Obama's First 100 Days

100 Days, and counting….

“Mel, in regard to President Obama’s first 100 days, isn’t there anything you agree with?”

The short answer is no. The full answer is here:

- No, I do not agree with "transparency" of Top Secret documents during an ongoing war.
- No, I do not think it is smart to attack the previous administration‘s conduct safeguarding the U.S. in the middle of a war. Following 9/11, we all wanted to do what was required to restore safety to our country. Attacking the preceding administration sets a dangerous precedent. Show Trials were reserved for the Soviets in the 1950s! We watched them with amazement and amusement; now we'll watch them tear apart America.
- No, I do not agree with the greatest spending spree civilization has ever seen: http://www.safehaven.com/article-12175.htm .
- No, I do not believe the Feds should run the car companies -- even arrogantly appointing a "Car Czar" that knows nothing more about cars than that they should have a comfortable rear seat -- nor the Banks, nor the Brokerages, nor the Newspapers. If these outfits can't make it under the rules of capitalism let them fail. If they are "saved" their saving will be the destruction of their honest competition.
- No, the president should not aid the Unions -- Unions broke the railroads, then the steel mills, next the airlines, and now the auto industry, and along the way most of the rest of the industrial base of America, our bed-rock bottom line strength. The real story behind out-sourcing is an attempt of American industry to remain competitive and that means finding cheap labor. And now the unions have a stranglehold on State and Federal Government! France!
- No, the President should not bail-out the thieving bankers and stock brokerages, and struggling auto makers, newspapers or any other individual business. These companies should be allowed go bankrupt and not be refinanced by higher taxes, high inflation, and devaluation of our hard earned money!
- No, I do not believe that it is Obama's job to go around the world proclaiming what a terrible place America is and to apologise .... to our detractors! Who then, behind his back, laugh! The President represents Americans… his job is to Protect and Defend Americans.
- No, I am not in favor of ratcheting-up yet another war. Afghanistan this time. Afghanistan is not Iraq. Iraq at least had a central government and an organized society, more easily conquerable. Afghanistan is a piece of the earth more accurately defined by the borders of the countries that abut it than by it's own sense of self. The President of Afghanistan is no more than the mayor of Kabul, the only "city" there and whose limits define the ends of civilization. History in replete with the bones of those who have attempted to conquer Afghanistan, from Alexander the Great in AD 320's to the Russians who pulled-out, defeated, in AD 1989. That is precisely why Afghanistan is called "The Land of Bones." And now it will be our young men's and women's bones. This foray sounds just like Kennedy's into Vietnam. ....just 5000 advisers.... we all know what happened there. I'll predict right now... this is going to be the Democrats undoing. Afghanistan.

Demobamas...

The no-nothings are in charge and will remain so ... even if we go bankrupt or succumb to totalitarian government. Here is why: take a look at Obama's supporters and you will see that his popularity is due solely to three things, none of which I consider qualifications for Presidency: his speaking style, his color and his appeal to base populist sentiment. This last is dangerous. Those pitchforks Obama threatened the financial/banking/brokerage industry with several weeks ago spring from populist rule. His popularity will remain in the 55% range for a very long time. Take a look at these numbers, they all add-up to a solid block of Demobamas: Hardcore Democrats = 35%, Jews = 1.5%, Muslims = 2%, Blacks = 12%, Hispanics 15%. This voting block represents more than 65% of the total vote. All Obama needs is 80% of these to maintain a plus popularity. By the way I'm not even counting the no-nothing youngsters that have the right to vote, nor the ACORN enrolled illiterate and dead, nor the 40+ million Hispanic family members that are waiting to flood into America once the existing 12 - 20 million illegals are granted citizenship.

Worry. Be very very worried.

