The Government Default

Today the news is the 2 parties are negotiating a 6-week extension raising the government borrowing. Only 7 days ahead of time. What a show of incompetence!

The Republicans thought they were winning. To paraphrase Governor Piyush "Bobby" Jindal, they have become the party of “Stupid”. This member is disgusted.

The Democrats think they are winning. Wrong! You are the irresponsible teenagers borrowing on your credit card. The day is coming soon where your card will be cut in half, and a very long stretch of your pay being docked is beginning. Debt has to be paid.

The US currently spends $23 billion of every $250 billion of taxes for borrowing. Because of good credit borrowing was 1%. Looking at Greece, Ireland, Spain and Italy the interest rate for over indebted is about 6% or higher.  At that rate the US would have to pay $138 billion out of every $250 billion of taxes for borrowing. How much spending is left for the Democrats? Look at Detroit.

Looking for a 3^rd party of adults to cut spending and raise taxes. Both are needed for the crisis we are creating. We need a sustainable economy, manufacturing and spending. Anyone coming forward?

Business Owners Need Fans

The average business owner is not flush with cash. If they still have their best customers, the orders are smaller, and he has to offer lower prices. Half their small customers have gone out of business and the business owner had to at their debt. The average business is hurting for income and profits.

If the owner has any cash, he is waiting for the next crazy idea to come from DC. Taxes will go up next year 4%. Cap and Trade (Tax) will export more manufacturing jobs overseas. Who knows how much health care will cost in a few years.

Look at states that have better economies. Texas, Oklahoma and North Dakota have lower unemployment and generated two thirds of all new jobs created over the last three years. Why? Business friendly regulations, stable taxes, governments within budget, limits on litigation awards, and respect for taxpayers.

Canada is doing well in this global recession. Why? Business friendly regulations, lower taxes, limited government spending, limits on litigation, and lots of legal immigrants. Same thing that built the USA. Canada also avoided the real estate bubble by not allowing very low down payments nor subprime lending. Smart regulations unlike Fannie and Freddie offerings.

If DC wants to improve the economy, the government has to be fans of business owners. Not vilify them. What business needs is stability. Cut government spending and borrowing, don’t add more regulations, and limit tax increases. Then businesses will start investing, expanding and hiring. Until then we are starting down the path of the Japanese lost decades.

The Bernanke Market

More commentary By ANDY KESSLER in the Wall Street Journal. Favorite line in the article: "But I think what really bothers the market is that the structural problems that got us into trouble in the first place still exist."

http://online.wsj.com/article/SB124762005061042587.html

Happy reading,
Steve

The Economy Is Even Worse Than You Think

An interesting analysis of the economy and commentary by MORTIMER ZUCKERMAN. My favorite line of the article: " So what kind of second-act stimulus should we look for? Something that might have a real multiplier effect, not a congressional wish list of pet programs. "

http://online.wsj.com/article/SB124753066246235811.html

Happy reading,
Steve

How About a Real Stimulus Plan?

Washington is now talking about another Stimulus Package. The problem is the current one has not spent the money necessary to stimulate the economy. Only 10% of the pork laden bill has been spent.

How many permanent jobs will the bill create anyway? Aren’t GAO estimates we are spending $600,000 per job created? You could give away money cheaper. Let’s not forget what this is going to cost us. Consumers eventually pay all taxes.

To create jobs we need to focus on manufacturing domestically. Businesses grow from creating real value. Services and finance grow from these bases.

Stop the Cap and Trade nonsense. It will export more jobs than create jobs. Climate change occurs naturally. Temperatures have not gone up in the last ten years. That disproves the theory that CO2 will increase temperature. Remember, temperature was much higher millions of years ago. Wasn't that the natural temperature we should go back to?

How about limiting litigation costs by capping awards? That would lower medical costs. Even better lower the costs of government regulations. Make filling out forms and information simpler for reporting. How about simplifying tax regulations so we can concentrate on serving customers?

For more jobs we need nuclear power and domestic oil production to lower our energy costs. I am okay with alternatives, but these are the lowest cost energy for transportation and electricity. What regulations have to change to allow investment?

Government building infrastructure is a worthwhile investment, but central governments do not respond quickly to needs. Government needs to be neutral to the market, or we export more jobs which slows the economy.

Let’s stop government from ruining our economy and stimulate real growth.
Steve