"The most significant threat to our national security is our debt," Admiral Michael Mullen, Chairman, Joint Chiefs of Staff, August 27,2010


Monday, May 31, 2010

In Memoriam

The Soldier: - By Charles M. Province


It is the soldier, not the reporter, who has given us freedom of the press.

It is the soldier, not the poet, who has given us freedom of speech.

If you can read this message thank a teacher, If you are reading it in English of your own free will THANK A SOLDIER!

It is the soldier, not the campus organizer, who has given us the freedom to demonstrate.

It is the soldier, not the lawyer, who has given us the right to a fair trial.

It is the soldier, who salutes the flag, who serves under the flag, and whose coffin is draped by the flag,who allows the protester to burn the flag.

To all the brave men and women who have dedicated or given their lives to protecting this country and it's freedoms: Thank you.

Wednesday, May 26, 2010

Mr. Adams, Thank You

John Adams was America’s second president (1797-1801). He lost a second term to his vice president – Thomas Jefferson. Adams was George Washington’s vice president; both terms. He was the father of America’s sixth president – John Quincy Adams. John Adams was a man unto himself. Even as he led the independence movement; he also defended the British soldiers who fired into the crowd killing five colonists in the event known as the Boston Massacre. His book, “Thoughts on Government” should be required reading in every secondary school in the United States. It presents such basic concepts as “a government of laws; not men,” “separation of powers,” and limiting government to “enumerated powers.” He would be more than upset (but read below; he predicted it) if he returned today and saw the mess we’ve made of this magnificent experiment. As you read his comments below, you may notice that he also anticipated much of the silliness that now dominates America’s government entities and its silly players. Parenthetical comments are solely the responsibility of TheFundamentals.  These quotes are all attributed to Mr. Adams.

The Revolution was affected before the War commenced. The Revolution was in the minds and hearts of the people; a change in their religious sentiments of their duties and obligations. This radical change in the principles, opinions, sentiments, and affections of the people, was the real American Revolution. (Tea Party critics: take notice.)

Great is the guilt of an unnecessary war. (GWBush. LBJohnson. Are you listening?)

Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.

Democracy... while it lasts is more bloody than either aristocracy or monarchy. Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There is never a democracy that did not commit suicide.

All the perplexities, confusion and distress in America arise, not from defects in their Constitution or Confederation, not from want of honor or virtue, so much as from the downright ignorance of the nature of coin, credit and circulation. (TheFundamentals calls it “fiscal promiscuity.”   For people like Obama, Bush, Greenspan, Geithner and Bernanke, Mr. Adams has it right. It’s downright ignorance.)

Because power corrupts, society's demands for moral authority and character increase as the importance of the position increases. (This one is almost cynically humorous. Brings to mind WJClinton, JEdwards and GHart.)

Arms in the hands of citizens may be used at individual discretion... in private self-defense. (Mayor Daley, are you paying attention? Oh, that’s right. You’re much smarter than Mr. Adams.)

As much as I converse with sages and heroes, they have very little of my love and admiration. I long for rural and domestic scene, for the warbling of birds and the prattling of my children. (This is far and away TheFundamentals favorite quote.)

Power always thinks... that it is doing God's service when it is violating all his laws. (Ye gods. Ain't this the truth? Power is Arrogance.)

Fear is the foundation of most governments. (He got it. He saw it. He lived it. Nothing changes. Welcome to the 21st century.)

While all other sciences have advanced, that of government is at a standstill - little better understood, little better practiced now than three or four thousand years ago. (Could this have anything to do with the simple fact that only government and politics attract, employ and glorify the truly incompetent?)

The happiness of society is the end of government. (See above)

There are two educations. One should teach us how to make a living and the other how to live. (Our second favorite quote.)

The Hebrews have done more to civilize men than any other nation. If I were an atheist, and believed blind eternal fate, I should still believe that fate had ordained the Jews to be the most essential instrument for civilizing the nations. (We mostly agree but, no, TheFundamentals still thinks that AIPAC stretches the privilege.)

In my many years I have come to a conclusion that one useless man is a shame, two is a law firm and three or more is a congress.—  (OK, founding father John Adams never said it but his character spoke those lines in the musical “1776” and TheFundamentals thinks he might just concur with this thought if he only could.)

John Adams. You may have been a Federalist but you were our kind of Federalist and we miss you. Thank you for what you did and what you gave us. You knew of what you spoke.

Monday, May 24, 2010

Mirror, Mirror on the Wall....

...who's the fairest one of all?