My biggest three are inflation and devaluation, taxes, and loss of freedom, which will turn us into a much poorer nation. Print and pass-out $3,600,000,000,000.00 dollars and guess what... each one isn't going to be worth much. As the economy rebounds inflation is going to go nuts. The cost of everything will explode. The USA will owe most of those still wet new 3.6 trillion bucks to foreign governments like the Chinese and Japanese. Here’s our debt now, unbelievable: http://brillig.com/debt_clock/ . The Obama administration hopes to use this devalued inflated money to retire this crazy debt. Will the Chinese go along? I think they will take those dollars and use them to buy and stockpile natural resources. I'm betting on commodities!

The Mexican Solution

I see that there is an outrage over the fact that the firefighters of California and Oregon are essentially non-english speaking Hispanics and that the job bosses are non-spanish speaking Americanos. Really, no American, at least not enough to fill the available job-slots, wants those jobs. No American: educated, fat and happy, and somewhat committed to home, wife, kids and that $250K mortgage, wants to handle a shovel in high temperatures with the risk of serious injury and loss of life for a double digit hourly salary without benefits. That leaves the slave population, read - Mexicans, to do the job. They are willing to leave their native digs, head-off to the fire fields of a foreign country and risk their necks for, what? 10 -12 bucks an hour? It's a shame really, but hey, it's the end result (same as obesity) of a rich society. Like the Egyptians, Greeks, Romans, Portuguese, Spanish, English (and others) of yore.

Here is the solution; it's called Manifest Destiny. We already believe in it, it has been tried successfully, we are ready to roll with it now, and the idea is protected by the Monroe Doctrine. http://en.wikipedia.org/wiki/Manifest_Destiny . This solution, at least, kicks-the-can of a myriad number of problems a hundred years down the road. We should: invade, conquer and colonize Mexico: 1) The Mexicans all become instant American citizens; something a large number seem to want. 2) Mexican territories are rich in natural resources and fertile soil. 3) The population is mostly subservient and will not, for the most part, resist; especially when the option is better than the current government. 4) They have no great ideological differences with America: they are Catholic and hard workers and have a built-in affinity with the American population which is already 15% Hispanic.

Additional benefits?: 1) The border "problem" is resolved instantly. 2) The Mexican drug problem would be taken-in-hand and the violence largely quelled. 3) The country is beautiful, with white-sand beaches and and towering mountains, and ripe for American style development. 4) Most of the current illegal population of the States would return to the State of Mexico to work and develop the country along the lines of America to the north. 5) 105,000,000 million new Americans that all want cars, trucks, homes, businesses, tractors, farms, credit, flat-screen TVs and Direct TV, AND are willing to work hard to get them. 6) Last but not least..... 105,000,000 new members to sign-up for the Ponzi scheme called Social Security; kicking that can down the road at least another 75 years! We have the men, women, and machines, the territory is very close-by and the current long list of problems beg for a solution.

Mel

Warren's Dilemma

Warren Buffett supported Obama, but now with considerable financial blood in the street he seems to be backing-off, or is he just in a corner? He said that he does not support "cap and trade" nor the raising of taxes, nor the prohibition of private jets, nor "card-check." There are other "ideas" he does not support either, like the vilification of the "captains of business" and "caps on salaries." What parts of the administration's policy does he support?

Obama is clever and recognizes people's weaknesses - that is how his speeches are directed, how he has climbed the ladder of political success; one hears what one wants to hear. Truly charismatic and dangerous. He appeals to an ego like Buffett's and says, "I respect your success, would you be one of my advisers?" The “Messiah” gets the “Oracle” on board (a winning combination?!) and then ignores advise. Having publicly committed to Obama, Buffett now does not want to look foolish and remains - sort-of - committed.

