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August 25, 2011

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TWO YEAR OLD MENTALITY----

is what Senator Gore reminds me of when he doesn't get his way on global warming. His temper tantrums are embarrassing just as were those of my children in the grocery market. Few of us who have actually studied the energy problem are denying global warming is being contributed to by man. The US is number one, the emerging nations are piling on, deforestation in the third world are contributing as well. But so too are sun activity, volcanoes, etc.
Falsified temperature data by advocates don't help his credability. Neither does traveling in a private jet. Nor do his linkages to energy investments including his advocacy for the Carbon credit exchange. But, worst of all is this whole green energy move. Corn has risen 75% since 2008. Corn is rising faster than the price of gasoline and yet: we are using corn to make ethanol and add it to gasoline. Corn is a component of 25% of the worlds food products. It is an easy product for the US to export to feed the world and gain foreign currency. So why do we want to make it into gasoline?

North Dakota and the new oil field is booming. Out of work? Want to build houses? They can't build them fast enough up there. They can't find labor. You can make $200k a year if you can drive a 16 wheeler. In the meantime in Louisiana we are shutting down the offshore oil fields. The rigs are moving to Brazil. Want jobs? Open the fields in Alaska, offshore and implement proper safty controls. We let China use our debt to buy up the oil production of the emergoing nation. We close ours down switching to corn. Inflation hurts our poor people but no matter we subsidize the farmers by giving food stamps to the poor. I could go on and on but why? We will now give out more food stamps, unemployment benefits, subsidies and try to develop green jobs(stuffing houses with insulation) while restricting oil production and using our corn,soybeans and wheat for gasoline. Of course this strategy also drives up the cost of feed for chickens, cows and pigs driving food cost even higher. This creates even more inflation for the poor who the President says he represents. Of course all the liberals will get mad at me when I infer this might be exploiting them for their votes paying them with food stamps and unemployment extensions. I think they are figuring it out: they actually prefer jobs.

We seem to be governed by smart people thinking and acting like 2 year olds. Today the President sounded totally out of his element as he tried to explain the beginnings of his jobs program number 3,4,5? More on that tomorrow.

A CHANGING WIND-----

The beat slowly goes on as the American economy sluggishly plods forward. All our company data so far shows interviews and hires continuing to slowly climb. The rate of increase is far too slow, however, to overcome the unemployment the nation faces but we appear to be still moving upward. Today's payroll unemployment figures will likely show the same thing. But, if you look closely at the data you will see a subtle shift in the winds. The end of stimulus money and the mood of the taxpayers is pushing the local governmets to lay off workers. This has been going on since the first of the year. And, now today's data will show that the Federal government is beginning to join the shift. Beginning with the military and the US post office the feds are laying off 18,000 workers this week. Magically, the private sector led by the small business companies are picking up the slack with about 100,000 jobs added.

Today one of the local bank CEO's with record profits this quarter made the problem and solution fairly clear: "The too big to fail banks and the fed are focused on wall street firms and we are focused on main street", he said. We are making profits by adding small companies to our business base and lending to those who are strong and encouraging savings by those who are not yet growing. The result is this bank has $3.4B in cash assets it is holding for businesses when they are ready to borrow or use their cash. Are they ready? He responded. No, because they are fearful of the next move by this administration. It is not fiscal policy that is inhibiting hiring it is regulatory policy. New regulations,added costs and new taxes are the fear of small business and they are still untrusting of this leadership.

Another factor is the dollar. Why do you see the big US companies going overseas to employ thier capital? One reason is the weak dollar made even further weaker intentionally by the Fed printing money. Fed notes show that the Fed narrowly avoided more watering down of the dollar. The theory is that lowering the dollar increases our exports by making them cheaper in foreign markets. However, at the same time it makes US companies dollars worthless if employed in America so they would rather employ them in emerging markets such as China. So they open their new plants overseas to sell thier products in foreign currency. Why do you think the stock market rallied when the Feds did nothing?

And, now the President will announce his plan to stimulate the economy. Once again he will likely throw money at the "green sector" which is not yet a viable economic sector. For every $1m he spends we mght create a job or two. But spending Federal money requires meeting Federal regulations and that is expensive to deploy. It means giving union companies priority, meeting certain wage restrictions, longer times to bid and get started. (Remember his awakening on "shovel ready"?)Save the dollars, Mr President. We don't need more debt to service. Secondly, he will give lip service to cutting regulations and getting captial to small businesses. We've heard that line time and again. His Dodd-Franks Bill and the Obamacare legislation alone has created thousands of new regulations. New regulations on banks getting approval from the Feds for refinancing mortgages that are underwater (aren't most of us?) has slowed the refinancing markets.

In the end it is time to ride it out. Announce we are doing nothing except getting the government back to work defining their new plan to cut $1.5T off the deficit, redoing the entitlement porgrams, contimue to make government smaller and let the economic machine of America recover. Jobs will come back.

FINALLY-----

A step in the right direction this morning as the Fed "Did nothing" and the market appears to be cheering! Bernake did mention it would be nice if the White House and the Congress work out a plan to encourage the fragile economy to rebound. Now if we could just get the Administration to take a clue form the Fed and get out of the way as well. Some things just have to play themselves out and recessions are one of them.

Nice article, Bill, Obama has no interest in Door A as you know. He is in a struggle with the American people to level the playing field and I'm afraid high unemployment is a price he is willing to pay to get there. GE and Buffet are simply big contributors to his financial machine and he plays them like a fiddle. I applaude Buffet for at least making a meaningless investment in BAC to give the market's financial sector a lift. It would be nice if the President knew how to do such things as lead.

Door 'A' would only interfere with the true aspirations of our 'White House Occupant'. He will delay that (A) until the Election.
Door'B' for sure; coupled with a Pseudo-Industrial- Political concoction.
More probably we will see The 'Buffett/Immelt' Banking and Jobs Export Plan Completed. The White House 'Nationalization Bag' is filling up:
GM,Bk of Am,GE,Fannie , Freddie, & Sallie, Boeing in a corner. Could CAT be far behind ?
Ecuse me, but when does WH Security arrest this 'Transgressor' ?

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