economic failure

Things you don’t know

It’s easy to watch the news and feel the economy is improving. Comically the performance of the Dow Jones is blasted at us each evening as the key indicator of economic success in America. It becomes more ironic when one thinks of Larry Kudlow shouting accolades of “Green Shoots” across the CNBC airwaves, but our neighbors are losing their jobs and homes. The Obama administration’s economic success is measured by the Dow, unemployment, and inflation. The numbers are reported as better than during the recession of the 1980s and especially better than the Great Depression. However, this is far from the truth.

Every evening the swings in the Dow are blasted across the airwaves as the measure of success of our country. However, the Dow has changed so dramatically no one should pay any attention to these numbers. The Dow is an index of 30 companies, originally started in 1896. In 1896 there were twelve companies in the Dow and only one remains existence today, General Electric. Since 1896 the “components,” or 30 companies composing the index, have changed 48 times. Thus, a more technology weighted or health services weighted Dow can look nothing like the Dow of bygone years. When one adds inflation, as the Dow is unadjusted, the numbers become completely meaningless.

The unemployment numbers are currently 9.1% and considered the holy grail of whether we are better off than the Great Depression. Most people don’t realize the methods of calculating the unemployment rate have changed. The most significant change came in 1994 when those out of work for more than a year were eliminated from the numbers, essentially reducing the count by 5 million and in 2003 the statistical models were changed. Using old methods brings the current U-6 rate to 23%, in line with the numbers of the 1930’s.

The consumer price index (CPI) is the measure of inflation and it too has changed. The market basket of goods is to measure pricing averages as this index impacts policy and more importantly government dole like Social Security and Medicaid. Alan Greenspan argued the historic methods were invalid because, for example, if the price of a steak increased then consumers would substitute with hamburger. A somewhat valid argument until one considers rent, heating oil, and gasoline where there are no substitutions. Changes were made by Carter, Reagan, and Clinton to ensure inflation was not “overstated.” Housing is indexed to “rent equivalents” and energy has been eliminated.

In essence, we are not comparing apples and apples to look at today versus yesterday. “There are three kinds of lies: lies, damned lies and statistics.” – Author Unknown

Collapse is Starting

President Obama promised “Hope and Change” when he was elected; he has definitely managed to deliver “Change,” and last week he was quoted saying “Hope” doesn’t happen overnight. Change has come at us like a freight train and repeatedly I have our covered loss of civil liberties, now our economic future has been stolen by Washington:
– The debt deal promised cuts, but the debt will increase by $8 trillion dollars to $23 trillion by 2021. “Why?” Because the government calls a “cut” less spending than was projected for the following year, not less than is spent now.
– The day after the deal passed the government spent $236 billion, or $750 per citizen, in a single day. For my family of six, the debt increased by $4500. I don’t have an extra $4500 lying around, do you?
– Standard and Poor’s downgraded the U.S. credit outlook for the first time in history on August 5, 2011. To claim this is a political move would underscore the objectivity of credit reporting.
– The official Chinese news agency commented, “China has every right now to demand the United States address its structural debt problems and ensure the safety of China’s dollar assets.”
– Food stamp usage hit a new historic high last week, 45.5 million, up from 26 million in January 2007, and 32 million in January 2009 when Obama took office.
– According to the Census Bureau, homeownership fell to the lowest level since 1998, 65.9%, and if delinquencies are included the numbers match 1965’s level of 59.2%, according to Morgan Stanley.
– Housing prices have dipped 32% since they peaked in mid-2006, again for the 50th straight month realtors call a bottom to the decline.
– Weekly first time jobless claims continued their record setting levels above 400,000 for the 17th straight week.
– The average length of time to find a job has surged to a new record, 40.4 weeks.
– The labor force participation rate fell to a new low, 63.9% not seen since the early 1980s.
– Including those who quit looking but desire employment, the broader unemployment rate reached 16.1%.
– Gold topped historic numbers last week, closing above $1660/ounce.

I believe President Obama and Congress sealed their political fate last week and I am hopeful revolution will begin with the election of leaders, not self-serving politicians in 2012. A quick read of history will point to failed governments following the same path as the United States. We will not have societal Armageddon tomorrow, but our standard of living, and more importantly future generations’ standard of living, will continue to decline.

August 14, 2011 by admin Big Government Depression Great Recession Obama Peak Oil

My 100th Column

My 100th Column (07/27/2011)

This week I celebrate my 100th column, a huge milestone for me as I could not have imagined writing for “The Observer” for nearly two years without missing a week; I just wish my high school English teacher could see me now. I want to thank the publishers for the opportunity, seeing something they liked and allowing me free reign to pontificate as I desire. It was freelance writing, “Death and Taxes” that won me the opportunity and I find it ironic it is that issue, taxes, currently in front of the American people. As I look back over the last 99 weeks I note my philosophies have emerged where I feel I can clearly define my views: libertarian (with a little “L”), constitutionalist fearful of eroding liberties, and angry at politicians feeling anointed to spend, steal, and create laws but yet hold themselves above the people.

