On Thanksgiving Day, TheFundamentals expressed its appreciation to those who fight and die for our freedom in distant lands. As our readers know, we are quite critical of the military leadership in choosing its strategies for battle locations and plans as well as strategic balance of power issues. For example, how does it help the United States to invade Iraq which was a power balance against Iran? The US now is an occupier of Iraq; completely stretched in terms of finances and personnel and unable to provide the same balance against Iran that Iraq provided both geographically and politically. It makes no sense. In Afghanistan, all one need do is study, briefly, its history. We now fight the very same folk that we armed in their successful battle with the Soviet invaders. These successful warriors, who eat sand for lunch, will tell you that they were the ones who brought down the Soviet empire. We don’t argue that position but we do question what the heck we think we are going to accomplish in that geography when we also must ultimately leave just as the Soviets did?
We would suggest a different approach including strong ties with India (which Mr. Obama is pursuing) and the Chinese (which means quit borrowing so much from them) and the Russians (who have their hands full with neighboring Muslims) and let them worry about Afghanistan and Pakistan, their neighbors, and the other Stan’s. In the meantime, it is just plain time to put an end to emigration and visitation from folks from those countries. If and when they decide to become tolerant societies with openness for other religious beliefs we would, of course, reconsider the restrictive policy on their citizens. Harsh? Hardly. More like common sense.
Listen to Lt. Colonel Allen B. West, brand new congressman from FL: http://www.youtube.com/watch?v=Eu8dRfgNxGM&feature=related
And, some simpler, basic logic from the Colonel: http://www.youtube.com/watch?v=TkGQmCZjJ0k&feature=related
Instead we invade their lands; kill some of their combatants of which they have an endless supply of recruits; kill many innocent civilians and thereby guarantee a building hatred for our country and couple those accomplishments with an open, welcome border policy for their angry citizens. Not a smart combination. Not a winning strategy. Not good tactics.
Americans are proud of their military. The men and women of the United States have a noble record of great accomplishments in fighting despots and tyrants and killers in many locations. But our civilian led military complex with its insatiable appetite for spending has also done some things that others have not. Four very significant military adventures in the last 65 years stand out:
• Monday, August 6, 1945 the atomic bombing of Hiroshima resulting in the immediate and subsequent death of an estimated 90,000 to 166,000 civilians
• Thursday, August 9, 1945 the atomic bombing of Nagasaki resulting in the immediate and subsequent death of an estimated 60,000 to 80,000 civilians
• Thursday, March 20, 2003 the invasion of Republic of Iraq, population: 31 million; a Muslim (97%) country (Shia 65% and Sunni 35%) resulting in the death of 100,000 Iraqi civilians with estimates of additional civilian deaths as high as 500,000
• Sunday, October 7, 2001 the invasion of the Islamic Republic of Afghanistan, population: 29 million; a Muslim (99%) country (85% Sunni and 15% Shia) resulting in the death of an estimated 34,000 Afghan civilians
The United States cannot plead innocence in the killing of foreign civilians. We go to great lengths to justify these acts but others do not forget.
There are many patient people in the world. The Muslamic peoples are not going to go away. They do not play a short term game. We must learn to match their long term strategy of perseverance with a winning long term strategy of our own. It will certainly not be easy but the combination of debt and invasions and civilian deaths are neither winning strategies nor winning tactics.
Tuesday, November 30, 2010
Thursday, November 25, 2010
Thanksgiving 2010
We are thankful for......
We love our country. We will always be grateful that we were born American. We will never turn our back on our country particularly now in its time of need for good leadership. We are committed to a free and thriving America. We will always be thankful to those many individuals who sacrifice so that we may be free. It is time for our leaders to require sacrifice from all of us. It is time to return to American fundamentals.
Afghanistan War (October 7, 2001 to present) - 1,077 Americans Killed in Action
Iraq War (March 20, 2003 to present) - 3,492 Americans Killed in Action
Source: http://www.defense.gov/news/casualty.pdf
Iraq War (March 20, 2003 to present) - 3,492 Americans Killed in Action
Source: http://www.defense.gov/news/casualty.pdf
Thursday, November 18, 2010
Decision points?
Bush II has been pretty good about staying home and keeping quiet. But, alas, the allure of the easy memoir dollar has pulled him out of the shadows and the Oprah’s of the world are only too happy to accommodate even while deprecating. We haven’t read it; don’t need to; don’t plan to. We lived it.
There is little doubt but that the current administration is beset with a myriad of problems that either began or were enthusiastically enhanced by both Mr. Bush II and Mr. Clinton. Clinton gets a break in the current viewpoint for several reasons, including; one, the basic media machine is pro Clinton and anti Bush, and; two, Bush overextended the US military in two unnecessary adventures as they were designed and executed. Third, the housing bubble that began under Clinton and the congressional mishandling of FHLMC and FNMA as well as the feds politically motivated monetary ease policies and disregard for fundamental regulation all burst wide open on Bush’s watch. Frankly Bush deserves the attributed blame for this mess because he did nothing to step in and mitigate it. And debt rose almost $5 trillion during Bush; about $1.5 trillion during Clinton.
Bush had many other troubled and bad “decision points.” He did nothing to rein in the spending of the federal government. The federal debt rise on his watch is tough to pass off as someone else’s responsibility. Of course, he is not responsible for the promiscuous spending in states such as California, New York and Illinois; Connecticut and New Jersey. But his policies supported the flow of federally collected and borrowed moneys to these spending machines and that is unforgivable. On the other hand the same promiscuity occurred under Clinton. To this day, few grasp the significance of the federal government’s support of America’s most insolvent states.
