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February 13, 2009

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Hey Bo, Great points here. My only point in favor of the infrastructure funding is that at least we are getting long term capital value for our investment. Given that bridges last 40-50 years and MUST be maintanined then at least by spending the money on those projects we are putting long term assest on the books, eliminating some future problems we have to pay for and , at the same time priming the pump on a problem left way too long by politicians already. In theory the stimulus funds will only give us a start on a project that will require close to $1 Trillion dollars to complete. Therefore one could argue that the jobs created to get started will be perpetuated if we fund and finish the project over ten or fifteen years. I prefer this to other one time uses of capital with no value on the books that create jobs for a year or two.
As for these paper pushing jobs that you describe created by the US government you are right on. Those are the jobs that are continuously targeted by the Republicans when they get power locally and nationally. They are like matter "they cannot be created or destroyed" because they are the pawns of the political party system. Democrats (seek to) create them and Republicans (seek to) destroy them. It could be argued that while they exist they create the National Debt and if they can be destroyed then we can balance the budget or even pay down on it. So why create those jobs in the first place?
My major concern about the stimulus bill is the amount of reoccurring costs are being created in the name of stimulus that will inflate the budgets of State and Federal administrations in the future. I think the this is the concern of Sarah Palin and the other Republican Governors who are hedging their support for the bill and calling for a review and budget forecast prior to accepting the funds. And, in my view, rightly so. Some of the 50 states can stand on their own without more federal help and if possible should do so. I do not believe the federal government has the right to force these states to take part or all of the funds and it was certainly a questionable call for the Congress to set up the possiblility of a fight between the Executive and Legislative branches of State governments by allowing the State Legislature to override the Governor's decision. I view the Governors who are at least taking a look before accepting the funds as being responsible. Why do they want to create or even save jobs or projects they cannot fund in the years ahead? They know the feds will not be there year after year to fund them. Fiscal responsibility for all of us begins with a balanced budget and those states who can do it now without help should do so. Until we all pay the price for our excessive spending, as you so well point out, we will continue to dig a deep hole for our kids and grandkids. If we aren't careful we might dig it for ourselves in the next 4 years.

So much to say and so little time. Mac makes some excellent points, especially about the dopes in California (not you, Bill.) Fortunately that won't be our problem much longer because Mexico is about to take it back.

One of my pet peeves is the infrastructure spending in the "stimulus bill." Yes, infrastructure needs to be constantly repaired and updated, but by the taxes already levied for that purpose, not the rampant spending in the stimulus bill. The giant infrastructure projects are done by huge machines and a very small body count. And in a year or two when the project is complete, the few jobs go away again. If you don't count gov't paper pushers and regulators, gov't never creates real jobs.

Yes, there are a lot of job losses going on, but in my opinion a great many of them (not all) are what I would call "soft core" jobs, by which I mean jobs that would never have existed in the first place without the debt driven hyper economy that we just came out of. Like 100,000 jobs at Starbucks where they sell $5 cups of coffee. Or all the granite countertop people who were making a living on all the folks who took home eqity loans on the supposed value of their houses that wasn't really there. Or all the people in the mortgage finance/refinance/title insurance (etc) industry who were only needed because of all the speculative buying and selling. I'm sure you can think of examples of your own. Those kind of jobs have to go away when the bubble that supports them blows up. A question I don't hear anyone asking is, "How many real jobs could be supported by a real economy that isn't inflamed with excess consumer debt?" If we somehow figure out how to bring back all these jobs, won't we be right back where we started?

My macro-prediction is that common sense will prevail, and that we will enter an era of conservative populism. The excesses of Obama/Pelosi/Reid will be obvious, and very fast.

Bill Bowen for COMMERCE SECRETARY!!! Whoops maybe not--I think they moved that job to the White House. Commerce runs the census right?---Wrong!! The White House does. No real job there Bo.

In the first 100 days of the Obama Presidency we are seeing the greatest grab for power of all time. The Executive orders; the Federalizing of the US Banking, Insurance and Auto industry; the grab of the Census control; the castration of the intelligence community; the "$789B of Stimulus" of Democratic Programs held in mothballs for 20 years; ---what's next? We get all this for changing Presidents?

All this comes in the same week that Retail sales rose, 1st time unemployment claims dropped and the markets had actually stabalized until we started "stimulating it". Perhaps the recession is waining on it's own. Afterall they say it is actually about 15 months old now. Most modern recessions last about 18-24 months. Perhaps the stimulus of the reduced gas prices in America have taken hold. After all they were a big part of why we had a recession in the first place and we now learn according to 60 Minutes that they were artificially driven up by BANKS going into the Oil and Gas Derivitives market and driving Oil Futures prices through the roof while supply actually increased and demand actually decreased. The Banks lost Billions--and we bailed them out under the smoke screen of bad housing loans. Who will bail us out for our 401K and Profit Sharing losses? We will. Did anyone at the Congressional Hearing ask the Bank CEO's if they are out of the Oil and Gas business yet? I didn't hear it. And guess what? Oil prices are dropping and gas prices are rising again. Is it true that Exxon is really cutting gas refining capacity? In 1974 I led a study for DDR&E that examined the future of Oil and Gas on the US economy and security. I learned that there is more Oil on the planet than any liquid except sea water. It is only a matter of economics whether we drill deep enough to get it and the cost of the environmental constraints place on drilling by the US Congress.
Congress ultimately controls the price of oil --not Saudi Arabia or Iran. Sarah Palin know this. Why doesn't anyone else speak up? Is it because the bumbling idiot she is made out to be is really a tough mom who "tells it like it is?" That will certainly make the political and media world try to keep her out of office. just to make sure I'm fair here: our 1974 study predicted global warming, the rise in frequency of tornados, hurricanes and drought so there IS a case for less use of fossil fuels but there is no shortage of oil. In the US alone there is enough "clean" natural gas to get us environmentally pure pretty fast. Who's stimulating that industry? No one--instead Congress will place more constraints on it to make sure it does not become economically competitive. There is more oil in the waters off California than exists in all the Middle East so while we pay Billions to Foreign governments the State of California is broke and refuses to uncap the wells to generate the revenue it needs. If it is truly the 5th largest economy in the world, bigger than most countries, then why doesn't it act like one? Would any of the 5 largest countries in the world cap their wells if they could feed and educate their people using those resources? The hierarchy of needs are upside down in California and will continue to be as long as they have a President who will bail them out with state aide.

Where is the leadership in this country? Don't tell me this guy is Lincoln. So far he is Jimmy Carter II at best or Mayor Daley at worst. His only similarity to Lincoln is that Lincoln governed during a civil war--this has the makings of a political civil war. I hope not.

Stay with it, Bo.

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