My early columns could be republished today: “What is Government’s Role”, “When Should Citizens Fear their Government?”, and “Big Brother is Watching.” Sadly I look back and see a country that has worsened during the last 100 weeks and continues to spin into the abyss while the citizenry look the other way to take in meaningless hype like Casey Anthony, the NFL, and “Dancing with Stars.” Two forces have united to provide the Kool-Aid for apathy, the media and the President. Right now we are two years into the economic recovery: remember “Green Shoots”, Biden and Obama touting all of the jobs they saved, and the National Realtors Association calling the bottom to housing prices? This deception is dutifully reported by the three networks and bull-horned by General Electric owned MSNBC and CNBC.

Over the weekend, the networks gave more time to the Amy Winehouse drug-induced death than the critical issues. Did you know last week gold hit a historic high over $1,600/ounce; jobless claims topped 400,000 for the 15th week in a row; and Borders (closed 399 stores), Cisco and Lockheed Martin announced combined layoffs of 23,000? Since January state and local governments have laid off 142,000 workers. Let’s not forget last week’s media celebration of American Airlines ordering jets from Airbus, a consortium of European companies, a staggering loss to domestic aircraft producers. Although our President tells us things are better and improving it is impossible to conclude the same when looking at the numbers. Likewise the 1930s were a long road of government missteps trying to fix problems created by the same banking cartel whose lineage has brought the same destruction upon us today. Looking back, history provides hilarious quotes from our leaders during the Great Depression trumpeting the recovery and “Happy Days are Here Again.” I believe Obama and Biden will be similarly chided for their mistruths when history is chiseled.

July 24, 2011 by admin Civil Rights Depression General Rant Great Recession Mainstream Media Obama

Small Town Destruction – Part II

In my first column addressing the demise of small towns I pinpointed three items I believe are consistent in the recipe for disaster: highway bypasses taking traffic around town, national retailers undermining local merchants, and outdated alcohol ordinances preventing thriving dining. Objective and specific, I believe the slow withering of communities can be avoided and in no way do I question the emotional appeal of charm or the fabric of the community. Expanding further on the recipe to create sustainability several more key strategies, in addition to the original three, can be implemented.

First, tax policy can drive business toward town center through a reverse property tax or by creating community redevelopment districts. Traditionally property taxes are lower in the suburbs, by reversing the millage rate growth is encouraged toward town and away from the outskirts. Continue reading…

July 16, 2011 by admin Economic Development Great Recession

Small Town Destruction

In my job I drive through small towns throughout the southeast U.S. It saddens me to see these former, vibrant communities withering away. Most people would find easy reasons for the local downfalls, like manufacturing plants closing. There is some truth to this, and of course the long-term trends in demographics point toward moves toward the suburbs, but I would argue the root cause is the locally self destructive historic actions of the communities themselves. I believe there are three distinct errors.

First, “we need a bypass.” One can follow US441, US301, or US1 in Georgia and Florida to see numerous examples. Beautiful towns are bypassed by high speed highways giving no reason to slow and take a look. The land on the bypass is commercialized by modern developers building look-a-like cheap structures found anywhere in America. The unique downtown charm of Main Street is then left to die. Ironically, my Garmin GPS has routed me through many towns, instead of the bypass, as the shorter faster route. I have enjoyed this scenic discovery and reminder of small town charm, and enjoy the scenery of the plantation homes, brick buildings, and unique architecture versus the lackluster Continue reading…

July 13, 2011 by admin Economic Development Great Recession

How Small Towns Can Survive (Cleveland, GA)

The following column appeared in the “White County News” 6/30/2011 where I was a guest columnist.

In my job I drive through small towns throughout the southeast U.S. It saddens me to see these former, vibrant communities withering away. Most people would find easy reasons for the local downfalls, like manufacturing plants closing. There is some truth to this, and of course the long-term trends in demographics point toward moves toward the suburbs, but I would argue the root cause is the locally self destructive historic actions of the communities themselves. I believe there are three distinct errors.

First, “we need a bypass.” One can follow US441, US301, or US1 in Georgia and Florida to see numerous examples. Beautiful towns are bypassed by high speed highways giving no reason to slow and take a look. The land on the bypass is commercialized by modern developers building look-a-like cheap structures found anywhere in America. Continue reading…

July 1, 2011 by admin Big Government Economic Development

Defending Yourself

Defending Yourself (06/22/2011)

I wrestled with the title and content of this column realizing I wanted to challenge thought processes. My context is asking, “When would you take up arms?” Recent Supreme Court rulings, at state level and the federal level have eroded 4th Amendment rights. These freedoms have been held sacred since the Bill of Rights passed and evolved from British tyranny and further back to feudal tyranny. Looking around I see this erosion becoming the norm, no longer the exception. Sadly, people who raise questions are now “domestic terrorists” or “troublemakers” harassed through detention, no-fly lists, and watch lists.