The most recent example of a silly politician gilding the resume with a combination of lies and exaggerations was outed by the NYTimes. And they were picking on one of their own – the attorney general of Connecticut who “misplaced a few words” in describing his wartime activities. In this particular case his misplaced words ended up relocating him from the safe confines of the reserve barracks in the homeland to the unsafe confines of a conflict thousands of miles away in which tens of thousands of real American warriors lost their lives. So, this got us to thinking about two things:

1. This guy is an attorney general which means he tries cases on behalf of the people of his state and that means he holds all sorts of other people to a high truth standard – defendants, witnesses, experts and others are sworn to tell the truth, the whole truth and nothing but the truth, so help them God, or they violate perjury laws and can be jailed/fined or both. What gives with an attorney general/prevaricator that can hold others to this high standard and, yet, not subject himself to the same standard? Makes no sense. Makes no sense that he can even continue in his present job much less be considered for another position. Haven’t we had enough of this deceit? Haven’t we had enough of settling for weak people? What standards do the people of Connecticut demand of their elected officials? Is Blumenthal the best that they can find for either job? TheFundamentals would think, with due acknowledgment to William Buckley, that any voter in Connecticut could open any phone book from any city/village/town in the nutmeg state, pick any page at random, point their finger at any name in the book and come up with a better qualified candidate. Okay, enough about Connecticut. The simple fact is that the citizens of the nutball, er, we mean nutbag state are entitled to vote for weak candidates if they so choose; we just don’t understand why they don’t give this “misplaced word” fellow the good old heave - ho.

2. But there is a much bigger issue at play when it comes to the way in which some of our political candidates see themselves. Do you remember a few years ago when Hillary Clinton was trying to get Obama’s job and she spoke about flying into a war zone under fire with the obvious connection about her bravery in being on the scene, in person, at great risk to herself because she was such a committed public servant? And, lo and behold, it was not true. It was either a lie or an exaggeration or misplaced words or whatever. And then do you remember when Joe Biden was running for president and he snitched the wording from some English politician about his background and upbringing and educational efforts and a bunch of other crap that not only was not true; the words were some else’s. So here’s what we were wondering. Why doesn’t Hillary quit her job and fly into a war zone and get to work doing something that somebody might find necessary? Why doesn’t she do something that is truly risky? Now. Just resign and say you are off to do something brave, but on my own. Or why doesn’t Joe do something really brave like quit his job and move to Somalia to teach the pirates there about capitalism and hard work? Or why doesn’t Blumenthal join the Peace Corps and move to Haiti and dig latrine ditches for the struggling citizens of that fair land? That’s what we don’t get. All these prevaricators can still do the things that they wish they had done but didn’t just quite get around to it. So just do ‘em now. Quit what you’re doing and do something that will make you look, er, we mean feel, good. There’s still time. Did you know that there are thousands of Americans, tens of thousands as a matter of fact, who make sacrifices every day? They don’t even think about gilding the resume or standing in front of an audience or a camera crew and belching out nonsense about their heroism and their real tribulations. They just do it. No one can make anyone do something for others or do something under difficult circumstances but we sure can acknowledge the ones who really do it and shun the fools who talk about doing it. It’s a fundamental, folk. The ones who really do it seldom talk about it!

In closing we want to make an observation about this guy Blumenthal. There is some evidence that he falls into the burgeoning category of very aggressive district attorneys who use their office for grandstanding and abuse of individuals and entities, particularly those where they are able to manage public opinion on so-called populist or politically correct topics. For those who are interested, we suggest you read a well written article by Fergus Cullen and recently published in the Wall Street Journal -
http://online.wsj.com/article/SB10001424052748704302304575214491462332922.html?mod=WSJ_newsreel_opinion

The abuse of power and the corruption of elected officials can be somewhat mitigated by term limit legislation and, where required, by amendments to state and the national constitutions. This term limit issue is not limited to congressional and legislative offices only. Term limits for all elected offices are long overdue!

Friday, May 21, 2010

A Secret Plan to Destroy America

I have a secret plan to destroy America. If you believe, as many do, that America is too smug, too white bread, too self-satisfied, too rich, let's destroy America. It is not that hard to do. History shows that nations are more fragile than their citizens think. No nation in history has survived the ravages of time. Arnold Toynbee observed that all great civilizations rise and they all fall, and that "an autopsy of history would show that all great nations commit suicide." Here is my plan:

1. We must first make America a bilingual-bicultural country. History shows, in my opinion, that no nation can survive the tension, conflict and antagonism of two competing languages and cultures. It is a blessing for an individual to be bilingual; it is a curse for a society to be bilingual. One scholar, Seymour Martin Lipset, put it this way: "The histories of bilingual and bicultural societies that do not assimilate are histories of turmoil, tension and tragedy. Canada, Belgium, Malaysia, Lebanon – all face crises of national existence in which minorities press for autonomy, if not independence. Pakistan and Cyprus have divided. Nigeria suppressed an ethnic rebellion. France faces difficulties with its Basques, Bretons and Corsicans."