So what else could Bush have done? Could he have pressured the fed to raise interest rates and regulate bad housing lending? Enforce lending standards such as documents and earnings and down payment requirements? Of course he could. He didn’t. And the fed will quickly respond that he could have vetoed spending legislation (fiscal policy) which he completely failed to do. He gave lip service, perhaps, to Fannie and Freddie silliness but he really didn’t mean it. He enjoyed laying claim to responsibility for expanding housing ownership, particularly among minority groups. Some leadership, huh? Decisions? Hardly. More like take credit for whatever spin you can get out of the situation and avoid responsibility for the unanticipated negative consequences. But, alas, not too many memoirs entitled, “Avoiding Responsibility.”
Ultimately, the early returns on Bush cannot help but to question the very title of this premature memoir. His decision points, today, with little time passed for aging and perspective suggest that much of his presidency was not based on “decision points” but was characterized by panicking in lieu of thoughtful consideration and decision making. It seems that Mr. Bush followed a fairly consistent pattern of what we at TheFundamentals have observed personally from other leaders who lack history, perspective and patience. They believe they must do something even when they don’t know what to do. So they send subordinates on missions that frequently find them bouncing off walls and returning to their starting point with nothing to show for their efforts except the appearance of motion and activity and huge expenditure records. They believe you can’t sit still. People expect you to do something. Or, they believe doing something is better than doing nothing because you can be deemed disengaged for doing nothing. Nothing worse than having to justify patience and forbearance, huh?
We have said it before. America needs a big and lengthy time out. A period of quiet introspection that would also be characterized by sacrifice and frugality. But, what could possibly be more un-American than doing nothing? And slowing down our borrowing and spending? And lecturing to everyone but the fellow/gal in the mirror?
So, the Bush nonsense continues with the replacement kid who thinks that strategically government is the answer and spending is the tactic by which to implement the strategy. He now lectures the world that American economic recovery is critical to the well being of the world. A few years ago he was dodging roll calls in Springfield, Illinois and now he knows what’s best for the world? Implicit in that thinking is that you had better help get our spending/consuming/borrowing machine back on track or your gonna be sorry. Without us to buy your stuff, you won’t be making as much of it would appear to be the logic of this argument. In the meantime one of his hands reaches out to the Muslim world while the other gropes your privates at the airport screening designed to prevent bad Muslims from blowing up American planes. We often wonder how much of this goofy behavior would occur if they and their families were subject daily to their solutions imposed on the rest of us? (Aside: Does Obama shop at Wal-Mart? Answer: Not in Chicago.)
Back to George II. We had eight years of this leader (liberal use of term) who displayed his lack of history, lack of knowledge about limitations and lack of foundation in fundamentals by panicking whenever a thoughtful process was required. We think history will characterize these eight years as “Panic Points” not decision points.
There is little doubt but that the current administration is beset with a myriad of problems that either began or were enthusiastically enhanced by both Mr. Bush II and Mr. Clinton. Clinton gets a break in the current viewpoint for several reasons, including; one, the basic media machine is pro Clinton and anti Bush, and; two, Bush overextended the US military in two unnecessary adventures as they were designed and executed. Third, the housing bubble that began under Clinton and the congressional mishandling of FHLMC and FNMA as well as the feds politically motivated monetary ease policies and disregard for fundamental regulation all burst wide open on Bush’s watch. Frankly Bush deserves the attributed blame for this mess because he did nothing to step in and mitigate it. And debt rose almost $5 trillion during Bush; about $1.5 trillion during Clinton.
Bush had many other troubled and bad “decision points.” He did nothing to rein in the spending of the federal government. The federal debt rise on his watch is tough to pass off as someone else’s responsibility. Of course, he is not responsible for the promiscuous spending in states such as California, New York and Illinois; Connecticut and New Jersey. But his policies supported the flow of federally collected and borrowed moneys to these spending machines and that is unforgivable. On the other hand the same promiscuity occurred under Clinton. To this day, few grasp the significance of the federal government’s support of America’s most insolvent states.
So what else could Bush have done? Could he have pressured the fed to raise interest rates and regulate bad housing lending? Enforce lending standards such as documents and earnings and down payment requirements? Of course he could. He didn’t. And the fed will quickly respond that he could have vetoed spending legislation (fiscal policy) which he completely failed to do. He gave lip service, perhaps, to Fannie and Freddie silliness but he really didn’t mean it. He enjoyed laying claim to responsibility for expanding housing ownership, particularly among minority groups. Some leadership, huh? Decisions? Hardly. More like take credit for whatever spin you can get out of the situation and avoid responsibility for the unanticipated negative consequences. But, alas, not too many memoirs entitled, “Avoiding Responsibility.”
Ultimately, the early returns on Bush cannot help but to question the very title of this premature memoir. His decision points, today, with little time passed for aging and perspective suggest that much of his presidency was not based on “decision points” but was characterized by panicking in lieu of thoughtful consideration and decision making. It seems that Mr. Bush followed a fairly consistent pattern of what we at TheFundamentals have observed personally from other leaders who lack history, perspective and patience. They believe they must do something even when they don’t know what to do. So they send subordinates on missions that frequently find them bouncing off walls and returning to their starting point with nothing to show for their efforts except the appearance of motion and activity and huge expenditure records. They believe you can’t sit still. People expect you to do something. Or, they believe doing something is better than doing nothing because you can be deemed disengaged for doing nothing. Nothing worse than having to justify patience and forbearance, huh?
We have said it before. America needs a big and lengthy time out. A period of quiet introspection that would also be characterized by sacrifice and frugality. But, what could possibly be more un-American than doing nothing? And slowing down our borrowing and spending? And lecturing to everyone but the fellow/gal in the mirror?
So, the Bush nonsense continues with the replacement kid who thinks that strategically government is the answer and spending is the tactic by which to implement the strategy. He now lectures the world that American economic recovery is critical to the well being of the world. A few years ago he was dodging roll calls in Springfield, Illinois and now he knows what’s best for the world? Implicit in that thinking is that you had better help get our spending/consuming/borrowing machine back on track or your gonna be sorry. Without us to buy your stuff, you won’t be making as much of it would appear to be the logic of this argument. In the meantime one of his hands reaches out to the Muslim world while the other gropes your privates at the airport screening designed to prevent bad Muslims from blowing up American planes. We often wonder how much of this goofy behavior would occur if they and their families were subject daily to their solutions imposed on the rest of us? (Aside: Does Obama shop at Wal-Mart? Answer: Not in Chicago.)