If you are pulled aside for additional screening at an airport and suddenly find yourself touched inappropriately by a TSA officer are you willing to yell “Stop!” Are you willing to kick and punch to defend your person? Are you willing to engage local law enforcement to file assault charges? What if you are an 18 year old girl attending your high school prom and security guards run a hand up your bare thigh under your dress? Would you be willing to complain, or more importantly Continue reading…

June 22, 2011 by admin Big Government Civil Rights Great Recession preparedness

What lifestyle changes would you make?

Check out this house. Is it worth it? No mortgage, living happy without the fear of a bank taking everything. Depending on where you have been in the last two years financially you may not understand the changes taking place in America.

The Greatest Depression is continuing in a rapid downward spiral with the plummeting value of home prices. Too many Americans have tied their fate to the future of their home. Since 2008 home prices have fallen 33%.

What is a house? How many people thought they were living the dream of a McMansion – 4000 square feet and a $4000/month mortgage?

I will continue on my 1.6 acres of rural countryside – chickens, woods, space, and simplicity. Life is easy when you have less.

June 7, 2011 by admin Depression Great Recession Peak Oil preparedness

The King’s Speech

The King’s Speech (04/20/2011)

I have never been as angry after a President’s speech as I was last week. Being forthright, I do not like Obama, never have, and never will. I believe he was unqualified to lead our country, has blamed others for his failures, will not hold himself accountable, and ultimately we disagree on the direction our country should go. Furthermore, I believe the Republicans have nothing different to offer than to protect their own interests and continue stealing our freedoms.

The King had an opportunity to win the American people over to the proposals for our future. Our fiscal situation is dire, inflation is increasing, wages are falling, energy and food prices are increasing, the Democrats have proposed spending $1.4 trillion more than tax revenues will produce, and in just 2 years the King and his court have increased the national debt 33%. The Jester, John Boehner, bragged regarding the bipartisan budget agreement, largest in history, but that lie only survived a week. The CBO reported the “real” cuts are only $352 million, less than 1% of the lie put to us.

The King, Jester, court, and sleeping beauty (Joe Biden) know how government works; let me explain. Let’s say you and I spend $100/month on eating out and decide next month we will budget $50 more dollars for dining. Using government accounting if we reduce the total budget to $120, we “saved” $30! There were no cuts; we just didn’t spend what we planned to, unlike spending $70 you and I would have inferred. Because my children’s future is in peril let me propose true government responsibility: mandatory 15% income tax for everyone, 20% for all corporations, and reducing the tax code to just one page as there will be no deductions of any kind. Second, eliminate the Departments of Energy, Education, Interior, Homeland Security, and Health and Human Services. Third, close all foreign military bases. Fourth, eliminate public funding of arts, Planned Parenthood, charitable programs, and any constitutionally questionable program. Fifth, cut all Congressional member and staff budgets and salaries by 50%. Sixth, eliminate all civil service pension plans and special medical plans. Seventh, remind our elderly that Social Security and Medicare were supplemental programs, not entitlements, and cut the monthly benefit to $750/person, regardless of income or marriage.

Only radical, truthful proposals will work to save our country. A parent makes tough decisions and redirects behavior; similarly we need politicians to lead, not steal our futures. The current tomfoolery will continue to strengthen the uprising and anger in America and revolution against the elected royalty will occur.

April 20, 2011 by admin Big Government Great Recession Mainstream Media Obama

My two cents…

The fed is between a rock and a hard place:

– no more QE: the stock market will crash, no easy credit, brakes on economy
– continue QE: rising inflation, real wages dropping, angry voters.

Furthermore the Administration is not supposed to be part of the monetary policy but Obama will politically pay for the decision either way.

What should we do:
– keep your gas tanks full (I filled the RV in January, $2.90/gallon, today driving home it is $3.80/gallon — $60 savings
– keep your pantry full — anything you buy today is cheaper than tomorrow
– understand the stock market is like going to Vegas. Best trading option is probably futures contracts
– pay down debt that costs more than 6%-8% to improve cash flow. Anything else is about to become cheap money. Free up the expensive money to invest in CD’s, dividend paying accounts when interest rates go back to 10-12-14%
– Remember, as interest rates go up bond prices go down. why do you think PIMCO sold ALL of their treasury bonds?
– Remember the government has $4 trillion in short-term treasuries coming due in the next 18 months

April 17, 2011 by admin Capitalism Depression Great Recession preparedness