2. I would then invent "multiculturalism" and encourage immigrants to maintain their own culture. I would make it an article of belief that all cultures are equal: that there are no cultural differences that are important. I would declare it an article of faith that the black and Hispanic dropout rate is only due to prejudice and discrimination by the majority. Every other explanation is out-of-bounds.

3. We can make the United States a "Hispanic Quebec" without much effort. The key is to celebrate diversity rather than unity. As Benjamin Schwarz said in the Atlantic Monthly recently, "The apparent success of our own multiethnic and multicultural experiment might have been achieved, not by tolerance, but by hegemony. Without the dominance that once dictated ethnocentrically, and what it meant to be an American, we are left with only tolerance and pluralism to hold us together." I would encourage all immigrants to keep their own language and culture. I would replace the melting pot metaphor with a salad bowl metaphor. It is important to insure that we have various cultural sub-groups living in America reinforcing their differences, rather than Americans emphasizing their similarities.

4. Having done all this, I would make our fastest-growing demographic group the least educated – I would add a second underclass, unassimilated, undereducated and antagonistic to our population. I would have this second underclass have a 50 percent dropout rate from school.

5. I would then get the big foundations and big business to give these efforts lots of money. I would invest in ethnic identity, and I would establish the cult of victimology. I would get all minorities to think their lack of success was all the fault of the majority. I would start a grievance industry blaming all minority failure on the majority population.

6. I would establish dual citizenship and promote divided loyalties. I would "celebrate diversity." "Diversity" is a wonderfully seductive word. It stresses differences rather than commonalities. Diverse people worldwide are mostly engaged in hating each other – that is, when they are not killing each other. A "diverse," peaceful or stable society is against most historical precedent. People undervalue the unity it takes to keep a nation together, and we can take advantage of this myopia.

Look at the ancient Greeks. Dorf's "World History" tells us: "The Greeks believed that they belonged to the same race; they possessed a common language and literature; and they worshiped the same gods. All Greece took part in the Olympic Games in honor of Zeus, and all Greeks venerated the shrine of Apollo at Delphi. A common enemy, Persia, threatened their liberty. Yet, all of these bonds together were not strong enough to overcome two factors ... (local patriotism and geographical conditions that nurtured political divisions ...)" If we can put the emphasis on the "pluribus," instead of the "unum," we can balkanize America as surely as Kosovo.

7. Then I would place all these subjects off-limits – make it taboo to talk about. I would find a word similar to "heretic" in the 16th century – that stopped discussion and paralyzed thinking. Words like "racist", "xenophobe" halt argument and conversation. Having made America a bilingual-bicultural country, having established multiculturalism, having the large foundations fund the doctrine of "victimology," I would next make it impossible to enforce our immigration laws. I would develop a mantra – "because immigration has been good for America, it must always be good." I would make every individual immigrant sympatric and ignore the cumulative impact.

8. Lastly, I would censor Victor Davis Hanson's book "Mexifornia" – this book is dangerous; it exposes my plan to destroy America. So please, please – if you feel that America deserves to be destroyed – please, please – don't buy this book! This guy is on to my plan.

"The smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion, but allow very lively debate within that spectrum." – Noam Chomsky, American linguist and U.S. media and foreign policy critic.

________________________________________

The above speech was delivered in 2004 by Richard D. Lamm, a Democrat, who served as governor of Colorado for 12 years from 1975 to 1987.

Wednesday, May 19, 2010

There Oughta Be a Law

Where to begin. Every day we are experiencing and every day we see with our own eyes what we know to be misguided behavior. But we never see appropriate remedial action. We all know that the national government is now an accumulation of programs, agencies, personnel and costs that bear no association with the fiscally sensible priorities of a responsible nation. We are not even sure what the priorities are anymore because the priorities bounce around and the spending just keep rising.

We all know that the states are burdened with mandates from Washington DC that are the consequence of a rudderless effort to keep making everything better for everyone and, in the process of such silliness, the only real beneficiaries are the people who print government bonds and currency and work for the thousands of local, state and national governments.

We see, in our communities, out of control education costs with no accountability for results. We see this issue at a sustained crisis level in our major urban areas. The performance of urban public schools stink and they keep asking for more money. How about some new ideas, some new teachers, some competitors, some results? Oh no, just give us more money.  The schools should be closed and competition and new entries encouraged.

We see the daily misuse of the descriptive phrase – “public servant” knowing full well that the only public the public servants are serving are themselves, their associates and their highly compensated union bosses. There is a declining pool of tax funds available to pay for the basic activities assigned to government because the tax funds are paying for inflated salaries, benefits and generous pension plans.  Basic services deteriorate.  Privatization and competition, coupled with sacrifice and frugality, are the solution.  All public pensions should be revised by law to do away with defined benefit plans and replaced with defined contribution (IRA's and 401k's) plans.

