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August 11, 2011

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REGULATIONS------

On one of his stops in Iowa the President was asked by a farmer to please stop sending more regulations to inhibit his ability to run his farm. The President responded "Don't always believe everything you hear---" What a tremendously comforting response to another of America's small businessmen. Reminds me of his "Share the wealth" statement to Joe the Plumber! Don't believe? The Healthcare bill alone created more than 130 new governemnt agencies and hundreds of new regulations on businesses--these are still being written nearly a year later. The Environmental protection agency has written hundreds of new regulations affecting all forms of US businesses. The Dodd-Franks act created nore than 4000 new regulations that are still being written. And we're not supposed to believe they will send us more? This was simply an answer to avoid the real answer: I will not stop until your world is the way I see my world!

GE CONTINUES----

The CEO announced that they will enter into a new $2B partnership with China to build Airplanes in competition with Boeing. This is our job creator leader? The NLRB is trying to block Boeing's $1B plant in the south where we will employ Americans to build planes while Jeff Immell partners with China to compete against Boeing? Could it be that Obama is "Leveling the playing field" with Boeing for GE? And, what of the technology patents and perhaps secrets (GE is a prime military contractor) that may be transferred to China in this partnership? I have yet to see anything built in China that is not soon "Knocked Off".

And, Biden-----

Understands the Chinese 1 baby(preferably male) per family rule in China but doesn't think it will work to fund their social security system? Social security in China? On their $1/hour wages? You'd need about 20 babies at that wage rate. If babies is all we need in America to fix our social security system then let's outlaw abortions. Come on VP--give us a break.

THE DISCUSSION ABOUT WHAT TO DO-----

Today we learn that instead of $500B of TARP money used to shore up the US Banking system that was publically known the Feds issued another secret $1.2T in loans to US and Foreign Banks and of course GE,Ford, Goldman Saks and other financial institutions in the meltdown to save the financial system. In effect the USA saved the world with the tax payer unaware. I have not seen yet whether that money has been repaid. But it stands to reason that GE made Billions tax free last year as did Goldman Saks.

And so, we see that the big guys got $2T in loans along with $1T in stimulus money while the small businesses? I remember a $30M loan fund as well as the SBA loaning out around $130M to the 9,000,000 wmall businesses in the US. In the meantime viertually all the growth of jobs has come from small businesses. Without aid. It should not be difficult to see what is needed to stimulate jobs in America: get out of the way of small business owners. Stop the regulations, stop the energy price increaases, stop the restrictions on what they can do, stop the tax increases, restrict the interest rate hikes on our credit cards. Bank of America and Citicorp were given Billions of dollars in loans and they now charge us 24% interst on our credit card debt using the excuse that we are a risk. We aren't the risk--they are. Politicians with their
PAC money at stake are ever so anxious to satisfy these big doners at the expense of the companies who employ 76% of America. The people who are creative enough to continue to hire when the big guys anre laying off people to make their #'s for wall street. If this secret bailout of the big guy doesn't wake up America to understand what is needed to get us going again then nothing will. So in the end America bailed out Europe and now they can't even bail out Greece. Any one else want to try socialism?

ANOTHER TOUGH DAY-----

Markets returned to their volatile moves as the global economy was forecast to slow considerably. The world is beginning to realize that the premier consumer is the USA and their markets rely on selling products here to a large extent. US employers are still interviewing at a higher pace than last year so these market moves may actually be more fear driven and trader driven than economic. Huge sums of money are leaving the markets and going into gold and T Bills. That has to result in down markets for a while. But, the US economy, mired in a 3 year slump, may actually wake up if energy and commodity prices continue to fall and as consumers continue to pay off debt. Soon banks are going to have no place to earn money and they are going to have to gamble on loans to small businesses. The heart and soul of America.

SYRIA----

The President showed some moxy calling for Assad to step down. At least this called Iran's bluff vocally. However, the call to step down was the precursor to war in Libya. Could we now see war #4? Unfortunately, this continues to exemplify the President's Yo Yo foreign policy as we were calling Assad a great reformer a few weeks back. Now he's accused of crimes against his people. Killing 2000 or so.

WATERS-----

Maxine Waters blasted the President yesterday for not caring about the Black unemployed and is mystified about his economic programs. 16.5% unemployment and rising will lose your base.

TAXING MILLIONAIRES----

The number of people making $1M+ in America--the target of the President's tax increase--are down 39% since he took office. Perhaps this is actually the way we level the playing field --we all go broke.

