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January 10, 2013

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NOBODY LISTENS: If you listen to the White House and the main stream analysts you would believe the economy is improving. Listen to a headhunter and you'll get a truer picture. After Black Friday's numbers and the President's victory the nation fell asleep. As we will no see the nation's economy had avery tough 4th quarter. Based on the numbers coming out it looks like GDP grew between .5% and 1.3%. Anemic. And, what do we expect?

POLITICAL FIGHTING persists and in very public, aggressive exchanges. The President acts like a King posturing for his party. Senator Reid acts like a blocking back. VP Biden acts like a Union organizer. McConnell acts like a complainer. Boehner acts like he is always ready to compromise if anyone gives him something to compromise on. And, the Tea Party House Members act like they were only sent there to block anything the leaders of either party tries to compromise on forcing Boehner to use the Democrats to pass anything with compromise in it in the House. Cantor sounds like a no compromise Tea Party advocate.

COSTS,COSTS,COSTS are forced on small businesses and consumers. A payroll tax hike that should have never been cut in the first place is now hitting everyone who works pay check. Obamacare expenses and insurance premium hikes are hitting small businesses. More to come in 2014. Tax withholding increases are now hitting small business owners and the people who invest in businesses. Energy fees and increased taxes are hitting businesses. Increased gas prices continue to plaque the consumer blinded by the recent pull back from $3.75 to $3.40. Natural gas continues to ge ignored. Corn prices continues to soar as Ethanol requirements are increased to 15% taking Billions of bushels out of the annual harvest. States and counties not blessed with oil industries continue to raise taxes on virtually everything we own,earn or consume.

DO WE REALLY think this environment can really encourage an economy to grow at a rate to put our kids to work? Home builders confidence just out: still stalled below 50%. You got to be kidding.

OPINION: I was interviewed yesterday by one of the Mid Atlantic newsletters on Business capital and venture capital and asked my view of what the economy holds for now and the near future. I basically made 5 points:

1. For nearly 4 years now we have struggled with a Government that is deeply divided over the approaches to solving our problems who spend far too much time addressing political issues than solving problems. The result is that employers and consumers have no confidence in the ability of Congress to produce compromise solutions. This creates significant reluctance to spend on new strategies and growth. Since 2011 we have seen more and more determined opposition to either side being willing to compromise an anything that gives us long term planning certainty.

2. The real estate market is frozen in a down mode. Single family housing has given way to multifamily housing. Housing values are still far below mortgage values for nearly half of the home owners. The result of this is a work force with little ability to move to where job opportunities exist. Government tends to blame the lack of qualified job seekers on the education/training system rather than acknowledge the true nature of the problem: mobility.

3. Baby boomers retire at a rate of 10,000 a day making the unemployment numbers look far better than they truly are. This retirement rate is taking more and more people out of the category of job seekers. These people are replaced on a reduced percentage rate as employers make do with less employee and advance technology reducing the need for people and adding to their bottom line. At the same time retired baby boomers do not spend at their employed rates and the demand for products and services is shifting away from things to healthcare and entertainment. The frozen real estate markets are also creating a reduced demand for retirement homes as boomers cannot sell their primary residence and are opting to stay in their jobs 2 or more years longer. result is reduced consumer demand and lower hiring opportunities for college grads.

4. Capital is nonexistent for small businesses. Reduced lending by banks. Virtually no venture capital for start ups. LOC’s withdrawn over 4 years. Credit card limits reduced and higher interest rates and fees charged by banks and CC companies. Even the small business Administration has a very small budget for small business loans and it was announced last week that Black owned businesses are being targeted for increased funding by SBA. With 9,000,000 Small businesses out there SBA is a drop in the bucket anyway. The regional and local banks have gotten out of the SB lending—too much risk.