Most of our larger states, the ones that now seem to be unable to enact any form of remedial or corrective action due to entrenched powerful groups supported by other entrenched powerful groups, are insolvent; teetering on bankruptcy. Heaven forbid that they would even consider issuing a legitimate financial statement accurately showing asset and liabilities and accounting for unfunded yet constantly owed liabilities such as pension payments, medical payments and other entitlement and personnel obligations.

We see special groups of people who do not submit and are not called to perform to the laws and rules that apply to most of us. Police who apply different standards to their own than to the public. Politicians who receive benefits and perquisites that are reminiscent of either royalty or tyrants. Judges who are afraid to enforce the basic laws so they "go along to get along."  Teachers who do not wish to be submit to performance standards. Silly litigation for those who accept no responsibility for their actions or the consequences of their actions. More lawyers per citizen than any nation on the face of the globe.  The examples are now endless.

We experience legislation that is measured by the pound; not the principle. A simple bill demanding a balanced budget is nowhere in sight. A simple bill demanding the reduction of debt is not even being considered.  A 2000 page document written by lawyers, special interests, pharmaceutical company lobbyists and several hundred more highly compensated individuals looking out for their carefully focused interests, is touted as a giant step forward by an increasingly apparent very weak individual posing as a leader. Who's gonna pay for it?  Not the people who vote for him.

The party out of power (POOP), after holding the chief executive spot for 96 months, was tossed out due in no small part to a record monthly deficit spending pace of $50+ billion. The party in power (PIP) now, learning nothing from that experience, has ballooned that pace to $150+ billion per month. This is not comprehensible to anyone who breathes, thinks and has ever balanced a checkbook. But it is happening. And then the people who do it are now saying we must stop spending so much money or we must raise taxes or both. Huh?

The people know better. The leaders do not. As a matter of fact, they are not leaders. They are self serving human beings engaged in a daily embrace of most of the documented known human failings – greed, pride, gluttony and sloth. We have been sold out for the silliest of all reasons – selfishness and misguided direction. We cannot solve everyone’s problem. We cannot make everyone’s life better. And we just plain have no business sticking our nose in other people’s business. Government is not a church; not a religion; not a cause. As a matter of fact our guiding law says we cannot establish a state religion in our country. And yet that is what the politicians and special interests have done. They have bypassed the basic religions and set up their own. And, much like the established religions, their religion follows many of the same tried, tested and true behaviors – fear tactics; high faluting principles; demands for money not earned but assessed to the followers; lots of glorification of personalities; false sense of uniqueness for participants; an entrenched leadership group that is so self elevated it is above the masses (a bright new face on the scene named Rand Paul correctly called them "arrogant") and countless monetary and personal benefits for those on the in. Here is what the USConstitution says about establishing a religion in the United States – “Congress shall make no law respecting an establishment of religion.”

The US government has become the Church of Making Life Better for Everyone, except those who are either temporarily out of favor or just aren’t inclined to drink the cool aid, by Spending Borrowed Money. As a comic strip used to say, “There oughta be a law.” Hello? There is. It’s called the Constitution.

Monday, May 17, 2010

Vive la Différence

Who’d a thunk that America would be finding its footings on the banks of the Delaware River? Did you know that George Washington won his first victory of the Revolutionary War in Trenton, New Jersey on the banks of the Delaware? Day after Christmas, 1776. Did you know that this city, Trenton, NJ, was once the capitol of the new United States of America? Today, it is the capitol of New Jersey and, now, the home of the newest governor in the United States - a fellow by the name of Chris Christie.

Chris Christie has the audacity to say things like:

“They (Party in Power (PIP) in Washington) believe in bigger government, higher taxes and more spending. I believe in less government, lower taxes and empowering local officials…to fix their problems.”

“This is who I am and this is who the people elected.”

“Like it or not, you guys are stuck with me for four years.”

“Nobody in New Jersey is going to have to wonder where I am on an issue.”

“I came here to govern; not to worry about reelection.”

We may be getting a bit ahead of ourselves, but can you grab the concept – I’m here to cut spending and not worry about reelection? Where did this guy Christie ever develop such a rare syndrome as to grasp those rare concepts? Cut Spending. Not Worry about Reelection?

Meanwhile, out west, in the sovereign state of Utah, the three term senator Bob Bennett, anticipating a fourth term, instead, was asked to leave by the Party out of Power (POOP) powers. So what happened to Bob? Where did Bob go wrong? Well, let’s read some of his own words after he got the heave ho.

