Wednesday, August 17, 2011
Are we Japan in the 1980's?
Not to be a Debby Downer but has anyone noticed some of the similarities between the U.S. and Japan? Yes, the RE bubble was bigger in Japan, and Japan is smaller, yada, yada, yada, my concern is not the magnitude but the similarities of the attempted grand solutions. Japan tried Massive QE, Yen weaking, and huge amounts of the magical dust called “infrastructure spending” to stimulate growth, check out Hamada, Japan Marine Bridge. Nothing worked and all Japan got was Debt level in excess of 150% of GDP. Now the best solutions the U.S. can come up with are the same solutions attempted 15 years ago? We look to be heading down the same path, with Zombie banks and we are using the same excuses for resisting cutting, we can’t stop spending, “if we cut spending now it will push us into a recession” and you can repeat this same line for the next 5 years, we will have little growth and we will end up with Debt to GDP near 200% just like Japan. (I think this is why I feel the S&P is on the right path, we cannot grow out and if you don’t grow deficits matter) The time is upon us, it is time to man up a take some pain, rip the band aid off it will heal faster.
Wednesday, August 10, 2011
The greatest case of shooting the messenger in recent history
There are a few, including Joe Kernen (CNBC host) who are upset because the S&P gave an opinion and lowered the credit rating of the U.S.A... Joe’s reaction to the report is a personal boycott of speaking S&P’s name; he has vowed not to speak the name of the company who gave an opinion, as if it were Lord Voldemort. What a child, anyway, Joe is a solid example of how our society and our self-titled leaders live in an imaginary world free of consequences, you buy a house with a payment equal to your take home pay but it is not your fault you can’t make the payment every month, then you and your congress person blame the mortgage broker, the broker blames the bank, the bank blames the investment bank, the investment bank blames Fannie and Freddie, they blame the congress who created Fannie and Freddie and the cycle is complete. This lack of responsibility is personified by the belief of congress and the president that decades of spending in excess of this countries tax receipt should have no impact, on anything, “don’t worry my grandkids will pick up the slack” (Both parties buying votes IMO but that is a different rant). Total debt has increase with every congress and president since Truman. I am talking about total debt not the nebulous number the spinsters in congress talk about like the rate of increase of Debt to GDP. Government love to talk about the “rate of increase” because the rate of increase can go down if GDP grows at a faster rate than congress issues new debt. Plus this is how Congress makes cuts to the budget they cut the rate of growth of spending and that somehow is called a cut. .. Enough venting I have to get to work
Fight the good fight.
Monday, August 1, 2011
Ron Paul is he right ?
Ron Paul Exposes The Deficit "Plan" Lies: "Cuts Are Illusory, Not From Current
Ron Paul slams it right out of the ballpark.
When a Cut is Not a Cut
One might think that the recent drama over the debt ceiling involves one side wanting to increase or maintain spending with the other side wanting to drastically cut spending, but that is far from the truth. In spite of the rhetoric being thrown around, the real debate is over how much government spending will increase.
No plan under serious consideration cuts spending in the way you and I think about it. Instead, the "cuts" being discussed are illusory, and are not cuts from current amounts being spent, but cuts in projected spending increases. This is akin to a family "saving" $100,000 in expenses by deciding not to buy a Lamborghini, and instead getting a fully loaded Mercedes, when really their budget dictates that they need to stick with their perfectly serviceable Honda. But this is the type of math Washington uses to mask the incriminating truth about their unrepentant plundering of the American people.
The truth is that frightening rhetoric about default and full faith and credit of the United States is being carelessly thrown around to ram through a bigger budget than ever, in spite of stagnant revenues. If your family's income did not change year over year, would it be wise financial management to accelerate spending so you would feel richer? That is what our government is doing, with one side merely suggesting a different list of purchases than the other.