Eventually (1), anyone with any money left will disclaim Obama. But his majority support will not diminish – it will actually grow. Obama has co-opted, through a cult of "believers" and "tax relief" promises, 50% of the voters, who will now receive either outright IRS welfare checks or minor income tax relief. He is rapidly creating more followers needing entitlements as a result of the destruction of the capitalistic system. Obama will continue to appeal to many voters: most Blacks, many Hispanics, traditionally liberal Jews, and rising Islamists, the very poor, and all those who can't bring themselves to vote for anyone without the (D) after their name. This absolute block, of perhaps 50% of voters, will be his... no matter what. A solid block. Classic Bolshevism. Read A Peoples Tragedy by Orland Figes. The conservative Democrat has vanished, as has the traditional Republican.

http://www.amazon.com/s/?ie=UTF8&keywords=a+peoples+tragedy&tag=googhydr-20&index=stripbooks&hvadid=1500914441&ref=pd_sl_4yh92q1kjm_e

Eventually 2 (soon) taxes will have to be raised or the dollar will collapse. A country just can't print money forever! The so-called rich are really the nation's Income Class. These folks have cash flow, these citizens are the only ones left to pay, and are ripe taxable targets. This large middle class will have to pay nearly all required taxes. The truly rich, the Equity Class are already off-shore and pay few taxes. Corporations pass ALL taxes on to their customers and pay NO taxes themselves. Sticking with his pledge, Obama won't raise income tax brackets on any but the truly rich. Instead a broad range of tax collecting measures will be put into place: taxes on cell phone use and texting (just pennies); taxes on web access (just pennies); a national sales tax (sales tax or Value Added Tax, or Gross Excise Tax) which will tax every single transaction in America including transactions on the likes of eBay; fossil fuel tax; carbon foot-print tax; water use tax; interstate highway use tax; mileage driven tax; luxury taxes; etc. In LA a new tax - a super tax - is under discussion (perhaps passed by now) on those with houses larger than 3500 sq.ft. Could this sort of tax be re-modeled and applied nationally by the Feds?

Eventually (3) a huge underground black market will spring-up. This has happened in every economy where the population feels put upon. The taxpayer is not a stationary target, he/she can step aside....

One more note: Additional proof that the "catastrophe" is being allowed to continue and “not going to waste” (as stated by Obama illuminaries: Akelrod, Raahm and Clinton), is that there is no apparent rush in D.C. to fix the collapsing economy... if there was, a fully functioning Treasury would be in effect NOW!

http://www.nytimes.com/2009/03/09/business/economy/09treasury.html?hp

Considering that the banking system began its sudden descent just before the election, and Obama started speaking to it then, before the election, and that he stated, immediately after the election that he and his team "were prepared to hit the ground running," to fix it, nothing has been done to staunch the decline in either stock market or real estate values, not even an uplifting speech.

There's trouble ahead...

Eight Ideas that would work right now to get America into the 21st Century….