ENERGY PLUS FOOD COST INCREASES GUARANTEE A SLOW ECONOMY

It is discouraging to have the President making excuses such as “bad luck” for the performance of his programs. GWB had Katrina and the Tsunami and 9-11. I didn’t hear him blaming bad luck for his results. Leadership is all about taking responsibility for the results your programs achieve. We all know the President sees the results in terms of the outcome for his base but that is not sufficient to lead America. That is pure partisan leadership and very divisive. The American people are seeing this clearly. It is also contributing to the poor psychology of consumers and managers. Fortunately for the President the economy is still out there trying to overcome the environment. I saw interesting data today that when energy costs equal 17% of GDP a recession always occurs. When energy costs fall to around 12 % of GDP then the economy is strong. By pushing his alternative energy program and driving up energy costs the President has contributed to his own demise. Energy costs are currently running around 15.5 % of GDP thus the economic slowdown. One factor that will help him is that gas prices are dropping. In September they should fall another 15 cents as we switch out of summer gas. However, the continuous push for ethanol based fuels is driving up the cost of food and that too inhibits economic activity. In effect the combination of energy and food increases since he took office have likely contributed to his inability to get us out of the slow economic pace and high unemployment. I heard T Boone Pickens the other day and he indicated he was getting a Congressional hearing on his natural gas proposal soon. That would be a good project for the President's infrastructure dollars. Construct a natural gas distribution system. That is an energy idea we can all get behind. Perhaps a win-win for the entire nation.

RANDOM THOUGHTS-----

On Politics and money----

I saw where the 12 people on the debt commission tasked with finding $1.5T in budget savings are among the top lobbyist dollar recipients in Congress led by Senator Kerry at $15M and Senator Baucus at $8M. But, it appeared most of them get $3M on average.
Makes you wonder how much they vote on principal versus money, doesn't it?

On the war on terror-----

I have long felt that Bin Laden never really intended to fight a war of weapons but rather always intended to simply use the same strategy that was used by the Viet Cong and that he employed against the Soviets in Afghanistan: economic leverage. It is working well. Look at the US and Europe as they try to fight the wars and defend against guys with shoe bombs and box cutters. Using these simple weapons along with fertilizer and plastic explosives in the hands of suicide bombers Bin Laden has managed to bring the economic systems of the US and Europe to the brink of failure. He has actually gotten the West to do his bidding for him. We are now engaged in a series of battles to dethrone the very dictatorships that he opposed in Iraq,Libya,Egypt,Syria,Yemen,Iran, etc.We are even second guessing the Pakistan alliance. Once we get tehm all out of there Al Queda will be free to move in politically or militarily and gain control. We have Iran joining forces with Assad defying the US to take him out. The President is faced with a "call Iran's bluff and take Assad out" or appear to "give in" and leave him killing his people. With the President questioning our alliance with Pakistan and announcing our timetables for withdrawal from Iraq and Afghanistan the Taliban and Al Queda are upping the anti and killing more Americans causing the President to choose to leave quicker or stay longer. Quite a dilemma for a President in an election posture. Pakistan has nuclear weapons and Iran is on the verge of them. Iran and Syria both border Iraq and as publically declared allies now they rpresent a srious threat to Iraq when we leave. The Taliban are anxious to fill the vacuum in Afghanistan and then take over Pakistan when we leave. Our boy Quaddafi, an international clown, is still in power and firing SCUD missiles. What does that say about the fire power of our ally: NATO? We took Iraq twice in a few days--NATO can't beat an idiot. Meanwhile the Chinese are getting a look at our helicopter technology from the Pakistan allies. The good news about that is we were working on stealth technology in the 1960's. So even if the Chinese copy us in 2011 I'm confident that they are still about 50 years behind our next generation. So in summary a few tribesmen in the desert have managed to use virtually nothing but suicide bombers and easy to obtain materials to drive the West into and economic war of leverage. It is not really clear whether they want us out of the Middle east or to keep us in there until we break the bank.

On Politicains-----

1. The President--in the midst of the worst financial crisis of our time deployed a social "level the playing field " series of programs that are breaking the backs of American tax payers. And, despite gains is continuing his programs at all cost while trying desperately to find a way to either get reelected or hold the Senate by blaming someone else for all the problems.

2. Donald Trump seems to know everyone and everything America needs. He can outwit China , put a stop to the exploitation of America by OPEC, name the 25 best international trade negotiators in the country, advise Romney if he would just call him like Perry and Bauchman do and turn the American economy around in a flash. At least he says what he really means though.That's refreshing.

3. Bauchman seems to be content to be the representative of the Tea Party. That seems to me to be a run for VP at best.

4. Perry seems to be trying to take out Bauchman first and then Romney later as he goes after the Tea Party vote. Perhaps he and Romney have decided on the ticket already.