Back to George II. We had eight years of this leader (liberal use of term) who displayed his lack of history, lack of knowledge about limitations and lack of foundation in fundamentals by panicking whenever a thoughtful process was required. We think history will characterize these eight years as “Panic Points” not decision points.
Monday, November 15, 2010
Harpooning the American Whale
Well, we got a sneak preview of what the fancy commission thinks we might need to do to cut the deficits and stop the ballooning debt rise. Most of their early notice/sneak peak/trial balloon seems quite tame to us at TheFundamentals but let’s quickly recap some of the suggestions:
• Cut the federal workforce by 10% (not much but, just like the busload of lawyers going over the cliff, a start)
• Increase social security full benefit qualifying age to 69 (grandpa goes back to work; we’re kidding of course, these changes are so far out in the future as to be meaningless)
• 15 cent a gallon gasoline tax (there should be no tax increases, none, before all the spending cuts are implemented)
• Eliminate mortgage interest deduction (not good timing for a crappy real estate market)
• 3 year federal pay freeze (what? How about a pay reduction first of, say, 33 %)
• Means testing for social security recipients (soak the rich; sounds familiar; expect to see a lot of this thinking)
• Medicare cuts (we would encourage starting with benefit reductions for fatties)
• Lower income tax rates (yeah baby)
We support all these suggestions but they will need to be strengthened (cuts implemented and measured before any tax changes; adhere to a strict 3:1 ratio of $3 in realized spending cuts for each $1 in revenues added) in order to accomplish the goal of deficit reduction. None will deal with America’s inability to compete in the world marketplace (see below.) In the meantime, we are not optimistic about the deficit reductions given these early reactions. First, from the lovely NPelosi, who said, “Simply unacceptable.” She sure got the message a few days ago, huh? Now do you see why term limits are an absolute necessity for this republic of ours to survive?
And, from the biggest, fattest whale of them all, Richard Trumka, AFL-CIO president and Obama buddy, “…the deficit commission just told working Americans to “drop dead.” Funny thing about this Trumka guy. His union has been telling American employers and taxpayers to drop dead for decades. Hey Richard, would you accept pay equity between the private and public sector? You union guys are big on pay equity, huh?
We didn’t see some of our earlier suggestions like sell the Grand Canyon and auction off California to the highest (well, any) bidder. If we could merge Mexico and California forming a separate country, we could solve two problems quickly. Doesn’t solve Illinois and New York but it would be a boon for the fence builders. Not as farfetched as you may think. More to the point, here are the things the commission missed that are needed to make America competitive and create lots of jobs:
• Tort reform; litigation and settlement limitations, loser pays; sunset on all legislation with legal penalty provisions. Does not cost a thing; makes America much more competitive; creates a pro business atmosphere which is badly needed for wealth and jobs creation
• Peel back the following protected classes: disability laws; equal pay laws; discrimination laws and any other laws, rules and reporting imposed on employers with less than 1000 employees, going to 5000 employees in three years (we would call this legislation, “Get America back to work law”)
• Eliminate all legislative and bureaucratic support (yes, Arne, that means the department of education) for the following special interest groups: teachers unions and all other public employee unions
• Eliminate all defined benefit pension plans for public employees
• Eliminate all federal funds going to states that do not follow the above guidelines (this small change coupled with the “Get America back to work law” would go a long way to solving America’s job creations problem. We would, however, need to establish a work permit program for the Mexifornia immigrants to work here)
• Reduce by 50% all subsidies to all federal subsidy recipients; follow up with second 50% reduction in 60 days
Do you notice that these changes don't cost anything? They are cutbacks that would send the message to American employers that we want you to build your products here; expand your businesses here, not in Asia or elsewhere; create new jobs, lots of new, good jobs here. Where is the commission to make America competitive? Create jobs? Do you really think Pelosi or Trumka have one clue about how to be competitive or create real jobs?
So, now what? Tune in. Don’t know that much will come from all this bluster. The proposed cuts and changes are minimal, but you can bet the fur will be flying; the lobbyists will be lobbying and the special interests will be buying lots of fancy meals for congress people at those overpriced restaurants. Hey, how about a tax on fancy meals at overpriced restaurants? Their lobby can’t be that strong can it? Richard probably wouldn’t go for that suggestion either.
• Cut the federal workforce by 10% (not much but, just like the busload of lawyers going over the cliff, a start)
• Increase social security full benefit qualifying age to 69 (grandpa goes back to work; we’re kidding of course, these changes are so far out in the future as to be meaningless)
• 15 cent a gallon gasoline tax (there should be no tax increases, none, before all the spending cuts are implemented)
• Eliminate mortgage interest deduction (not good timing for a crappy real estate market)
• 3 year federal pay freeze (what? How about a pay reduction first of, say, 33 %)
• Means testing for social security recipients (soak the rich; sounds familiar; expect to see a lot of this thinking)
• Medicare cuts (we would encourage starting with benefit reductions for fatties)
• Lower income tax rates (yeah baby)
We support all these suggestions but they will need to be strengthened (cuts implemented and measured before any tax changes; adhere to a strict 3:1 ratio of $3 in realized spending cuts for each $1 in revenues added) in order to accomplish the goal of deficit reduction. None will deal with America’s inability to compete in the world marketplace (see below.) In the meantime, we are not optimistic about the deficit reductions given these early reactions. First, from the lovely NPelosi, who said, “Simply unacceptable.” She sure got the message a few days ago, huh? Now do you see why term limits are an absolute necessity for this republic of ours to survive?
And, from the biggest, fattest whale of them all, Richard Trumka, AFL-CIO president and Obama buddy, “…the deficit commission just told working Americans to “drop dead.” Funny thing about this Trumka guy. His union has been telling American employers and taxpayers to drop dead for decades. Hey Richard, would you accept pay equity between the private and public sector? You union guys are big on pay equity, huh?
