Thursday, June 9, 2011

The Fish Stinks From the Head Down

We are in the beginnings of a depression.

A bump in the road is a short lived event. But when the road is crumbling beneath you, those bumps, divots, soft spots and potholes go on for miles. It will ruin your car if you keep driving. Another analogy is that of a car that’s overheating. When the check engine light comes on, it’s time to pull over and let the car cool off. America, the check engine light is on.

We’ve seen the pictures of President Obama eating ice cream. Well, it’s time for a double dip. You might as well hand the man a Slurpee and get the checkbook out of Timothy Geithner’s hands as quickly as possible. There is a housing crash, a dollar crash, a manufacturing crash and a job marked crash going on right now. Don’t ask Joe Biden to explain this to you. He’s running cover.

The more these men do to try to fix the problem, the worse it gets. Our spiral into financial disaster began when TARP mutated from the book balancing act that should have cost the United States about 1/3 of what it actually did because it was supposed to provide money to help homeowners and banks offset the losses on their balance sheets when the prices of homes dropped below the amount of the mortgage. Instead, homeowners got minimal relief and the program turned into nothing more than an unwarranted bailout for banks and a handful of insurers and automakers.

Just look at a breakdown of $700 billion Troubled Asset Relief Program. That’s a lot of crony capitalism. Notice how small of a percentage went to homeowners or to programs that would bridge the difference between house prices and actual mortgages. The solution never really addressed that problem. Instead, it was an inside job which allowed thousands of mismanaged financial institutions to be propped up because the government was effective in propagandizing us with the words "too big to fail."

The argument has been made that there weren’t enough private investment groups available to do a controlled bankruptcy and sell off the assets to capitalists willing to take the risk of reviving these institutions so they could be better run and operate in a more modern form. But, that’s like saying there wasn’t enough kids available to put together baseball teams for a league because the kids were forced to go to summer camp. Government regulation has all but chased any private money out of the market unless you count recirculation of printed dollars amongst Wall Street investors who continue to be the only people in America today getting or staying rich.

This is not a smack at Wall Street investors. It’s a smack at the system. No one begrudges anyone in America from making money. One likes to hold on to that last shred of hope that we are in some ways still a capitalist system. The problem is they are playing with monopoly money. There is no real velocity of money in the private markets anymore. Most people are living paycheck to paycheck.

This was followed by the Stimulus, which also failed miserably according to researchers at the Harvard Business School. Steven Van Nuys at American Missive:
...we probably didn’t need Harvard to do a study for us to learn that Keynesian stimulus does little to stimulate lasting private sector economic activity. There is already abundant evidence of this- and two recent events prove particularly instructive.

Most significantly, Barack Obama’s $787 billion stimulus package failed to stem the rise of national unemployment. In fact, unemployment turned out much worse than the Administration’s projection of an 8 percent maximum if the law was passed. As we all know, unemployment has been hovering at or very near 10 percent for over a year since the law’s passage. Not surprisingly, a big part of the reason for this is that companies nation-wide have been doing the very things that the Harvard researchers found local firms doing: hoarding cash, holding back on hiring, cutting expenses, and blaming the overall uncertainty caused by government encroachment into the private sector for their behavior.
Whether you have an economic system that hands out money to people who work at unproductive jobs with unproductive companies or you simply cut them a check, the fact of the matter is unless you are producing something or providing a tangible service, it’s socialism. The money isn’t worth the paper it’s printed on.

The United States sits on a gold mine in the Gulf of Mexico, the Continental Shelf, in America’s heartland and up in Alaska. It’s called oil and gas. The only way out of this mess is to toss out strangling regulations, get rid of the EPA and its left wing green agenda and drill, baby, drill.

Real wealth can be generated from not only the actual production and exploration of oil and gas, but from the collateral businesses that will result from this unleashing of our industrial giant. The manufacturing sector will be boosted by a need for equipment and the servicing of that equipment. The housing sector will be boosted by the need for housing in areas where workers will have to live. The service sector will be boosted by the need for people to get their coffee in the morning, eat lunch or buy dinner when on or near the job sites.

Instead of raising the debt ceiling, we need to do what households do when their budgets get tight and the debt gets high. We need to spend first on the essentials of government, service the debt and start from a zero sum budget on whatever else is left over. Whatever we can't afford of what's left over needs to be reformed; and we need to call on the states and the private sector to step in where the federal government is no longer able. We need to go to a two tiered flat income tax structure, cut corporate taxes, eliminate the death tax and create a 5% fair tax on consumption in a way that works toward lowering the amount of our GDP that is taxed by the time we balance our budget. Tax increases are out of the question and should be off the table. We must eliminate burdensome regulations. America can reward itself after it pays off the debt and the balances the budget by reducing or eliminating the consumption tax or by reducing flat tax rates.

This is not rocket science! But it’s a shame that our so-called “great financial minds” just sit there scratching their heads trying to spin their inability to solve the problem when the solution is as plain as the nose on their faces. I'm just a blogger. How come I get it and they don't? There's a lady in Alaska who calls it common sense. This is something the elites, the Egberts and the bookworms know nothing about.

America is the frog that has slowly been boiled to the point where leftists, radicals and socialists now occupy key positions of financial decision making. These people are resistant to anything that they believe are not environmentally sound or which in their Marxist minds creates a disparity between the rich and the poor. Their attitude is if it doesn’t work, subsidize or stimulate it and if it does work, redistribute it. No capitalist in his right mind is going to play in that system. There's your depression and there's why you see jobs falling off the table to the tune of over 400,000 a month.

It’s time for the frog to jump out of the pot and do something about the hand that turned on the stove. Nothing short of a lawful reverse Bolshevik revolution will do here.

There is no civil discourse that can replace the fact that all these people who have overseen the financial collapse of our nation have to go. This means President Obama, too. He is incompetent. If he’s not incompetent, then he’s complicit. Either way, the fish stinks from the head down. The time to fundamentally restore our system is here. We cannot wait any longer.

By this time next year, the dollar will be worthless, real unemployment (not the bogus numbers the Department of Labor keeps putting out) will be higher than it is now and millions of more people will be out of their foreclosed homes. We are in the beginnings of this depression now. We will need to analyze the upcoming quarters to tell for sure, but we know that GDP is dropping and unemployment is rising past the top edges of what would be defined as a recession.

The media won't tell us this because they are covering for the loser in chief who simply won’t do it right. Someone give President Obama and his people a coloring book and crayons. Sit them in the corner so the grown ups can take over and get these problems solved.

We can no longer be tolerant of having leftists, socialists and radicals in charge of our economy. This is not a time for civil discourse or business as usual where the two parties take turns in power so that each set of cronies gets a crack at it. We must demonize the type of people who are in power now and who are responsible for America’s great decline. Yes, that’s right. We must do whatever is necessary within the law to make sure that America knows who these people are, what they've done and why they need to go.

Time is running out. It will only be when liberals, leftists and those in the establishment on both sides of the aisle who are responsible for the mess we are in lose their jobs that the rest of us can start getting ours back.

1 comment:

  1. another great post, Patrick!!

    keep sounding the alarm!!



Total Pageviews