If I were King here are a few things I’d do to revive the U.S. economy and propel it into the future. Of course as King I’d need no consensus, no votes, no Congress, just my own very good judgment and the love of the people or a large group of thugs to enforce my will…. . Here they are, without any particular order:
1) Energy. We are tapped-out. Proof lies in the fact that every year there are brown and black-outs across the country. Hydro has been maxed-out; most rivers have been harnessed; cheap and easy oil is gone; alternative energy is a cruel hoax. There is no such thing as alternative energy. Energy and its use is subject to the Laws of Thermo Dynamics. Any power source, other than that provided nearly free by the planet, in other words, fossil fuel, requires more energy to get and produces less efficient energy in return than that obtained by just using oil directly. Ethanol, hydrogen, wind and solar are all costly fuels, in terms of energy in versus energy out. The only truly viable source of energy left is nuclear. Vast amounts of nuclear energy, providing relatively clean power is ours for the developing. We need it, unless we plan on eliminating a lot of people. Let’s put tens of thousands of highly skilled folks to work building Nuclear Power Plants. And hundreds of thousands more building the stuff that goes into those plants from valves to distribution networks.
2) Transportation. Airplane travel is relatively inefficient, whereas trains are very efficient. Modern high speed trains are an almost off-the-shelf ready to run technology now in use in Japan and Europe. We know how to make them, we know how to make them better. Their use is non existent in America. A system of Hub-To-Hub high speed trains is a must. Under my Kingship, nonstop routes would be built connecting the Airline Hubs already scattered about the country. I believe there are 35 or 40 of these airline hubs operating right now in the USA and Canada. The Airline Hubs are used less and less as Airlines consolidate and shrink. These hubs are ready right now to accept high speed rail lines. These existing hubs have facilities already in place to service large numbers of travelers: auto rental fleets, hotels, restaurants, freeway access, etc. Currently there are many unused terminals at many of these hubs. These terminals are ready now to receive and redistribute millions of travelers. Another beauty of train transport is that travelers could take their RVs and autos with them at relatively low cost. These trains should be powered by either nuclear engines such as those currently used on ships or by electricity. Plentiful electricity would be available from #1 above.
3) Banking. Not enough cash you say? Take the caps off of FDIC. Money would flow out of treasuries and into banks. Banks have to lend out money to make money. Currently CDs are insured to $250,000 and that higher number expires at the end of this year. This no way of inspiring trust or stability in the banking system. It does not allow long range planning by savers and investors. Get the money back into the banks now. Apparently the Federal government wants to inspire trust in banks... or why else are they forcing consolidation, flooding these banks with cash and forestalling bankruptcy? This being the case it's time to tell depositors that their cash is safe. All bank deposits, from checking accounts to CDs would be covered all the way up...no limits.
4) Education. In my Kingdom, High Schools as we know them would stop at the end of the ninth grade. At that point students would have to choose an education that shapes their future in a more positive manner. High schools are essentially large baby sitting institutions housing people not yet ready for the adult world, not fully mentally developed but near fully physically developed. Sex is topic number one on most of their minds and only the truly studious serious students have much to learn beyond the ninth grade. The learning is marginal in any case. A better system would allow students to choose either a trade school or professional and academic schooling for the 10th, 11th , and 12th grades. High schools have become giant baby sitting institutions, a place to warehouse vast numbers of young people not yet ready to become productive members of an advanced society. Our society has no established apprenticeship system as was in effect in the pre-industrial world, but there is a need to train individuals in all the trades our society currently needs. It’s time to bring back “Shop.”
5) Service to America. Upon graduation from “New” high school, every able bodied graduate would be required to serve this country for minimally two years. This service can be in virtually any field from the likes of the Peace Corp, Job Corp, Military Service or to new services to be devised. This would allow those “graduates” time to develop their skills and to prepare for adulthood. It would give these people a chance to contribute to the country they live in, to have a stake, or equity in the country.
6) A New GI Bill. After a stint of say at least 2 years service to America an equal amount of free schooling toward a specific advanced trade or degree would be made available. At the conclusion of this period of training the New GI Bill would make home ownership available through low fixed interest rate long term loans.
7) Water. Tax it and distribute it. Right now water is still taken for granted. We all see water running down the gutters, misuse is widespread. I’d not punish those who wish to use it as a broom or to flood their gardens, but the price of this behavior would be enough to push one to conserve it. This goes for areas of the country that have plenty of it too. A Federal tax collected on water would be used to develop and distribute this precious resource to areas less blessed. Desalination plants, powered by nuclear energy would immediately be built in areas where saltwater is available and fresh water is in short supply.
8) Transportation Fuel. Since we do not have the electricity to power the long awaited electric vehicle of the future, CNG as a transportation fuel, would be immediately developed. Natural gas is widely available and current technology is available right now to convert our truck and automotive fleet to its use with minimal expense. With currently available hardware one could even fill-up at home in areas that supply natural gas to homes. This one is a no-brainer.
That’s it. This plan could be implemented quickly and comprehensively. It covers many areas of immediate and future concern. Let’s go, let’s build a new America, not with dole programs, not with make-work jobs, but with real solutions to real problems. All it requires is a Great King Mel!

Our Future

This comment is from my brother Jerry. I think his analysis is accurate.