We didn’t see some of our earlier suggestions like sell the Grand Canyon and auction off California to the highest (well, any) bidder. If we could merge Mexico and California forming a separate country, we could solve two problems quickly. Doesn’t solve Illinois and New York but it would be a boon for the fence builders. Not as farfetched as you may think. More to the point, here are the things the commission missed that are needed to make America competitive and create lots of jobs:
• Tort reform; litigation and settlement limitations, loser pays; sunset on all legislation with legal penalty provisions. Does not cost a thing; makes America much more competitive; creates a pro business atmosphere which is badly needed for wealth and jobs creation
• Peel back the following protected classes: disability laws; equal pay laws; discrimination laws and any other laws, rules and reporting imposed on employers with less than 1000 employees, going to 5000 employees in three years (we would call this legislation, “Get America back to work law”)
• Eliminate all legislative and bureaucratic support (yes, Arne, that means the department of education) for the following special interest groups: teachers unions and all other public employee unions
• Eliminate all defined benefit pension plans for public employees
• Eliminate all federal funds going to states that do not follow the above guidelines (this small change coupled with the “Get America back to work law” would go a long way to solving America’s job creations problem. We would, however, need to establish a work permit program for the Mexifornia immigrants to work here)
• Reduce by 50% all subsidies to all federal subsidy recipients; follow up with second 50% reduction in 60 days
Do you notice that these changes don't cost anything? They are cutbacks that would send the message to American employers that we want you to build your products here; expand your businesses here, not in Asia or elsewhere; create new jobs, lots of new, good jobs here. Where is the commission to make America competitive? Create jobs? Do you really think Pelosi or Trumka have one clue about how to be competitive or create real jobs?
So, now what? Tune in. Don’t know that much will come from all this bluster. The proposed cuts and changes are minimal, but you can bet the fur will be flying; the lobbyists will be lobbying and the special interests will be buying lots of fancy meals for congress people at those overpriced restaurants. Hey, how about a tax on fancy meals at overpriced restaurants? Their lobby can’t be that strong can it? Richard probably wouldn’t go for that suggestion either.
Thursday, November 11, 2010
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, November 10, 2010
America, the spoiled brat of the world
Last week we presented a discussion of the feds ongoing plans to goose the American spending machine by printing and distributing currency. As we all know, there has been substantial deficit spending by both the previous and, at quite an accelerated rate, the current administration. This is simply promiscuous fiscal expansion policy (F E) that has no basis in sound, fundamental economic policy. There has been lengthy attribution of this approach to the British economist John Maynard Keynes. It should both be noted and recognized that England has now rejected such spending programs and is instituting significant spending reductions. We would encourage any interested reader of these essays to watch a recent “prime minister” question period. It is a remarkable display of good leadership dealing with past mistakes, deficit spending and a prior administration with leadership that is locked on failed policies of subsidies, protected classes, special interests and massive deficit spending. If you want a quick primer on the future of Obama’s PIP, dwindling in its obliviousness, watch the labor party representative during the question and answers period. Just click on: http://www.cspan.org/Watch/Media/2010/10/27/HP/A/39987/British+House+of+Commons+Prime+Ministers+Questions.aspx
Now to continue our review of America’s fiscal and monetary promiscuity and Mr. Bernanke’s policy of Quantitative Easing (Q E.)
Indiscriminate printing and distributing a national currency, much less the world’s reserve currency, is not only an act of desperation, it is unsound monetary policy and it is deserving of complete censure and rejection from any financially responsible citizen of the US and any debt holder of any US obligation. At an absolute minimum, the direct devaluation of a nation’s currency by its central bank should be censured by the citizens of that country and should lead to an immediate termination of all connected with such act. Further, in a representative democracy the elected officials representing the people should be called upon to take a position – aye or nay on such a proposal. And the elected president should be called upon to either accept or veto such a desperate act. Let the elected representative’s stand one way or the other for two reasons: one, it is their job and; two, they can either stand or fall at the next election based on the end results and end consequences of such a horrible policy.
America has chosen neither path. The central bank announces a massive monetary expansion program on top of a previous massive spending and monetary expansion program and not a peep out of congress and not a peep out of the president. The people spoke and devastated the party responsible for the spending. Just think about that simple consequence. The people, who will make the sacrifices and engage in a period of frugality, are begging for leadership that will enact such policies.
The Obama presidency is doomed unless the divided PIP in congress saves it. The Bernanke gamble of monetary promiscuity will only pay off, and briefly at that, for Wall Street, the banks and large corporations with pricing power. It will keep the wolf away from the public employee’s union door for a short period of time but these people only live for today. Apparently, Mr. Obama and what remains of his PIP have fully embraced this short term view. The rest of the world, that group that the immature candidate Obama rallied to his cause during his campaign against Bush and McCain, now judges Obama as a failure.
The publication Financial Times is not anywhere near as bashful in printing its observations about the Bernanke “quick and easy” boom plans. Here is their article: http://www.ft.com/cms/s/0/981ca8f4-e83e-11df-8995-00144feab49a.html#axzz14MQ2O700
And their editorial comments, on the same action, are must reading:
http://www.ft.com/cms/s/0/5f7070aa-e84b-11df-8995-00144feab49a.html#axzz14MQAqwDZ
We repeat out previous observation about Bush II and Greenspan. They failed America greatly. Obama spared no adjectives in so describing Bush’ actions. And now the world looks at Obama with the same critical eye. Obama responds cluelessly. He has redefined the obliviousness of “not getting it.” Together with the singularly focused Bernanke, these four individuals are determined to enter the history books as the destroyers of America. They do not and did not understand what they did and are doing.