Here is one Bob quote, “"Looking back on them (votes), with one or two very minor exceptions, I wouldn't have cast any of them any differently even if I had known at the time they were going to cost me my career."

Let’s talk about the votes first. Bob gave lip service to controlling spending and balancing budgets. But he also voted for bailouts and he sure wasn’t opposed to putting spending designations in legislation that would come back to Utah. He was just a tad too unprincipled on the do as I say more than do as I do persona that has infected most all of the elected folk in Washington. Two, is it his job to vote the way he wants to vote or is it his job to vote the way his Utah citizens want him to vote, which is pretty much against deficits and unrepaid debt? TheFundamentals thinks he had better follow his constituents on matters economic and fiscal. He didn’t do it.

Bob also had a problem with keeping his word. Had to do with this reelection business. Remember, he said, “…cost me my career.” Big no-no, Bob. First who is kidding whom? Your career Bob was your private sector adventures; not representing the citizens of Utah in the US senate. Second, Bob, you said you would only serve two terms, which, by the way, is the recommended term limit period supported by TheFundamentals, for accumulative time spent by any one person in any combination of elected national jobs, excluding the presidency. Namely, twelve years total; no pension; just social security. So, Bob, why did you change your mind? Why did you say two terms, extend it to a third and now act upset when they gave you the heave ho while trying for a fourth?

C’mon Bob, do you really think you are that irreplaceable? Who do you think you are, John McCain (In Washington – 27 years)? Arlen Specter (In Washington - 29 years)? Harry Reid? (In Washington – 27 years)?

Twelve years. Not 27 or 29 or whatever!

Thursday, May 13, 2010

Accurate Financial Reporting

We start this essay with the exact wording from the US Constitution pertinent to today’s topic:

Article I, Section 9 is entitled “Limits on Congress.” The sentence in this section pertinent to today's essay is, “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.”

Today, we focus on the wording, “…a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.”

Does this wording include a regular Statement of Debt which is the direct consequence of the net of the Receipts and Expenditures?

Apparently not. Think about this simple extrapolation. The courts, the congress and the president(s) have taken the bare bones language of the Constitution and stretched, massaged and distorted those words over 200+ years and used the ambiguity of those words to create a massive, intrusive national government which is completely inconsistent with the wording and the intent of those who created the document. How do we know this? Well, the fine folk who fought for a great independent land sought strict controls over any government because they just had to fight for their lives in order to get out from under the burden of an oppressive national government. We cannot comprehend that they expected the government they formed to spend itself into a massive debt burden for which there would be no repayment program.   

What is the real debt of the United States? On May 10, TheFundamentals presented the US debt numbers provided by the US Treasury department. The recent growth of this debt is staggering. It is at massive record levels with no repayment program. It is growing monthly at massive record levels. It is projected to grow at massive record levels for the foreseeable future which means for years to come. It is not sustainable. It is the sure route to destruction of the country. But, we only published the portion recorded by treasury because that portion is actually documented with issued obligations – treasury notes, bills and bonds. But what about all the other debts and obligations and contingent liabilities of the US government? The so-called “off balance sheet” obligations. Where can we go to locate those numbers? Where does the United States government tally up all the debt, all the commitments, all the obligations? Where does the US government make that important information publically available. We don’t know. We can’t find it.  Surely our government would not hide this important calculation?

We Googled “total US debt.” They tell us that Wikipedia (W) is the most frequently used link to examine this search topic. So we read what W has to say and it is rather disconcerting. W says that the numbers we show from treasury exclude Fannie Mae and Freddie Mac and that the US now stands behind all their debt. W estimates the debt of these two government outfits as “just over “$5 trillion.” FIVE TRILLION DOLLARS!  W also points out that the US has taken on substantial obligations as part of its support, guarantees and funding of various programs and bailouts beginning in late 2008 and continuing up to this moment. How much are these obligations and commitments? How much has the Federal Reserve committed?  We don’t know. And what about the other commitments that are quantifiable but are not identifiable through any reasonable search or examination.  What are these you ask? They include Medicare, Medicaid, and Social Security.

Last, we ask about the known spending commitments for all forms of government programs, bureaucracies and military activities. Perhaps a simple way to address all these items, and also include the rising interest costs associated with rising debt, is to ask for an accurate projection of future deficits which will become future debt in the very near future. If you know you are going to spend it and you know you won’t be able to pay for it you darn well had better document it as more and more debt and you darn well had better know when it is coming and how you will borrow the funds. That would seem to be a direct requirement under the Constitution wording noted above.

