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May 20, 2010


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Here are a few interesting developments:

1. Congrats to the Obama terror fighting team. We used the drones to kill the # 3 Al Queda leader and one of the founders. He was the money guy. One by one the top guns are being killed. The drone is an incredible weapon for this war.

2. The Attorney General of Virginia is requesting the documents from UVA of one of the top climate change scientists who does research there. They are investigating the "fradulent" moves of the famous inventor of the "hockey stick" climate warming data. He has been accused (remember the emails ?) of doctoring his data to show global temperatures increasing when they actually decreased in order to get $400k of grants from the Federal Government to fund his research. In true American University liberal fashion UVA has refused to provide the information including the professors emails to the AG investigating the man. Ironically the Virginia Attorney General is a UVA graduate. On to the courts with this one.

3. On the climate change scene I guess there has been a "cooling" at the Gore house as the man who brought home $106 Million lobbying for "warming" is splitting with his wife of 40 years. Maybe she read his emails.

4. The leak goes on and now Obama has sent Holder to "take action".
Evidently we must have to sue BP to give us jurisdiction. This will be interesting to watch. This is a very dangerous situation for the country and we should have had control and the purse strings long ago.

Repeal HealthCare Bill - start over - write one based on the guy from Wisconsin; increase medicare preimums - base premiums on wealth; don't allow SS to kick in until age 70 and no cap based on salary - pay SS no matter what your salary; don't put in any more entitlement programs; don't give congressional pensions - make them figure it out - I have to; let's use clean coal...ain't the best but it makes us less dependent on the Arabs; cap unemployment insurance - right now it just goes and goes; give tax breaks to small business so they can hire; quit hiring government employees - that really is dumb - they will keep on taking money from us forever. If the government would pretend the money was really theirs, we wouldn't be in this mess. All of us have to balance a budget or we go under. So should they! Get out of Afghanistan now.

I think we can all agree that our spending must be cut. There, that was easy. The hard part, what do we cut? Can cuts alone get it done? Can we have a discussion on that.

What a mess. Today we watch as BP tries one more time to plug a hole in the ocean floor that is spewing millions of barrels of oil into the environment. Thousands of offshore rigs pump oil every minute of every day. Deeper and deeper they go into the water. There are two main culprits here I think. First is BP who foolishly took this financial and public relations risk in America's waters without a fool proof disaster control system to shut off the flow of rigs when accidents happen. Second is the US Federal Government proving one more time that it cannot be depended on to perform it's duties and function effectively. The responsibility of making sure that BP and all other oil drillers were complying with US safety standards is the Feds and they failed. So now the mess and the nervous watch. And the consquences for Americans and the environment. And the blame game.

To me though this is one of the great examples of why the whole idea that we can turn everything over to the Feds to take care of life for us is crazy. Obama's view of cradle to the grave management of our lives is unlikely to work. Let's look at the track record of the Feds on our major issues today:
1. Social Security: Trillions of dollars of American payroll taxes over the years taken for general use and the SS pension fund unfunded.
2. Border control: an estimated 31 Million illegal immigrants have passed through our southern border. Millions now living here legally given amnesty as a reward. And once again the Obama administration is trying to forgive and forget the current group if only Arizona and Texas will accept 1200 National Guard and $500 Million as a bribe for their support as if that will seal the border.
3. Medicare: Unable to compute accurate actuarial figures for Medicare the Feds have another Tax on Americans and American businesses which they have squandered and another broke Federal system with tax dollars uninvested.
4. Balance of payments: for as many years as I can remember the Feds have ignored the basic effects of balance of payments deficits in US Trade policy opting instead for ever cheaper products produced by countries with no wage laws, no safety standards, no environmental constraints and no contribution to the defense of the free world or even the UN. The Feds set the tariff policies of the US. The Feds negotiate our trade agreements. And for way too many years the feds have been able to constrain America's oil and natural gas production relying instead on ever increasing oil imports costing us Trillions of US dollars.
5. Deficit Spending: Congress has continuted to tax and spend our way to 13 Trillion dollars of debt. Never stopping to worry about the consequnces of their actions. Congress is both Republican and Democrats in a never ending mix of control. Never the less they spend and spend without a thought of ever balancing the checkbook. Meanwhile the US Presidents are given the blame while Congress takes credit back home for delivering more and more pork. And, we are to believe they can run our lives?
I could go on but this is enough of the evidence of the ineptness of the system we call the Feds. And further evidence that "big" is not necessarily better or efficient at running things.
General Motors is big. The United Mine Workers are big. Fannie Mae was big. Merril Lynch was big. American and United Airlines are big. None are very good at what they were created to do. Perhaps it's time to get smaller and see if we can become better at what we do.

Is anyone else concerned with the fact that Washington (President, Senate, Congress) has such low approval ratings? What is this telling the world? Is anyone minding the shop and starting non-government jobs, finding ways to help small business so they can hire? All of the government jobs we are creating only come with huge pension/health care costs down the road that all of us will pay. It is truly depressing. And why does the American public continue to let the media tell them what to think? They are putting Rand Paul on the same platform as Sarah Palin and will crucify him just as they crucified her. Oprah talked about dysfunctional families on her show all of the time...this is one huge dysfunctional group!

Excellent analysis, Bo, thanks. Joe --excellent point. I suppose if it happens then Obama will print another Trillion US dollars, give them to the IMF and we'll bail out Europe too. Or I guess he could use the $500 Billion the fed is holding that GWB gave them in the TARP money. Where is China with all their US dollars in all this?
Bo--did China contribute to the IMF contribution to the emergency funds for Greece and friends in the EU?

Another thought I had as I read your analysis and listened last night to the experts on TV was that this problem the EU has with individual members going belly up is very similar to the US problem of California and other states going far into the red and rushing to Obama for a bailout from the broke Feds.

Speaking of bailouts have you heard that two Democrats in Congress have introduced two bills to bailout the Union pension funds? One for the corporate unions to the tune of around $350B in funds and another from a California guy, of course, to bail out the state and local workers union pension funds which are about $100B in the tank. That's another $500B for the US tax payer to give to more of Obama's supporters. When will the madness stop? We can't even bail out SS or Medicare. I'm going to see if I can get my representative to have congress fund my Profit Sharing Plan because I no longer make profits. But I still pay taxes.

I think there is one important piece missing from your assessment, and that is the current ice developing on the pond of banking liquidity in Europe. My spies tell me that banks, particularly European banks who have heavy exposure to Greece and the other weak European Economies, are cutting back on interbank credit exposure to each other. If the ice thickens, we will have a full blown financial crisis. If banks are afraid to lend to each other (which is what actually caused the crisis in the US a few months ago) liquidity dries up and the world's economy comes to a halt. Liquidty and banks being willing to accept each other's settlement risk is what makes the system work. I think that is much of what the stock markes have been responding to in the past couple of days. Buckle up, it could get very ugly very quickly.

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