Instead of dealing with the fundamental economic burdens that have destroyed America’s competitiveness in world markets, they revert to easy programs of spending, borrowing and currency devaluation (F E and Q E.) The United States is getting its fat behind handed to itself everyday in the world’s competitive marketplace
The German Finance Minister opined as follows about Bernanke and Obama’s foolishness, “With all due respect, US policy is clueless,” Wolfgang Schäuble, told reporters. “It’s not that the Americans haven’t pumped enough liquidity into the market,” he said. “Now to say let’s pump more into the market is not going to solve their problems.” Herr Schäuble provided a direct perspective on these issues in an interview available at http://www.spiegel.de/international/world/0,1518,727801,00.html . It is worth reading.
In a recent editorial in the Washington Post (see: http://www.washingtonpost.com/wp-dyn/content/article/2010/11/03/AR2010110307372.html ), Bernanke made the following statement: “The Federal Reserve cannot solve all the economy's problems on its own. That will take time and the combined efforts of many parties, including the central bank, Congress, the administration, regulators and the private sector.” Bernanke has got the players and the order of things quite wrong. The central bank, congress, the administration and the regulators caused and are now exacerbating the problem. The private sector must fix it. But, they need help. Unfortunately the help they need is the diminution of the other four Bernanke players in his order of things. Bernanke sees the four government players as a solution. Until they are seen as the real problem, the problem will continue. Herr Schäuble, the Financial Times, David Cameron and other world leaders understand the real problem. They see America as a "clueless" spoiled brat. When will Obama and Bernanke?
Now to continue our review of America’s fiscal and monetary promiscuity and Mr. Bernanke’s policy of Quantitative Easing (Q E.)
Indiscriminate printing and distributing a national currency, much less the world’s reserve currency, is not only an act of desperation, it is unsound monetary policy and it is deserving of complete censure and rejection from any financially responsible citizen of the US and any debt holder of any US obligation. At an absolute minimum, the direct devaluation of a nation’s currency by its central bank should be censured by the citizens of that country and should lead to an immediate termination of all connected with such act. Further, in a representative democracy the elected officials representing the people should be called upon to take a position – aye or nay on such a proposal. And the elected president should be called upon to either accept or veto such a desperate act. Let the elected representative’s stand one way or the other for two reasons: one, it is their job and; two, they can either stand or fall at the next election based on the end results and end consequences of such a horrible policy.
America has chosen neither path. The central bank announces a massive monetary expansion program on top of a previous massive spending and monetary expansion program and not a peep out of congress and not a peep out of the president. The people spoke and devastated the party responsible for the spending. Just think about that simple consequence. The people, who will make the sacrifices and engage in a period of frugality, are begging for leadership that will enact such policies.
The Obama presidency is doomed unless the divided PIP in congress saves it. The Bernanke gamble of monetary promiscuity will only pay off, and briefly at that, for Wall Street, the banks and large corporations with pricing power. It will keep the wolf away from the public employee’s union door for a short period of time but these people only live for today. Apparently, Mr. Obama and what remains of his PIP have fully embraced this short term view. The rest of the world, that group that the immature candidate Obama rallied to his cause during his campaign against Bush and McCain, now judges Obama as a failure.
The publication Financial Times is not anywhere near as bashful in printing its observations about the Bernanke “quick and easy” boom plans. Here is their article: http://www.ft.com/cms/s/0/981ca8f4-e83e-11df-8995-00144feab49a.html#axzz14MQ2O700
And their editorial comments, on the same action, are must reading:
http://www.ft.com/cms/s/0/5f7070aa-e84b-11df-8995-00144feab49a.html#axzz14MQAqwDZ
We repeat out previous observation about Bush II and Greenspan. They failed America greatly. Obama spared no adjectives in so describing Bush’ actions. And now the world looks at Obama with the same critical eye. Obama responds cluelessly. He has redefined the obliviousness of “not getting it.” Together with the singularly focused Bernanke, these four individuals are determined to enter the history books as the destroyers of America. They do not and did not understand what they did and are doing.
Instead of dealing with the fundamental economic burdens that have destroyed America’s competitiveness in world markets, they revert to easy programs of spending, borrowing and currency devaluation (F E and Q E.) The United States is getting its fat behind handed to itself everyday in the world’s competitive marketplace
The German Finance Minister opined as follows about Bernanke and Obama’s foolishness, “With all due respect, US policy is clueless,” Wolfgang Schäuble, told reporters. “It’s not that the Americans haven’t pumped enough liquidity into the market,” he said. “Now to say let’s pump more into the market is not going to solve their problems.” Herr Schäuble provided a direct perspective on these issues in an interview available at http://www.spiegel.de/international/world/0,1518,727801,00.html . It is worth reading.
In a recent editorial in the Washington Post (see: http://www.washingtonpost.com/wp-dyn/content/article/2010/11/03/AR2010110307372.html ), Bernanke made the following statement: “The Federal Reserve cannot solve all the economy's problems on its own. That will take time and the combined efforts of many parties, including the central bank, Congress, the administration, regulators and the private sector.” Bernanke has got the players and the order of things quite wrong. The central bank, congress, the administration and the regulators caused and are now exacerbating the problem. The private sector must fix it. But, they need help. Unfortunately the help they need is the diminution of the other four Bernanke players in his order of things. Bernanke sees the four government players as a solution. Until they are seen as the real problem, the problem will continue. Herr Schäuble, the Financial Times, David Cameron and other world leaders understand the real problem. They see America as a "clueless" spoiled brat. When will Obama and Bernanke?
Monday, November 8, 2010
Leadership Series: in loco parentis
We can write about leadership. We can complain about a lack of leadership. We can acknowledge it when it occurs.
It occurred on Friday in South Bend, Indiana and Saturday in a place called Beaver Stadium in Happy Valley, Pennsylvania. We would like to acknowledge it on these pages.