This rant is not about politics, it is about prudence. Please try and read this, it may make a huge difference in our lives and that of our families.
This government bailout/ stimulus plan is an unmitigated disaster. One of two things is going to happen. We're going to become a doomed-to-fail socialist nation or we're going into some economic out-of-body experience that will result in mind boggling stagflation (sluggish economic growth coupled with a high rate of inflation and unemployment).
I don't know about you but everyone that pays taxes and is prudent with their money, and that represents more than 60% of homeowners and most likely 75% of renters, should be livid with outrage. This administration and Congress is asking this group of people - you and me - to pay the freight for all of these irresponsible people. Right now, it shouldn't matter what your politics are (unless you truly believe that socialism is the path for the USA), you should simply say enough! We have a process, it's called foreclosure and bankruptcy. When the market forces clear out those individuals that should never have been homeowners the ridiculous run-up in house prices will be reversed and many of the more responsible non-owners may now opt to buy those vacated properties at prices and terms that they can responsibly manage. It's ridiculous to think that this problem was caused by unemployment & a poor business environment. The situation is just the opposite... too many people got caught up in the frenzy to get a home because "everyone was doing it" and the lenders & regulators had gone crazy. You cannot confuse wants with needs. People need housing, a place to live... they want a house. Hey, I need a vacation, I want to go to Europe, but a trip to Lake Tahoe will do for now. That's responsible, even though my credit card company says I can go to Europe right now... and pay later and later and later. Did you go crazy and get yourself jammed up this way? If not, why should you shoulder the consequences? And, no, it's not the American way. America is a capitalistic free market society. Should we track down the scoundrels, crooks and bad actors that perpetrated this fraud on those that were legitimately duped or conned? Absolutely! Should we take pity on all those that took a gamble (bought at sky high prices with unrealistic loans) that turned out to be a loser? This event is not without precedent. For the uninitiated I refer you to the "tulip mania" of the Dutch in 1636-1637 http://en.wikipedia.org/wiki/Tulip_mania. Close to 400 years ago people got caught up in the chase for gains by speculating on a flower. Crazy!
Regarding these bailout plans, I can draw a counter analogy that the average person would most likely call outrageous on its face: How about have the government compensate every stockholder (including their IRA and 401 accounts) for the sharp losses they have suffered as a consequence of these irresponsible "home buyers, lenders, and regulators? This group has actually lost REAL money, upwards of 50% is common, whereas these underwater homeowners in most cases never had ANY equity in these houses. These "home occupiers didn't lose anything other the the title of "homeowner." What a cruel joke. Many of these delinquent mortgages were for 100% - 125% of the absurd bogus appraised sale value. Let's not forget, many of these failing homeowners refinanced their homes (some multiple times) as the prices skyrocketed. They actually took money out of their house and spent it. Remember my want of a European vacation? Some fools actually did it. The banks actually loaned them more money than the house was worth!! The lenders that made these loans should be allowed to go out of business. The government can stand behind newly formed and well capitalized banks and we can get back to doing business in the US and around the world. You cannot REWARD bad behavior. There is one rule that governs all of life, not just business... Behavior that gets rewarded get repeated!

If you want America to get back on its feet and get the economy rolling, I suggest that you contact every elected official you can and tell them to stop this insane solution and let the losers go. It's good for you and your responsible friends. And forward this to like minded individuals.

Jerry Shapiro

A Fix That Isn't

No doubt we have a problem, but is the Government plan the one to fix it? The idea that cheap money, via sharp reductions in interest rates, and flooding failing banks and brokerage houses with capital will fix the problem is plain wrong. Here's why: In this steep economic decline, who wants to borrow money? Who wants to take a gamble on a new idea, a business expansion or a new large purchase? Especially in a recession that President Obama says puts the country, or the world, on the brink of catastrophe? At any interest rate! Only the desperate want this money, and we all know that the desperate don't get loans.... unless it's from their local pawnshop. The problem is not one of "credit liquidity" as we hear repeatedly. Cheaper interest rates will play a role, but that role is still down stream. Easy credit was part of the problem that got us here and is not a good policy to continue.