So, here is our conclusion. This fall when the folk are running around asking for your vote, answer them this way. We want to know how much we owe. Not what you occasionally tell us but the real numbers. And then we want to know how much you will commit to reduce that amount if we give you the job. If they can’t answer the question and they will not commit to report on and reduce the accurate total amount owed, tell ‘em to take a hike. Better to vote for no one.  Better yet, run for office yourself as long as you are willing to commit to abide by the Constitution and are willing to produce an accurate financial statement as required by the Constitution. 

Tuesday, May 11, 2010

Please Remain Calm

We heard those three words of assurance uttered by one of the talking heads on one of the daily business shows last Friday. The context of the soothing advice was in reference to the rather schizoid and negative behavior of the world’s stock exchange tracking indices. If you are inclined toward the short term analysis and perspectives offered by many of the business channel readers/analyzers spewing dime a dozen projectile opinions, “please remain calm” may only be slightly better advice than those who are promoting gold purchases or laying in a year’s supply of canned goods.

At TheFundamentals, we have been asked several times this last week one of the following questions:

1. What’s going on?

2. What can I do?

3. What should I do?

People are concerned; they are uncertain. What’s going on? What to do?

Before we expand on our sentiment, we would also point out that the new president jumped on the news about the increase in jobs in April. Out of a labor force of 150 million, 15 million are unemployed; 10 million are underemployed and 22 million are safely employed working for government. He did not mention any of those numbers. Nor did he mention that someone needs to be working in the private sector to earn the money to pay the taxes to support the 22 million government employees. In summary, a lot of people don’t have jobs. America needs many more workers in wealth creating jobs and many fewer in wealth consuming jobs. TheFundamentals has a modest reading recommendation for White House employees: any one of our essays on the topic of wealth creation.

Debt is the growing source of concern and uncertainty. Greece and several of its European friends are in the spotlight due to a lengthy stretch of fiscally promiscuous ways. These folks have bought into the unfortunate new thinking of recent US political leaders that “borrowings” were a legitimate revenue source. Sometimes, when one is not taught the fundamentals by “grown ups” or is susceptible to believing in short term solutions, the new thinking can be accepted as real thinking. At the top of this list of fools is RCheney who said something about deficits no longer mattering. When Cheney and Bush II took office, the debt of the US was $5.7 trillion. It had ballooned to $10.6 trillion when they left and Obama took over. That increase of $4.9 trillion means that on average, each month those two received a government paycheck, US debt rose $51 billion. That is $51,000,000,000.00 per month!

Markets do not like uncertainty. And we are getting triple doses of uncertainty from all over; but, significantly, from those who are supposed to be the “grown ups.” When the US president talks a good game but does the opposite, people notice. When he signs legislation that increases deficits, while talking about controlling deficits and debt, people notice. When he supports public employment while private employment plummets, people notice. When better, cheaper products are made outside the US, people notice. When US business would rather locate in places other than the US because of a positive environment elsewhere, people notice. When the largest US political subdivisions run massive deficits and avoid corrective action and do not issue accurate financial statements displaying their real financial condition, people notice. When the policy of the government is to misplace blame on others for government failures, people notice. When the leader, the president, treats business as an evil enterprise rather than the only wealth creating vehicle around, people notice. One last point. The US debt is now $12.9 trillion, an increase of $2.3 trillion on Obama’s watch. He has been in office for 15 months. Debt under his control is increasing at the rate of $154 billion per month; that is $154,000,000,000.00. That is exactly triple (as in 3X the pace) the horrible performance of Bush and Cheney. People notice. (Aside: We wonder what Obama will have to say about what the next president will be inheriting from him.)

The financial mess facing many of the worlds democracies is the consequence of spending more than received (deficits) which leads to the accumulation of growing obligations (debt) which, when not repaid, leads to either insolvency/default and or bankruptcy (destruction.) People notice.

The cure is not all that complicated. The cure is sacrifice and frugality. We appear to be at the talking stage of sacrifice and frugality now; not in the United States mind you, but at least where the lenders have left town or are charging a lot more for their loans. The longer the talking stage lasts, the longer the uncertainty lasts and it appears that we are in for a long talking stage period. There is no apparent likelihood of a leadership change here (US) soon, so that adds to the uncertainty. As the weak leaders engage in head fakes to talk about sacrifice and frugality, their remaining credibility wanes and uncertainty grows. People notice.

Better advice? Does anyone recall what Captain Chelsey B. Sullenberger III, a true grown up and true leader, told his passengers just before making an emergency landing in the Hudson River? “Brace for Impact.” Come to think of it, those three words may be good advice for Obama to pass along to the successor who inherits the huge mess he is creating.