Here are the opening three paragraphs of the statement from the president of University of Notre Dame on accepting responsibility for the tragic accident that took the life of a young Notre Dame student:
November 5, 2010
Dear Notre Dame students, faculty, staff, alumni, parents and friends,
The tragic accident that took Declan Sullivan’s life just over a week ago, the Mass of Remembrance in the Basilica, and his family’s faith-filled funeral for him this week have given each of us the chance to grieve, remember and pray. Declan was a bright and energetic young man who lived his life with passion. We will miss him, and we believe that he is in the loving embrace of our Lord.
Over this past week, I have had the great privilege of meeting with and trying to provide some measure of support to Declan’s parents, sister, brother and other members of his family. Many Notre Dame faculty, staff and students also have reached out to offer their assistance. Yet the Sullivan family, through their incredible grace and courage, has given us support and an example of how to respond. They ministered to us as we tried to minister to them.
There is no greater sadness for a university community than the death of one of its students under any circumstances. Yet this loss is more devastating, for Declan died in a tragic accident while in our care. For that, I am profoundly sorry. We are conducting an investigation and we must be careful not to pre-judge its results, but I will say this: Declan Sullivan was entrusted to our care, and we failed to keep him safe. We at Notre Dame — and ultimately I, as President — are responsible. Words cannot express our sorrow to the Sullivan family and to all involved.
(for the remainder of the letter, please go to http://newsinfo.nd.edu/news/17375/ )
In Notre Dame,
Rev. John I. Jenkins, C.S.C.
President
University of Notre Dame
On Saturday, an older fellow accomplished quite the feat – 400 college football wins. His reluctant interview following the game is a treat and renders a valuable lesson about humility and perseverance. It is offered at:
http://espn.go.com/video/clip?id=5774317
Accepting responsibility. Humility. Perseverance. Three leadership traits.
It occurred on Friday in South Bend, Indiana and Saturday in a place called Beaver Stadium in Happy Valley, Pennsylvania. We would like to acknowledge it on these pages.
Here are the opening three paragraphs of the statement from the president of University of Notre Dame on accepting responsibility for the tragic accident that took the life of a young Notre Dame student:
November 5, 2010
Dear Notre Dame students, faculty, staff, alumni, parents and friends,
The tragic accident that took Declan Sullivan’s life just over a week ago, the Mass of Remembrance in the Basilica, and his family’s faith-filled funeral for him this week have given each of us the chance to grieve, remember and pray. Declan was a bright and energetic young man who lived his life with passion. We will miss him, and we believe that he is in the loving embrace of our Lord.
Over this past week, I have had the great privilege of meeting with and trying to provide some measure of support to Declan’s parents, sister, brother and other members of his family. Many Notre Dame faculty, staff and students also have reached out to offer their assistance. Yet the Sullivan family, through their incredible grace and courage, has given us support and an example of how to respond. They ministered to us as we tried to minister to them.
There is no greater sadness for a university community than the death of one of its students under any circumstances. Yet this loss is more devastating, for Declan died in a tragic accident while in our care. For that, I am profoundly sorry. We are conducting an investigation and we must be careful not to pre-judge its results, but I will say this: Declan Sullivan was entrusted to our care, and we failed to keep him safe. We at Notre Dame — and ultimately I, as President — are responsible. Words cannot express our sorrow to the Sullivan family and to all involved.
(for the remainder of the letter, please go to http://newsinfo.nd.edu/news/17375/ )
In Notre Dame,
Rev. John I. Jenkins, C.S.C.
President
University of Notre Dame
On Saturday, an older fellow accomplished quite the feat – 400 college football wins. His reluctant interview following the game is a treat and renders a valuable lesson about humility and perseverance. It is offered at:
http://espn.go.com/video/clip?id=5774317
Accepting responsibility. Humility. Perseverance. Three leadership traits.
Thursday, November 4, 2010
Q E
If you follow monetary policy (who doesn’t besides John Stewart, John McCain and the last two white house occupants?) you know that the letters Q E stand for quantitative expansion or quantitative easing. Now that sounds pretty important doesn’t it? Quantitative expansion. What on earth is quantitative expansion? Sounds like something Albert Einstein could explain.
Here’s how Q E works. First some background. Federal reserve banks distribute currency where ever it is required. For example, let’s say your local bank has been the recipient of a large deposit of old raggedy-edged one, five and ten dollar bills. They have guidelines as to whether those bills should remain in circulation or be turned in for new bills. So, the local bank bundles up the old bills and sends them to the local fed and gets new bills in return. And that way when you go to the store you don’t get handed too many bills that make you wish you were carrying hand sanitizer.
Now here’s how else the fed distributes currency. This is the Q E part. It buys US securities. You know, the ones issued by the US government every time it does something but there is no cash in the till to pay for it. There hasn't been much money in the till for the better part of 30 years. But the crazy spending (which technically is not Q E but F E or fiscal expansion) has really taken off ever since Bush II and Obama II got their jobs at 1600 Pennsylvania Avenue NW, Washington, DC 20500.
The fed can buy US government securities from the treasury department or just go into the marketplace and buy them from member banks or the teachers’ pension fund or Mr. and Mrs. Smith. Usually when they buy, they buy a lot; like hundreds of billions. But, of course, the banks or the pension fund or Ma and Pa Smith want to get paid if they sell their bonds to anyone, including the fed. So, how does the fed get the cash to pay for the bonds? Two ways. They order it up from the bureau of engraving. In 2009 they asked for and received hundreds of billions of dollars worth of federal reserve notes. Each note (those pieces of paper in your pocket) costs about 7.5 cents to print. The pennies the fed pays covers the engraving, printing and related costs and put a few bucks in the till to cover the costs of the Christmas party (just kidding.) But that is peanuts compared to the trillions they create with electronic debits and credits in the banking system. No paper involved.