5. Romney seems to be counting on jobs to do it for him. The economy is his ally and he is being very careful to avoid other issues. Kind of reminds me of Kerry in some ways. Another very skilled politician who has flip flopped a lot on issues. But, combined with Perry, Palin or Bauchman could be tough to beat.


ANOTHER GREAT INTERVIEW-----

The CEO of Catepillar was interviewed this morning. Catepillar has big plants in Illinois and has been considering moving out of Illinois as the new governor decided to raise taxes. They are in negotiations as the Gov tries to keep them. Since July 1 Catepillar has hired 11,000 workers in America.(500 in Illinois) They are seeing increased demand for their products throughout the world. He sees no sign of an economic recession although he is worried that the political envirnment may create one. Today the President meeets with his business advisory committee (why is the CEO of Catepillar not one it?). At the same time as Catepillar is negotiating to stay in Illinois they are opening a brand new plant in the Carolinas
which will pull back jobs from Mexico. When asked if he had cleared that with the NLRB (reference to the ongoing suit by the administration to block Boeing) he laughed and indicated that he was confident Boeing would win. And, he commented that we need to change course in this country if we are going to put people back to work. We need a pro business political climate.(Now we know why he's not at the White House.) Asked about the infrastructure dollars in the stimulus bill he commented: way to small and not much of a factor. Much more was needed to stimulate hiring. He then said one of the problems is that there are lots of jobs open with his suppliers even in places like Michigan but the types of jobs, namely service technicians with experience on the computers on heavy equipment are not available. This is something I have tried to tell educators for years--the US focuses on college level education and the county technical schools are not market savy and take too long to respond to changing technology. Even now in our county the schools are cutting the funds to the tech school in favor of college bound student programs. He commented that the failure of the administration to negotiate free trade agreements with Columbia and Panama is costing his company tremendous competative disadvantages. The import tax on one of his big trucks into Columbia is $300,000. This gives his competitors in Japan and China who have better agreements and cheaper costs advantages in these markets. (Note Columbia and Panama-- where the US has drug fighting operations and solid relationships. Why are we penalized?)

I could go on but in the end we are seeing once again the lack of understanding and unwillingness to listen of the administration to the business community. We ignore this CEO and who has the next promotion? Bill Clinton who is proposing that we retrofit all our houses to become more energy efficient and that will employ 2 million construction workers. That would be 2 million more government workers--right? You can already get a $500 tax credit if you buy a new AC unit. How's that program doing?

BILL---

Congrats on the hits. I love your poem--a lot of wisdom in it.

THE TRAP----

Looking now at the lineup for the committee we see that the Dems have baited their GOP trap. Obama perhaps did outfox Boehner. Here is the possible maybe even likely strategy: Fill the committee with ultra liberals which Reid and Pelosi certainly did. The GOP did not fall in the trap of filling their side with Tea Party members. However, they are now facing good prospects of cave in or ending in a stalemate triggering the TRAP: Automatic huge cuts in Defense which will anger their base and automatic cuts in Medicare which will anger the seniors. The liberals (with Pelosi calling for openness of the negotiations on TV) will demand large DOD cuts and defend Medicare to the delight of seniors. While the GOP will be forced to defend DOD at the expense of Medicare.) In the end they will be forced to cave in or gridlock the committee. It has been the strategy of Obama and the Dems to "hold their gains" in Congress while the administration moved forward with regulations to implement their programs. Thus, Obama and the Dems have clearly decided on a "blame the Tea Party" strategy for 2012 as they face the angry voters once again. Thus the gamble that a deadlock will cost the GOP far greater than the Democrats who will, perhaps, hold the Presidency or the Senate--either of which will ensure their pre2010 gains are safe. Even today Obama's cures: extend the payroll tax reduction (goes to his base), extend unemployment benefits (reduces the anger of those 4 million white construction workers coming off 99 weeks of unemployment) and fund the infrastructure building that he ignored in the first $1T. All of these are more spending on his base to keep them happy. It will be interesting to see if the GOP can find a way to turn the table.

ON WORLD EVENTS---

Today American companies and their executives stepped in and turned the markets for a day. Insider buying as well as corporate buybacks were at their highest point since June of 2008. Perhaps this will send a message that they believe their companies are worth investing in. However, European banks rallied on the basis of the London paper admitting that they published unconfirmed rumors about the French bank's weakness. That has nothing to do with the debt problems of Europe. It was estimated that Spain and Italy alone need $2T. We did get a better jobs report. And, in the short run I do think the economy is growing. Perhaps not fast yet. But, we are far from out of the woods as the American politicians play these chess games for votes.

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