The problem is lack of money; money in the hands of consumers. The problem is fear. Fear of losing a job, fear of losing a business. In short, there is no confidence in the governments ability to deal with a problem they have incorrectly identified. The solution lies in getting money in the hands of consumers. A cessation of the payroll tax would be a step in the right direction. Stopping the payroll tax gives an immediate pay raise of approximately 7.5% to every worker... overnight. A cessation of payroll taxes gives every business a "raise" of the the same size... overnight. With a pay raise a worker "feels" better, feels wealthier, and has an immediate increase in confidence. With a lower cost of doing business, an employer is less likely to lay-off an employee and more likely to improve operating efficiencies with new capital investment. With a pay raise in every worker's pocket, every worker has an instantaneous improvement in credit scores, and more spendable dollars at the end of everyday. This is the moment that lower interest rates plays its part, this is when large purchases and plant expansions and the introduction of greater efficiencies become feasible. And here's the best part: The plan can be put into effect without long drawn-out congressional hearings and studies. This plan can be put into effect with the stroke of a pen, and without the creation of a single new bureaucracy.

This leads one to ask why this is not done? Certainly its been thought of. As Rahm Emmanuel said, this economic disaster is really an "opportunity" for social "change." If the problem gets deep enough the government will have free hand in introducing sociatial change, and this was President Obama's singular promise... "Change."

Until institutions that have gone astray are allowed to fail and their assets are bought by those that have not, or newly formed ones taking advantage of liquidation prices, until homeowners, who should have never purchased a home on poor, or nonexistent, credit have lost their homes through foreclosure thus allowing a new buyer to acquire that asset at a favorable and affordable price, we will never know the true value of those assets or the depth of the problem. Putting ones finger in the hole in the dike will work only so long. The dike is going to break, it's just a question of when. When the "fix" of a finger in the dike takes place it simply allows the water behind the dike to rise higher. When it gets to the next hole the problem starts again, only this time there is even more pressure behind the dike; when the pressure gets too great the dike will burst. Are we nearing the bursting point or just reaching with another finger?

A Second Shoe

Roubini is right. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aUy55wEBqrB8 There is yet another shoe to drop. Not a small part of the problem is that the world has become globalized: the banking system has become homogenized; there is no systemic division between brokerage houses, banks, and insurance companies. Government meddling, in the form of social engineering, has not helped the financial world. Not too long ago banks were local institutions; not even interstate let alone international. Regulation dealt primarily with reserves and reach. Additionally the risk assessment criteria used by large investment institutions has become homogenized - with every institution measuring risk against the same yardstick. A single "miss" can wipe-out the whole system. It's like a gene-pool that has been reduced to a single set of reproducing individuals where one "bad" gene can surface to destroy the entire species.

Deleveraging of the system is wreaking havoc with every government and every major industry, due in no small part to overlapping and interlocking of financial activities. Globalization has failed to act as a buffer; has instead created one giant world-wide system, subject to a case of flu that could be deadly. There are no alternate players to put in the game. There are no firewalls protecting one institution from another. Take a look at General Electric, just as a single example. GE stock and bonds is held in large quantities by every major financial institution. GE is primarily a financial institution. 60% of GE's revenue comes from financial investment deals.... loans. GEF holds the paper on commercial properties around the world. As retail contraction spreads, shopping centers and malls and strip centers are sick; they have holes in them (even vaunted anchor tenants are folding tent), vacancy ratios are terrific and cash-flow to GE's portfolio is in trouble. GE could well go under taking additional institutions with it. Think about this: In 40 years the S&P 500 has lost 425 of its members. There are only 75 original members in the current S&P 500.

When that second shoe drops there will be an earthquake. This is the kind of stress to a system that leads to war. The world's population has left the farm. The industrialized cities have too much capacity, and people and industry have combined to put severe strain on energy and other natural resources. In Roubini's words, "The worst is yet to come." I still believe that oil (DXO)and agriculture (DBA) will be winners. Oil is not being made as fast as we use it and people continue to eat. Speaking of food.... the world's ag industry looks a lot like the financial one: intertwined, globalized, homogenized.