February 2010

Snowstorms

The last several weeks living in North Georgia have made me long for the warm weather of New Smyrna. Snow has fallen across the mountains and into the Mid-Atlantic States. Mentioned in the news, but not garnering huge attention, has been the concern over budget shortfalls to handle snow removal and storm effects. The next economic storm brewing is more significant than this winter’s snowstorms though, it is the budget shortfalls at city, county, and state levels. Unlike the Federal government the other levels of government cannot run deficit budgets, leaving IOUs, payment vouchers, and possible insolvency as their only options.

Currently, California’s state budget is $40 billion, and assumes $9.6 billion in revenue will come from the Federal government, although it is rumored unlikely. Watching the news, the “Governator” remains firm on passing budgets, leaving programs intact, and not raising taxes. Sadly, Arnold has been at the front of the line grabbing monies for his state, in sharp contrast to what most Republican governors tend to do. Along with California; Illinois, Arizona, Florida, Michigan, Nevada, New Jersey, Oregon, Rhode Island and Wisconsin are also on the verge of fiscal disaster. Each of these states shares in common an increase in spending to fund public pension plans and support social programs that outpaced revenues. Coupled with the economic downturn, and housing crisis, revenues have fallen sharply. States like Arizona and Florida saw legislators enjoy spending due to property tax growth and found themselves like giddy children with an unlimited budget in a toy store full of opportunity.

Compounding the state problems are unfunded pension liabilities. Teachers, firefighters, policemen, and other public service employees enjoy an opportunity that allows productive members of society to work a limited number of years and then retire. In California the projected teacher pension shortfall is currently $43 billion, a huge number that can only be made up through taxes, additional contributions, or reduced benefits.

At the municipal level, foreclosures have created property tax deficits and reduced spending has cut sales tax revenues. Adding to revenue problems, and wiping out reserves, is increased expense for snowstorms, ice storms, and potential hurricanes this summer. “USA Today” ran an article on February 3rd, 2010 examining road maintenance under the caption, “Tight times put gravel on the road.” The article noted gravel roads are emerging as a sign of financial struggle in rural towns. In this case, budgets are so constrained that regular maintenance can no longer be performed on asphalt roads, something we all take for granted. Additionally, we have seen the fantastic examples of bridge failures, and can expect more infrastructure failures of roads, sewer, and water.

Listening to a podcast during the last week the discussion turned to the economy and the participants talked about local insolvencies, and mortgage resets, making an observation, “if it were really that bad wouldn’t someone tell us?” In hindsight, no warnings were given leading to the housing bust, or the market crash in March 2009. Looking back further, the headlines of the 1930’s are hilarious with weekly pontifications of better times coming and I believe our economic recovery is going to echo a similar path. I realize that comment contradicts the optimistic news presented daily. However too many factors remain: unemployment, reduced tax revenues, drains on local spending, excessive quantitative easing, Chinese currency manipulation, and increased spending. It seems like Americans have become the proverbial frog in a pot of hot water, slowly being boiled to death, oblivious to the impending doom.

February 19, 2010 by Big Government

Sheep

Sheep

This past weekend was the Superbowl, a time honored tradition of getting together with friends, watching the game, cheering for fantastic football plays and watching commercials at halftime. I scoff at this as a continued hilarious process of entertaining the sheep, or the “sheeple” if you prefer. Sadly, I assert more people know the names of the quarterbacks of each team and not the names of their two Senators. Most people will know which team won the game, but cannot name which party has a majority in Congress. Lastly, the commercials will be recounted with detailed attention, but the average person cannot describe the details of the largest federal budget passed in history this last week.

I find myself an outcast because I don’t watch the Superbowl, or follow professional football obsessively. I admit I don’t follow any professional sports religiously, although I may know names, teams, or who leads a league at times. And of course, if I were invited to a game or race, I would joyfully attend. Preparing this week’s column I had realized I had no idea who was playing, and did not care. I realized a long time ago I had no interest in watching millionaires who made no contribution to society run around on a field or court. When the players make the news it is usually due to beating their wife or girlfriend, an affair, drugs, or shooting. But yet, our society idolizes these players that have near superhuman strength.