Monday, May 10, 2010

US Debt -- a brief history

The following information is sourced from The US Treasury’s website: http://www.treasurydirect.gov/

Total US Debt on GWBush inaugural day, January 20, 2001             $ 5,727,776,738,304.64

Total US Debt on BHObama inaugural day, January 20, 2009            10,626,877,048,913.08

Actual debt Increase during GWBush presidency                                4,899,100,310,608.44

Average debt increase per month (96 months)                                       51,032,294,902.17


Actual US Debt at end of each month of Obama presidency:

January 31, 2009                             $ 10,632,005,246,736.97

February 28, 2009                              10,877,144,501,237.52

March 31, 2009                                  11,126,941,485,713.37

April 30, 2009                                    11,238,592,141,958.64

May 31, 2009                                     11,321,599,905,356.40

June 30, 2009                                    11,545,275,346,431.39

July 31, 2009                                      11,669,251,349,504.65

August 31, 2009                                 11,812,870,150,873.53

September 30, 2009                           11,909,829,003,511.75

October 31, 2009                               11,893,091,028,361.01

November 30, 2009                            12,113,047,538,115.42

December 31, 2009                            12,311,349,677,512.03

January 31, 2010                                12,278,635,997,966.88

February 28, 2010                              12,440,068,020,714.47

March 31, 2010                                  12,773,123,096,139.43

April 30, 2010                                    12,948,738,915,856.86

Actual debt increase (so far) during BHObama presidency                         $  2,321,861,866,943.78

Average debt increase (so far) per month (15 months)                                    154,790,791,129.59

Dear Readers: These startling debt numbers are US Government facts.  What you see documented above is what TheFundamentals describes as “Fiscal Promiscuity.” The average monthly increase during 96 months of GWBush was $51 billion. Under Obama, the average monthly increase has ballooned to $154 billion; three times as much. In closing, we would pose this question. “At what level did the burgeoning US debt become a national security issue?”

Thursday, May 6, 2010

The Winds of Change - Episode I

Wind is the result of pressure. Differences in air pressure result in air movement. Air movements can be mild, moderate, strong and severe. The greater the pressure; the greater the movement. Add in some heat and circulation and the air movement can get rather rambunctious. We would like to use this meteorological metaphor to discuss the winds of change that are occurring in our political, economic and financial environments. We think that these changes are going to be on our minds and affecting our pocketbooks for some time to come. We think that these changes, much as air movements, will come in variations of mild, moderate, strong and severe events. And, we think that much like weather, man would like to be in control but isn’t. We think that much unlike weather man can control his/her political, economic and financial conditions but will, instead, allow the building pressures to create the levels of movement.

To document the levels of movement, we are creating a new category of electronic links to facilitate our following these events; these changes. We have creatively decided to call the category, “Winds of Change.” It is located in the left margin and already contains a few articles that may be of reading interest. These winds will result from pressures - electoral pressures; joblessness pressures; excessive taxation pressures; debt pressures; voter dissatisfaction pressures; who knows, there may even be an example or two of prudent actions made to avert worst case scenarios but the early returns do not create optimism for this likelihood. Do not expect great first steps. Do not expect even medium first steps. At first, the steps will be political cover and more of the “time buying” pronouncements that we have grown to know and despise from our weak political leaders. Regardless, we will document the change in this new category.

If you are a faithful reader and contributor to TheFundamentals, you know that our main purpose is the reversion to fiscal sensibility and sound financial management. We wish to play a role in bringing about the end of the deficits = debt = destruction path that our governments at all levels have embraced. We suggest the simple remedial path of sacrifice and frugality. We make specific recommendations for our political leaders to follow. We really want these recommendations to be used by voters as criteria in examining candidates and deciding who to support. Our recommendations are tried, tested and true. That doesn’t mean that they will be so received. We know/hope that we will get to financial soundness and saneness and we know that a constant education process is needed to maintain focus on the process and the final destination.

Prior to the housing bubble bursting, the pressure build up was phenomenal – prices way in excess of affordability with a terrific boost from high credit pressure bolstered by the silly antics of politicians taking credit for rising home ownership and silly bureaucrats spiking the punch bowl late into the night and opportunistic fat cats pouncing with glee on the willing prey – the rest of us. The process of correction is underway. The bubble correction has been painful but necessary. There are three remaining bubbles that will not correct easily. These are:

• Government spending and its burdensome intrusion on the free enterprise economic system. This bubble has greatly expanded in the last 16 months. Is there a showdown coming? Not according to the 10 year budget projections of the new, current administration.

• Education costs and results. This bubble is massive and, mostly local. It is not going to burst without pain and suffering. It is entrenched and the powerful unions and political forces behind it are well supported at the ballot box. But, a few shingles are blowing off the roof as the winds of change rustle (click on “Documentary Takes on NJ Teachers Union)

• Health care costs. The costs in the US are at least double compared with anywhere in the developed world. The entrenched non competitive factors of bought off congress people, strong lobbyists, huge vote providing powerful unions/associations and very corrupt private interests dominate health care. Will the competitive and business environment factors that have driven most good US manufacturing jobs to foreign countries affect health care? Or, will costs just keep rising?