5. Sequestration has slowed the largest industry in the country: the Federal Government. The federal government in an effort to satisfy the need to reduce future spending has targeted the DOD and discretionary spending with most of the agreed to cuts so far. This has had a huge impact on the Mid Atlantic region’s employers. With construction on its knees and these actual cutbacks as well as the implied cutbacks on the horizon government contractors and the small businesses who support them the strongest employers in the region have shut down hiring. As has Wall Street. The result once again is a lack of hiring of midlevel and college graduates. Congress and the White House continue to ignore the major consumer of our deficit: entitlement and benefit plans. The truth is the cutting of future spending of this programs out 30-40 years will not impact the economy as soon or as dramatically as the current approach to Defense and discretionary spending is doing.

The continuous walking to the microphone and blaming the other side is what kills the confidence of America’s managers and damages the economy. Both sides don’t want to compromise. But each side must or we will continue to see this economy falter more and more. These negotiations should be done in private,quickly and with the goal of finding the grand bargain allowing us to move forward and try to absorb the taxes and costs we have already been given.

PLEASE---I am listening to the President tell us that we need more taxes on millionaires. He is also telling us that raising the debt ceiling is not authority to spend more money. Once again he has nothing to offer on spending cuts. And, of course as he details the lack of progress in reducing the unemployment and the effect of the deadlock on the economy he puts all the blame on the Republicans. Once again he claims Americans voted to solve the defict by taxing the rich. He is now listing his priorites: new energy,schools,gun control, immigration reform, etc. More spending.

What is killing the economy? Deadlocked political system. Tax increase everywhere you look. Obamacare implimentation. Dodd Frank implimentation. Higher gas costs. Higher food costs. Real Estate frozen creating an immobil employment pool.

THERE IS A STARTING POINT, A'NEXUS'. It is the exposure of political 'hackery'. Policy reversals whose primary motivation is not the Country's well-being but only to de-frock the opposition. Expose these 'robo-pols'and support candidates of demonstrated self-lessnes and apolitical ambition. Candidates motivated with the repair, not the disintegration of society, it's economy, and postulates of faith and morality . Expose the incompetants who's abilities are solely lyrical and lacking pragmatism . ENOUGH

IT's ALL NATURAL--Bill, condolences. Unfortunatley, you and Sue migrated to the territory of your adversary: Liberals. It is natural for people to migrate to where they are comfortable and in our lifetime we have seen California become the western home of Liberals and minority groups in need of protection from the "normal folks". Like the growth of any colony the rules get changed to satisfy the needs of the migrating group and accelleration occurs. for us of the other beliefs I would call it the "accelleration of deterioration". San Francisco is like the black hole of migration of liberals and California is slowly being consumed by the black hole. Soon if not already the few statewide elections for Governor and Senators will be irrelevant as well. Illinois reached that point in the mid 80's under the Daley political dictatorship.And, they finally became powerful enough to produce Obama and export him to Washington DC. The accelleration now is pushed to the national stage as we look at the support system being renamed entitlements, gay marraige being pushed from the White House, the business of making national laws being taken from a Congress frozen by a Liberal White House and a Liberal Senate leadership allowing the President to rule by "Executive Order", etc. And , so the new political strategy of the liberals has caught the moderate and conservative by surprise. In the end it is likely the Supreme Court will be required to unwind some of this abuse of power. It may be a race in time as it will take legal action challenging the use of "Executive Orders" to usurp the power of Congress or it will take a new President to cancel them. If the current White House gets more liberals on the court then the US system could indeed be in trouble and the black hole consume the nation's political system as it has San Francisco, Chicago, etc. Condolences, my friend. I know you enjoy the role of combatant defending the under dog out there. Otherwise you would migrate to a place where people nod their heads in aggrement with your thoughts.

Republicans spend way too much time building barriers to migration rather than embracing the issue and finding a way to adapt to it and influence it as best they can. Immigration from Mexico is the most pressing case. Mario Rubio is the best opportunity to develop a leadership that will win. But, it better happen soon.

HOW ABOUT AN OLD 'OLD STAND BY'; the 'HALLMARK' of Republican 'propositioneering', INNOVATION. The Country and certainly California have financially dried up. Romney chanced two hours of it and almost tipped the entire election. Humility and the observation of 'politicaly correct' speech has run us aground:financially, morally, and now our National Security.

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