With President Obama’s populist push against the CEOs and executives of major corporations I must wonder why sports and Hollywood celebrities are exempt. The American people readily hand their money over to large entertainment corporations that provide obscene riches to a very few in an environment where nepotism is more likely to drive success than any type of skill. On the other hand, a successful businessman who risked his home, personal family life, and employed others is now demonized if he rises to a successful level. No one questioned the use of private aircraft and limousines by Paris Hilton, but the automotive executives that employ hundreds of thousands and whose company’s stock is owned by the masses were chastised by Congress for wisely using their time to travel via an efficient means. Ironically, Nancy Pelosi travels every week via private aircraft from Washington, D.C. to California at taxpayer expense but that is not questioned.

President Obama has made it clear that to succeed in America by hard work, rising through the ranks, managing people, and running billion dollar corporations is bad. However, it is acceptable to sign a hundred million dollar contract to play games for a few years, and even get paid if hurt. Or, like Conan O’Brien to get $30 million to peacefully leave a contract at NBC. As much as his populist agenda is being promoted, it scares me to think about a lottery society where success is measured by luck rather than a society that favors hard work, risk, and rewards success. Life is not fair, everyone is not a winner, but America has led the world by everyone having the opportunity to succeed regardless of gender, race, or economics. The Romans distracted the people with entertainment, ran lotteries, and controlled the people to take taxes, and control the people. Governments know when the people are entertained they will turn their backs on the important issues and trust others to care for them, just like sheep. Sadly, it seems like the American people have become sheep who do not care. Now, I must ask, “Who won the game?”

February 19, 2010 by Depression Great Recession Mainstream Media Obama Stupid People

Not True

Middle ground is often hard to find, regardless of whether you try to get there from the left or the right. President Obama made the news three times last week, with each appearance being overshadowed more by politics than the substance behind his comments. His presidency has taken the appearance of a rudderless ship, using the press and public opinion to drive short term goals with no strategic plan to maintain direction. Weekly the administration’s cast of characters marches onto the Sunday morning talk shows and Emanuel, Axelrod, Gibbs, and even Clinton pontificate this week’s new agenda. Like the Clinton years, weekly trial balloons are floated and the Chicago political machine drives the weekly agenda. Sadly, the theme of the week does not deliver substance, but instead takes our country on “Mr. Toad’s Wild Ride”.

A historic opportunity was in front of President Obama last week with the State of the Union Address. However, he again shifted blame for the economy back to the prior eight years before he was elected; offering a repeated argument, he “inherited a failing economy after eight years of bad decisions.” I have previously offered that leaders need to own situations, plans, and provide concrete strategies, but Obama prefers to savor projecting blame. Worsening his image, his speech was overshadowed by his gaffe against the Supreme Court’s recent first amendment ruling. He erred in stating foreign corporations would be allowed to spend in our elections, although 2 U.S.C. 441e(b)(3) prevents this and Justice Alito responded, forever tainting the tone of the speech.

On Friday Obama went to Baltimore to dialogue directly with the Republican Caucus. News reports showed sparring, and the “Huffington Post” reported he mauled the lions in the lion’s den. A frequent video clip of the networks is Obama stating, “I am not an ideologue.” However, my check of the dictionary shows an ideologue to be “an often blindly partisan advocate or adherent of a particular ideology.” My recollection of the last twelve months is locking the minority party out of discussions on health care, mocking the passionate citizens of the minority, and demonizing anyone who disagrees with the majority’s agenda. Regardless, I am impressed he engaged, and more importantly did so without a teleprompter.

Saturday was much more in line with the sound bites this President enjoys. His appearance on the sidelines and participating in the commentary at the Georgetown vs. Duke basketball game drove home his likeability. Comfortable in the celebrity style spotlight and ravishing the attention, Obama delivered his typical one-liner partisan dig when asked about being left-handed and responded, “I went to the Republican House caucus just yesterday to prove that I could go to my right once in a while.” Once again though, he received significant coverage of an insignificant event, managing his image and failing to deliver substance.

This last week shined light on the tissue paper thin qualifications of our President and peeled the onion back to show a man that continues to operate in campaign mode, not a strong leader with the strength he promised. The State of the Union a year later was the platform to recount “Hope and Change”. However, promises were broken – Guantanamo, Afghanistan, reducing unemployment – all of which don’t require opposition party support. Even ramming the largest healthcare bill in history into the economy was not accomplished because he cannot lead his own party. Last week’s State of the Union speech could have enticed all Americans, but the populist platform rang hollow with disappointment.

February 6, 2010 by Obama