Money For Nothing

I suggest that our national anthem be replaced with the Dire Straits song "Money For Nothing." It seems to fit our national desires better than claiming to be the land of the free. Instead, because of our desire for something for nothing, we will become the land of the fee.

The Roman Empire took hundreds of years to ultimately fall. America has been an Empire for at least 100 years, so we may go on for some time. I have been predicting 5 to 8 years untill we have a crisis more severe than 2008—a few more years if the recovery next year is stronger than I think. I am certainly no economic expert. I can only look at my situation and extrapolate. Extrapolation of our current spending issues leaves little doubt that an even bigger crisis is coming relatively soon.

There were gasps in the audience when Michelle Bachman recently suggested a cut of 40% of government expenditures. Instead there should have been applause. I was talking to my son Dmitry about politics and said our politicians were either liars, or idiots who think that 2+2=6. The fact that Republicans think 2+2=5 is not particularly comforting.

I am guardedly pessimistic because I expect budget cuts when a crisis forces it. Waiting until then makes the coming crisis worse and the cuts greater.  Every few years we have "kicked the can down the road." Is there a cliff coming? At the very least we are headed for a ditch. Fasten your seat belt.

Doubling Down On Debt

France, Germany and the EU Look For SolutionsThe central irony of financial crisis is that while it is caused by too much confidence, too much borrowing and lending and too much spending, it can only be resolved with more confidence, more borrowing and lending, and more spending. Most policy failures in the United States stem from a failure to appreciate this truism.

This Larry Summners quote seems to be in agreement with the philosophy of the current European Economic Community. This video explains some of the odd details of the bailout just announced. 

I think that this deal is doomed to collapse, but I doubt that one very interesting article is right and that it will collapse in two weeks: 

The eurocrats, of course, lack the guts to trim back monetary union to a more manageable size. Too much face would be lost. So "euroquake" fears, once viewed as outlandish, are gaining pace. Despite Thursday's deal, and all the reassurances of a "durable solution", the Italian government on Friday paid 6.06pc for 10-year money, up from just 5.86pc a month ago and a euro-era high. Such borrowing costs are disastrous, given that Rome must roll-over €300bn of its €1,900bn debt in 2012 alone. A default by Italy, the eurozone's third-biggest economy, and the eighth-largest on earth, would make Lehman look like a picnic.

I think the crisis will come and the longer it is postponed the worse it will be. I hope she is wrong and that we have some time to deal with the issue of excessive debt. 

Branson Landing: Seduced By The Dark Side

I am sitting on a hard metal bench wondering what Jesus would think. The episode where he drove the moneychangers from the temple comes to mind. This is our modern religion—shopping. Branson Landing is an open-air mall along Lake Taneycomo in Branson, Missouri. 

Being an on-again, off-again local, I know the story of Branson Landing's construction. The huge government sponsored bond issue, the special sales taxes, and the promise of increased business for local businessmen. Of course, they lied. Most of the stores are big chains. Business dropped when the mall was completed—there are only so many tourists. 

There is just so much money in a tourist’s pocket, and whatever falls out in the Mall is not available for country music shows. Attendance at those is down 20% I am told. Yakov Smirnov actually had to come out of retirement and star in a show in his own theater. Poor man. 

My guess is that eventually it did provide more of a “destination” like they promised, but not for the locals. Unless you are Paris Hilton or a Marriott heir. 

While it is pretty to sit and look at the lake, building the Mall in the flood plain without the proper permit might not have been the smartest thing for the City Fathers to do.

The choo-choo train is running down the middle of the street, but I doubt most of us shoppers, myself included, could fit inside the cars—not with all the funnel cakes we just ate. 

My wife complained that she could not find me in the crowds doing our religious duty. People are actually buying custom Teddy bears, and buying gourmet olive oil at Devo Olive Oil Co, fighting the crowds all the way.

I know I sound like an old curmudgeon, but don’t misunderstand what I am saying. There is nothing wrong with shopping. Stacy bought a fun hat and her first perfume! It is the whole system that is corrupt. From our shopping intensity to the profit mania that depopulated our industrial areas, from the top to the bottom it is corrupt. 

Again I wonder what Jesus ...

Oh wait, the musical dancing fountain show with the lights and fireworks and the igniting of propane is starting—never mind. 

Who Said This?

We need a President like this who can cut! Who said this:

“The one thing that we absolutely know for sure is that if we don’t work even harder than we did in 2008, then we’re going to have a government that tells the American people, ‘you are on your own,’”

I have no objection to a safety net, but that is not this person's proposal. What this implies is an impossibility. The government can not provide for you, for you are the government. A government that tells you that you can rely on it is a government that lies. This is our current government.

Our deficit is 1.4 trillion a year. We need to cut our Government spending by 40%. When Bachman mentioned this unpleasant fact in one of the debates, the crowd gasped. This was a Republican crowd that should have known better. 

I favor the expiration of the Bush Tax Cuts for the Fat Cats. In fact we need to let them expire for everyone. The expiration of these cuts is already factored in the the Congressional Budget Office deficit estimates. Even with a 4 trillion dollar tax increase over 10 years, we still need to cut 10 trillion from our spending. No one but Ron Paul is talking about this. Paul proposes keeping the Bush Tax Cuts and cutting spending even more, I do not feel this is practicable. 

Folks, if you rely on the government you are relying on a false god who will fail you in the end. 

Why Save?

In today's economic environment there is very little reason to save. If you do you get the proverbial shaft, while the government keeps the gold from the mine. 

There have been many examples of this. The first that comes to mind is the shafting the GM and Chrysler bondholders got in their bankruptcies. Secured lenders got less than unsecured lenders. One Chrysler bondholder that said he was going to sue was threatened by the government and he did not sue.  I doubt that the government was responsible for the death threats that the investor recieved. Property rights mean nothing anymore. 

The rate of interest that a saver recieves right now is less than the inflation rate. Of course, they also pay taxes on this "interest." This is a direct consequence of the actions of the Federal Reserve. 

The Obama regime will continue this in its latest plan to "help" homeowners who owe more on thier house than it is worth. From the Wall Street Journal:

The latest iteration came Monday, when the Federal Housing Finance Agency unveiled changes to a program meant to make it easier for underwater homeowners who are current on payments to refinance into a lower-rate mortgage. 

On the surface this does not sound bad, but it is another example of savers getting the short end of the stick:

Missing from that winners' list: investors who finance housing markets by purchasing mortgage-backed bonds. They will fund this new effort. Here is how: As homeowners refinance, investors who bought mortgage bonds will be given back their money and will have little option but to reinvest at far lower yields. The transfer is the difference in yield.

It is not that the bondholder is paid off, as in a normal refinancing, the bondholder instead just gets a lower rate of return than promised-without thier permission. 

Why save? Why invest? The Banksters are just going to take it from you.