If the fed thinks that things need to be goosed up a little, they buy up securities and put cash (paper and electronic entries) in the system. And that folks is what quantitative easing (expansion) is all about. Did anyone do anything, like make a product or provide a service? Nope. Did anyone paint the house or fix the road or build a better mousetrap? Nope. Not necessary with Q E. You don’t need real economic transactions. You just create US dollars out of thin paper or thinner air and buy treasury securities. Eureka. You’ve got Bernanke Boom times. (Aside: When the financial history of American is written, the Monday morning quarterbacks (aka historians) will define the perfect storm as the unfortunate alignment, in a 12 year time span, in Washington DC, of Messrs. Bush II, Greenspan, Obama II and Bernanke. Let's just call them the four equestrians of the apocalypse. If TheFundamentals had any graphical skills, we would design a new federal reserve note with these idiots riding rampant across a background of the constitution and the front page of TheFundamentals website!)
What do we at TheFundamentals call this kind of activity? Well we believe, as we have said many times, in not reinventing the wheel. If someone else can say or do or demonstrate or even describe something better than we can we like to copy them, with accurate and appropriate attribution of course? So, we are going to answer our own question, “What do we at TheFundamentals call this kind of activity?” We’re okay with using the feds own letters; slightly modified. We call it Q and E.
Quick and Easy. Remember the advertisement that used that expression, "We make money the old fashioned way. We earn it.” The fed has revised it. They make money the old fashioned way all right. The same way banana republics have been making it since someone came up with the idea of coin and currency to replace gold, diamonds, wheat, oil and real wealth created products. The fed says, “We make money the quick and easy way. We print it.”
There are only two questions you need to ask anyone who will take your call. One, if this scheme backfires on us, what happens? And, two, if it’s so easy, why doesn’t everyone do it?
Here’s how Q E works. First some background. Federal reserve banks distribute currency where ever it is required. For example, let’s say your local bank has been the recipient of a large deposit of old raggedy-edged one, five and ten dollar bills. They have guidelines as to whether those bills should remain in circulation or be turned in for new bills. So, the local bank bundles up the old bills and sends them to the local fed and gets new bills in return. And that way when you go to the store you don’t get handed too many bills that make you wish you were carrying hand sanitizer.
Now here’s how else the fed distributes currency. This is the Q E part. It buys US securities. You know, the ones issued by the US government every time it does something but there is no cash in the till to pay for it. There hasn't been much money in the till for the better part of 30 years. But the crazy spending (which technically is not Q E but F E or fiscal expansion) has really taken off ever since Bush II and Obama II got their jobs at 1600 Pennsylvania Avenue NW, Washington, DC 20500.
The fed can buy US government securities from the treasury department or just go into the marketplace and buy them from member banks or the teachers’ pension fund or Mr. and Mrs. Smith. Usually when they buy, they buy a lot; like hundreds of billions. But, of course, the banks or the pension fund or Ma and Pa Smith want to get paid if they sell their bonds to anyone, including the fed. So, how does the fed get the cash to pay for the bonds? Two ways. They order it up from the bureau of engraving. In 2009 they asked for and received hundreds of billions of dollars worth of federal reserve notes. Each note (those pieces of paper in your pocket) costs about 7.5 cents to print. The pennies the fed pays covers the engraving, printing and related costs and put a few bucks in the till to cover the costs of the Christmas party (just kidding.) But that is peanuts compared to the trillions they create with electronic debits and credits in the banking system. No paper involved.
If the fed thinks that things need to be goosed up a little, they buy up securities and put cash (paper and electronic entries) in the system. And that folks is what quantitative easing (expansion) is all about. Did anyone do anything, like make a product or provide a service? Nope. Did anyone paint the house or fix the road or build a better mousetrap? Nope. Not necessary with Q E. You don’t need real economic transactions. You just create US dollars out of thin paper or thinner air and buy treasury securities. Eureka. You’ve got Bernanke Boom times. (Aside: When the financial history of American is written, the Monday morning quarterbacks (aka historians) will define the perfect storm as the unfortunate alignment, in a 12 year time span, in Washington DC, of Messrs. Bush II, Greenspan, Obama II and Bernanke. Let's just call them the four equestrians of the apocalypse. If TheFundamentals had any graphical skills, we would design a new federal reserve note with these idiots riding rampant across a background of the constitution and the front page of TheFundamentals website!)
What do we at TheFundamentals call this kind of activity? Well we believe, as we have said many times, in not reinventing the wheel. If someone else can say or do or demonstrate or even describe something better than we can we like to copy them, with accurate and appropriate attribution of course? So, we are going to answer our own question, “What do we at TheFundamentals call this kind of activity?” We’re okay with using the feds own letters; slightly modified. We call it Q and E.
Quick and Easy. Remember the advertisement that used that expression, "We make money the old fashioned way. We earn it.” The fed has revised it. They make money the old fashioned way all right. The same way banana republics have been making it since someone came up with the idea of coin and currency to replace gold, diamonds, wheat, oil and real wealth created products. The fed says, “We make money the quick and easy way. We print it.”
There are only two questions you need to ask anyone who will take your call. One, if this scheme backfires on us, what happens? And, two, if it’s so easy, why doesn’t everyone do it?
Monday, November 1, 2010
The Calling of Our Time
Lying to the government. If you are either arrogant or stupid enough to answer any question posed to you by any defined authority figure without the benefit of legal counsel, you may be able to answer this question, “What form of law abiding, citizen responsive legal system would establish the principle that the authority figure can lie to the citizen without any consequence but an otherwise innocent citizen can be punished for lying to an authority figure?” A monarchy perhaps? A dictatorship for sure. Some form of communist tyranny? The premise of the question is simple. If the citizen is not guilty of any crime, then how can they become guilty of a crime by simply not either responding adequately or accurately to an authority figure who is not similarly disciplined? By the way, this issue is not just the arrogance of gun toting bureaucrats. The 22 million other government employees without guns are not regularly reminded that they work for the taxpayer. Their unions sure don't perform this task. How can we remind them? Regular reductions in force would be a good start.
