring up those negativisms to his face during the last debate and now, McCain the man seems compelled to respond. This is the conclusion we all would make, I suppose, if we were coming off the same tour as McCain; egged on by his narrow-minded rabid fans.
McCain seems to have forgotten that he has plenty of guilt by association skeletons in his closet too so he may want to leave that stuff on the redneck trail where it belongs. Moreover, he had better be mindful that he will be in a blue state tomorrow with actual thinking people who will not respond to anti-intellectual cheap shots, or will they?
Obama also has plenty of explaining to do because I swear the man is on democratic liberal crack unveiling reams of spending plans to help everybody. I don't know how he expects the taxpayers to pony-up that kind of dough now that we have guaranteed all the bank deposits in the world. After all, that $500,000,000,000 deficit that has already been projected for the 2009 U.S. budget is definitely double by now.
Irrational exuberance has now taken over the U.S. government; the national debt clock in Times Square has run out of digits but somehow we have unlimited funds to guarantee the world financial markets and give tax breaks to poor Tom, healthcare-less Dick and jobless Harry. All hands are out and less money is supposed to come in? I hope these candidates find some financial rectitude and tell it like it is tomorrow.
Thursday, September 18, 2008
Bailout Bonanza Continues to Prevent Trickle Down of Bad Debt
The Federal Government reversed itself after 2 days of record declines in the financial markets; it is pretty clear that there is no faith in the financial markets without the government guarantee. The mantra of “too big to fail” has completely taken over though I do not understand the criteria used to choose who wins and who loses. Why let Lehman fail but not AIG? As I write the Fed and the Congress are feverishly meeting to create a new government entity to buy up the rest of the bad debt out there. If this is the case, Lehman got a bum wrap.
Before George Bush was elected President, the discussion centered on his ability to ruin just about everything he touched. 9-11 saved him from himself for a while and delayed the inevitable. There was a point when he enjoyed incredible popularity much to my dismay, I might add. We were “winning” the war on terror and Americans improved their standard of living; trading up to bigger houses and better things because George Bush was right prosperity did trickle down. Unfortunately, we did not realize the sleight of hand; victory and prosperity were an illusion. And while the war rages on and the rest of us take on 2nd jobs and plunder our 401k’s to remain afloat, the government has chosen to bail out some of the richest companies in the world supposedly to prevent all of that bad debt from trickling down.
Wednesday, September 17, 2008
Finally The Financial Truth Flows Through the Markets
The world-wide financial markets are in crisis right now. Wall Street investment banks are failing and/or scrambling to stay afloat either through a merger or cash infusion. The Dow lost 504.48 yesterday and 449.36 today; almost 1000 points in 2 days. Meanwhile markets in Russia, Asia and other parts of the world are hemorrhaging; Russia has had to halt trading over the last 2 days.
As you know, I knew these days were coming and I welcome them. We have to let the financial truth flow through the markets so we can figure out where we are so we can know where we have to go. All of the lies and propping up caused the market to disassociate from reality. The markets have been on a roller coaster ride this whole year because investors had no idea where to plant their feet. I have gone over all of this in previous posts.
I hope all of this fallout means we are getting closer to a financial reality based on the fundamentals. Yes things are terrible right now and I have always said that the market should reflect it. All we did was delay the inevitable; the government invested over $500,000,000,000 into trying to shore up the markets and it didn't help at all. Now investors are worried the government has over-extended itself.
I'd rather know the truth because knowledge is power; with the right information, we can find solutions. We have found them before and we will find them again. In the meantime, it is going to be terrible, I am not looking forward to going through any of it. At least we all know that we are in it together because that's all we have right now. We need to help each other as Americans first and people second.
All I can hope is that Americans do the right thing and elect the President that will bring us together. President Bush and the GOP have done nothing but divide Americans into nasty splinter groups blaming and re-blaming while they capitalize on our prejudicial weaknesses leaving us proving once again that there is truth in those unavoidable cliches:
UNITED WE STAND; DIVIDED WE FALL.
There is no way for McCain to bring us together and you all should know that by now. Do you really think he will inspire us to do anything? Ask yourselves deep down inside if lies, deception and downright nastiness is the way to help America. Obama will make mistakes, all Presidents do, but at least we will be United, something we have not been for a long, long, time.
As you know, I knew these days were coming and I welcome them. We have to let the financial truth flow through the markets so we can figure out where we are so we can know where we have to go. All of the lies and propping up caused the market to disassociate from reality. The markets have been on a roller coaster ride this whole year because investors had no idea where to plant their feet. I have gone over all of this in previous posts.
I hope all of this fallout means we are getting closer to a financial reality based on the fundamentals. Yes things are terrible right now and I have always said that the market should reflect it. All we did was delay the inevitable; the government invested over $500,000,000,000 into trying to shore up the markets and it didn't help at all. Now investors are worried the government has over-extended itself.