In reality, bringing our fiscal house into order is not that complicated or excruciatingly painful at all. If we simply kept spending at current levels, by their definition of "cuts" that would save nearly $400 billion in the next few years, versus the $25 billion the Budget Control Act claims to "cut". It would only take us 5 years to "cut" $1 trillion, in Washington math, just by holding the line on spending. That is hardly austere or catastrophic.
A balanced budget is similarly simple and within reach if Washington had just a tiny amount of fiscal common sense. Our revenues currently stand at approximately $2.2 trillion a year and are likely to remain stagnant as the recession continues. Our outlays are $3.7 trillion and projected to grow every year. Yet we only have to go back to 2004 for federal outlays of $2.2 trillion, and the government was far from small that year. If we simply returned to that year's spending levels, which would hardly be austere, we would have a balanced budget right now. If we held the line on spending, and the economy actually did grow as estimated, the budget would balance on its own by 2015 with no cuts whatsoever.
We pay 35 percent more for our military today than we did 10 years ago, for the exact same capabilities. The same could be said for the rest of the government. Why has our budget doubled in 10 years? This country doesn't have double the population, or double the land area, or double anything that would require the federal government to grow by such an obscene amount.
In Washington terms, a simple freeze in spending would be a much bigger "cut" than any plan being discussed. If politicians simply cannot bear to implement actual cuts to actual spending, just freezing the budget would give the economy the best chance to catch its breath, recover and grow
Hat tip Zerohedge
Ron Paul slams it right out of the ballpark.
When a Cut is Not a Cut
One might think that the recent drama over the debt ceiling involves one side wanting to increase or maintain spending with the other side wanting to drastically cut spending, but that is far from the truth. In spite of the rhetoric being thrown around, the real debate is over how much government spending will increase.
No plan under serious consideration cuts spending in the way you and I think about it. Instead, the "cuts" being discussed are illusory, and are not cuts from current amounts being spent, but cuts in projected spending increases. This is akin to a family "saving" $100,000 in expenses by deciding not to buy a Lamborghini, and instead getting a fully loaded Mercedes, when really their budget dictates that they need to stick with their perfectly serviceable Honda. But this is the type of math Washington uses to mask the incriminating truth about their unrepentant plundering of the American people.
The truth is that frightening rhetoric about default and full faith and credit of the United States is being carelessly thrown around to ram through a bigger budget than ever, in spite of stagnant revenues. If your family's income did not change year over year, would it be wise financial management to accelerate spending so you would feel richer? That is what our government is doing, with one side merely suggesting a different list of purchases than the other.
In reality, bringing our fiscal house into order is not that complicated or excruciatingly painful at all. If we simply kept spending at current levels, by their definition of "cuts" that would save nearly $400 billion in the next few years, versus the $25 billion the Budget Control Act claims to "cut". It would only take us 5 years to "cut" $1 trillion, in Washington math, just by holding the line on spending. That is hardly austere or catastrophic.
A balanced budget is similarly simple and within reach if Washington had just a tiny amount of fiscal common sense. Our revenues currently stand at approximately $2.2 trillion a year and are likely to remain stagnant as the recession continues. Our outlays are $3.7 trillion and projected to grow every year. Yet we only have to go back to 2004 for federal outlays of $2.2 trillion, and the government was far from small that year. If we simply returned to that year's spending levels, which would hardly be austere, we would have a balanced budget right now. If we held the line on spending, and the economy actually did grow as estimated, the budget would balance on its own by 2015 with no cuts whatsoever.
We pay 35 percent more for our military today than we did 10 years ago, for the exact same capabilities. The same could be said for the rest of the government. Why has our budget doubled in 10 years? This country doesn't have double the population, or double the land area, or double anything that would require the federal government to grow by such an obscene amount.
In Washington terms, a simple freeze in spending would be a much bigger "cut" than any plan being discussed. If politicians simply cannot bear to implement actual cuts to actual spending, just freezing the budget would give the economy the best chance to catch its breath, recover and grow
Hat tip Zerohedge
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