Fiscal responsibility. It seems only reasonable that a person who conducts their private financial affairs with sensibility and frugality should be able to not have a third party or presence deny them the same form of conduct with respect to the activities of the state or any form of government that can lay a claim on that individual. You could argue that there would be extenuating circumstances that would be exceptions to that rule. For example, if a community is under invasion from without and they enter into a defensive compact, logic and reason would suggest that the cost of that defense should be borne by all, regardless of personal inclination. Alas, we now have now started down the slippery slope. Soon, the process by which this communal obligation is distributed can now be distorted to other activities based on decisions for reasons that may not be as compelling as common defense. If you’ve read this far, you now understand the reason for the 18 enumerated powers to the national congress in the US Constitution. Repelling invasions happens to be one of them. These constitution drafting fellows were pretty darn smart. Let's get back to EIGHTEEN. EIGHTEEN IS ENOUGH!
Privacy. The right to be left alone. As defined by the party that wishes to be left alone. Let us remember that a defined fundamental is that we are not all alike. We do not think alike; worship alike; dress alike; behave similarly or seek similar objectives in the choices we make. Notwithstanding the power of Madison Avenue to define us quite homogeneously, it is just the case that many of us do hear different drum beats and many of us do choose very different paths. Even Madison Avenue acknowledges these unique characteristics by going after segments of the consuming audience with so-called targeted messages. So, the question is, “Must you conform?” In 60+ years of observation and many firsthand experiences that answer is quite simply, “YES.” The undisciplined power of the government has stripped away the simple need for knowing and being oneself. George Orwell saw it coming. As did Henry Thoreau. The founding fathers were not just telling George III and his minions to back off and withdraw their arbitrary impositions; they were saying we can take care of ourselves, thank you very much. Butt out. We don’t need you and we don’t want you.
So, TheFundamentals is quite certain that you, our readers and supporters, can add to these few examples of unnecessary contradiction between human fundamentals and the practices of today’s authorities. The change most people seek is not more of their external involvement and more of their definitions and futile excursions with other people’s money. It is simply the opposite. Go away. You have become an unwelcome and nonproductive factor in our existence. Regardless of your tactics and your constant fear based messaging we would prefer to proceed without your presence. It does not escape any of us that the money flow to all these forms of intrusion – unreasonable rules, indiscriminate and promiscuous spending and warring and constant requirements in private matters can be mitigated with the simple elimination of funding. Without the funds, they just go away. There is no greater or effective weapon to correct the mess that we are in than the simple elimination of funding. This is our message to you who get to determine the future of this country of ours. If you wish change, you must insist on the elimination of funding of the intrusions defined above. That is our message to you. Unless you convey it by using this criterion in selecting your representatives at all levels of government on November 2, 2010, there will be no change.
“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.”
America is greatly in need of “new Guards for their future security.” The old Guards have lost their way. They are no longer fulfilling the role of securing the unalienable rights endowed to us by our Creator including Life, Liberty, Privacy, Fiscal Responsibility, the Pursuit of Happiness and no lying government agents. So it is. It is now up to us to "institute new Government." It is our right and our duty. It is the calling of our time.
Fiscal responsibility. It seems only reasonable that a person who conducts their private financial affairs with sensibility and frugality should be able to not have a third party or presence deny them the same form of conduct with respect to the activities of the state or any form of government that can lay a claim on that individual. You could argue that there would be extenuating circumstances that would be exceptions to that rule. For example, if a community is under invasion from without and they enter into a defensive compact, logic and reason would suggest that the cost of that defense should be borne by all, regardless of personal inclination. Alas, we now have now started down the slippery slope. Soon, the process by which this communal obligation is distributed can now be distorted to other activities based on decisions for reasons that may not be as compelling as common defense. If you’ve read this far, you now understand the reason for the 18 enumerated powers to the national congress in the US Constitution. Repelling invasions happens to be one of them. These constitution drafting fellows were pretty darn smart. Let's get back to EIGHTEEN. EIGHTEEN IS ENOUGH!
Privacy. The right to be left alone. As defined by the party that wishes to be left alone. Let us remember that a defined fundamental is that we are not all alike. We do not think alike; worship alike; dress alike; behave similarly or seek similar objectives in the choices we make. Notwithstanding the power of Madison Avenue to define us quite homogeneously, it is just the case that many of us do hear different drum beats and many of us do choose very different paths. Even Madison Avenue acknowledges these unique characteristics by going after segments of the consuming audience with so-called targeted messages. So, the question is, “Must you conform?” In 60+ years of observation and many firsthand experiences that answer is quite simply, “YES.” The undisciplined power of the government has stripped away the simple need for knowing and being oneself. George Orwell saw it coming. As did Henry Thoreau. The founding fathers were not just telling George III and his minions to back off and withdraw their arbitrary impositions; they were saying we can take care of ourselves, thank you very much. Butt out. We don’t need you and we don’t want you.
So, TheFundamentals is quite certain that you, our readers and supporters, can add to these few examples of unnecessary contradiction between human fundamentals and the practices of today’s authorities. The change most people seek is not more of their external involvement and more of their definitions and futile excursions with other people’s money. It is simply the opposite. Go away. You have become an unwelcome and nonproductive factor in our existence. Regardless of your tactics and your constant fear based messaging we would prefer to proceed without your presence. It does not escape any of us that the money flow to all these forms of intrusion – unreasonable rules, indiscriminate and promiscuous spending and warring and constant requirements in private matters can be mitigated with the simple elimination of funding. Without the funds, they just go away. There is no greater or effective weapon to correct the mess that we are in than the simple elimination of funding. This is our message to you who get to determine the future of this country of ours. If you wish change, you must insist on the elimination of funding of the intrusions defined above. That is our message to you. Unless you convey it by using this criterion in selecting your representatives at all levels of government on November 2, 2010, there will be no change.
“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.”
America is greatly in need of “new Guards for their future security.” The old Guards have lost their way. They are no longer fulfilling the role of securing the unalienable rights endowed to us by our Creator including Life, Liberty, Privacy, Fiscal Responsibility, the Pursuit of Happiness and no lying government agents. So it is. It is now up to us to "institute new Government." It is our right and our duty. It is the calling of our time.
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