In our next episode on the “Winds of Change” we will look at a local example involving government intrusion, bloated costs and politicians and peer into the tent where our new president learned his union supporting ways with rather bad consequences for the business community. Stay tuned.

Tuesday, May 4, 2010

It's All Greek to Us

The ancient Greeks used a form of discussion called "dialectic" to debate issues. Today, TheFundamentals, out of respect to the land of Plato and Socrates, employs dialectic questioning to examine the many facets of matters Greek. Let’s start….

What have we learned from the Greeks historically?

In literature, in poetry, in mythology and in the more modern forms of advanced communication – screen and stage, the Greeks are noble, wondrous folks with great wisdom and experience and joyous family celebrations. The world sends its visitors to their cities, their ancient structures and their islands to partake of the history and the culture and the society that has led the world through the ages. We all marvel at their culture and bearing. We embrace their nobility. We base our democracy on their principles. The Greeks don't engage in self destructive behavior. They know better.

What have we learned from the Greeks more recently?

The ancient state of Greece, cradle of Earth’s democratic concepts, is drowning in debt. How can a democracy, supposedly the only form of government system that is flawed but not totally destructive to economic and personal freedoms, be drowning in debt? How can free people engage in extended periods of self destructive behavior? Why would free people engage in self destructive behavior? It just doesn’t make sense. Surely the Greek politicians and bureaucrats were looking out for the interests of the citizens and, particularly, the Greek tax payers? Surely, the Greek politicians and bureaucrats were men and women of principle and recognized the need to practice sacrifice and frugality. Maybe they can blame Wall Street for their problems!  We do wonder, however, whether American politicians and bureaucrats have been taking too many junkets to study the behavior of this storied state and its promiscuous ways?  It appears that our politicians are imitating the Greeks.

What does the expression, “Beware of Greeks bearing gifts” mean?

Well, we did a little research and it turns out that it is a reference to a wooden horse that the Greeks left at the doors to the city of Troy a few years back. The Greeks and Trojans (aka people of Troy) were warring and it appeared that the people of Troy had won; the Greeks had retreated and they left this gift of a really big wooden horse. The Trojans took it inside their walled city and proceeded to celebrate late into the evening. And then, when they were all passed out; when the Trojans were out cold and not able to defend themselves, Greek warriors swarmed out of the wooden horse and destroyed the sleepy, defenseless Trojans.  Pretty clever, huh?  Some think the Greeks have lost their edge in this modern world of ours.  But they are doing a pretty good job of playing the Germans for patsies and the Germans are buying into it much as the Trojans did.

Could that be a wooden horse standing on the banks of the Potomac?

What does that mean? Are you suggesting that the promiscuous ways of the Greeks have invaded our fair land? Could the example of the consequences of their decades of financial promiscuity be a gift of warning to the United States? Will we heed the warning? Will we modify our financially promiscuous ways? Our excesses? Will we rein in our costly military ventures? Our vote buying entitlements? Our generous public employee pensions? Is that what you mean? Are you speaking metaphorically?   Are you nuts?   It can't happen here.  We're not Greece.  We're the greatest country ever.  Our best days are ahead of us, fool.

Could the Greeks just be engaging in a bit of "regifting?"

There you go again.  That question has a bit of cynicism in it.  Are you suggesting that the Europeans are returning our gift of crappy bubble inflated, mortgage backed securities by loading up the world with some crappy Euro bonds payable by their Greek member state?

Did Thomas Jefferson have some Greek heritage in his background?

Apparently not because this is what he said, “It is incumbent on every generation to pay its own debts as it goes.”

Does TheFundamentals wish to make a prediction?

No, but we will make the following predictive comment: Beware of more and more Washington politicians and bureaucrats speaking about the dangers of deficits and debt while performing no actions to either eliminate deficits or repay debts. TheFundamentals expects a rise in politicians saying, “Do as I say; not as I do.” Only, we predict they will not use those words. They will say things like, “Hey, let’s form a committee or a commission to look at the problem.  To come up with suggestions.” Or, they might say, “Hey, you all had better get your deficits under control pretty darn quick (but this is what they really mean - Don’t be looking to me to do anything about it.")  See Steny Hoyer's article in the left margin entitled -  Do as I say; not as I do (just kidding; it starts out with "Shared Sacrifices" which leads us to wonder, "Hmmnn, has Steny been reading TheFundamentals?")

What might Thomas Jefferson say today if he was around?

“Don’t look a gift horse in the mouth.”