I'd rather know the truth because knowledge is power; with the right information, we can find solutions. We have found them before and we will find them again. In the meantime, it is going to be terrible, I am not looking forward to going through any of it. At least we all know that we are in it together because that's all we have right now. We need to help each other as Americans first and people second.
All I can hope is that Americans do the right thing and elect the President that will bring us together. President Bush and the GOP have done nothing but divide Americans into nasty splinter groups blaming and re-blaming while they capitalize on our prejudicial weaknesses leaving us proving once again that there is truth in those unavoidable cliches:
UNITED WE STAND; DIVIDED WE FALL.
There is no way for McCain to bring us together and you all should know that by now. Do you really think he will inspire us to do anything? Ask yourselves deep down inside if lies, deception and downright nastiness is the way to help America. Obama will make mistakes, all Presidents do, but at least we will be United, something we have not been for a long, long, time.
Tuesday, September 16, 2008
Taxpayers Bail Out AIG
Like I said yesterday Citizens, prepare yourselves!!! We are in it for good this time. One of
Why are we saving AIG and not Lehman Brothers? Yesterday, the government said it would no longer bail out private companies. Today they say if they don’t continue, our financial system will collapse; the number of companies deemed too big to fail is growing. Has anyone stopped to add up all of the bailouts this year? What is the total? How much debt will it take for the government to realize it too has reached its limit? Do you all still believe in the free market economy? If the market is supposed to find the best price, reward good business practice and regulate itself, then these companies should fail because others will take their place. Isn’t that the theory Republicans?
Wall Street can go ahead and jump for joy every time the government bails them out but they have no idea what misery will trickle down to the rest of
Debt has fueled growth for all of us. We all borrowed and things were fantastic. The middle class improved its standard of living on debt. Business improved its profits on debt and the Government paid for war, entitlements and subsidies with debt. Everyone was HAPPY HAPPY HAPPY! The debt has come due my friends and while we the middle class are now struggling to repay our debt the government is borrowing to pay for its debt and is called on to help big business pay their debt. The individual is held accountable but not big business?
WE ALL KNOW WHAT HAPPENS WHEN YOU BORROW FROM PETER TO PAY PAUL!!!
We are supposed to be one
The greatest country on earth is begging
Oh, that worked out real well.
Monday, September 15, 2008
R.I.P: More Wall Street Firms Go Bust
If you read me, you know that I have been screaming about the financial markets and all the debt that is being used to prop them up. Everyone kept telling me that I was being a “negative nelly” because I have been complaining that the unprecedented use of debt instruments was unsustainable. Every day we hear about more financial institutions who have bitten off more debt than they can chew; today we lost two more, Lehman Brothers and Merrill Lynch.
Now I think it is particularly ironic that the Republican’s own economic policies have fed upon themselves. 168 yr old Lehman Brothers, one of the hallmarks of Wall Street has crumbled under the weight of the debt driven economy. Merrill Lynch skirted the same fate by selling itself to Bank of America. The venerable bull got beaten by its own financial bull$#!%.
Friday, September 5, 2008
Let’s Face Facts: The Republican Economic Policies Have Failed
Now that we have had time to digest both Political Conventions, the gloves are off. In the next 60 days Americans have to decide once and for all the direction of this country. Many people were impressed with both shows and it appears that the polls are neck and neck once again. While we all want what’s best for the country, we all need to do a little math and ask ourselves the age old question; “Are we better off today than we were 4 years ago; in this case 8 years ago?”
Though the following numbers are even worse now, these are documented facts as they are from the 2004 census:
The Republicans have run the country into the ground. They were the only ones who got rich here. The middle class is suffering under staggering debt and losing their homes. Meanwhile the government has already lent Wall Street Banks over $500 billion dollars and they still give themselves million dollar bonuses even when they fail.
Thursday, August 21, 2008
Federal Debt: How Much is Too Much?
I have been especially worried about this economic downturn because of the amount of debt associated with it. Not just for individuals but on the part of the federal government and its entities. The treasury and the federal reserve are borrowing and spending like wildfire to prop up the economy. The federal government has tacked on more debt in the past 8 years than it had acquired in its entire previous existence. The 2009 budget deficit is already close to $500 billion ($500,000,000,000) and the national debt is over 10 trillion ($10,000,000,000,000).
Monday, August 18, 2008
Manic Stock Market Does Not Inspire Confidence
Hello Monday! The stock market went down 180 points today but this is no longer unusual; 2008 is the year of break-neck rallies and steep declines and lately we do not even know what each day will bring. First crude prices skyrocketed because of worldwide demand that was apparently out of our control; India China America
What is the average person who does not understand the nitty gritty of the financial markets but is an investor through a 401k or retirement account supposed to think with the market yo-yoing back and forth, especially over the past 4 months. Regular folk are depending on the market for their retirement and this type of manic market behavior does not inspire confidence. When are we going to get back to the business of investing?
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