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September 01, 2011

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THE FED GOES ALONG----

He sounded like a true believer as The Fed Chairman made his speech today. I suspect we'll hear more of the same tonight. First a review of how it all happened, how bad it was, how we almost recovered but higher oil proces and the Japanese earthquake killed the recovery. Now we need cooperation, moderation of our cuts,infrastructure investments, etc. A true team player.

He also told us inflation is back: CPI up 3.5% mostly because he says of higher oil prices and higher car prices because of a lack of Japanese cars to buy. Hmmm- nice try guy but he failed, of course, to mention the increased costs associated with government intervention in the energy production driving coosts higher to stimulate green jobs. He failed to mention the 300% rise in corn prices as we move to 15% addatives of ethanol to our gasoline. He failed to mention our closing of our offshore oil drilling operations in the gulf. But, he assurred us that we will see this inflation reverse to 2% once these temporary factors are gone. Hold it---could it be that the watering down of our currency made foreign cars more expensive rather than the earthquake? He told us that our manufactured products are more competative on world markets--well of course they are--the dollar has been deflated.

I have to admit that he did sound like a guy who knows what is going on. But to me he sounded like he was a litmus test for tonight's speech. Of course he also wants to keep his job. But, in the end he did what I support: nothing.Just as he did a week ago.

GREECE---

It works so well--socialism. Greece announced today that it had minus 7.5% growth in it's GDP. They have 16.5% unemployment. 40% of the people work for the government. So who is left for the Greeks to have produce goods and services? With 56.5% of the people working for the government or unemployed then on 43.5% of the workforse is working in the private sector to pay th taxes to support the other 56.5%. And, we want someone to bail them out? Or, perhaps that is the model we want to install here. I can't wait for the next shoe to drop--tonight.Maybe the football game will be good.

SMALL BUSINESSES----

The Good News is that 79% of small business owners say they are in good shape to handle the second dip of a recession. That is they are sitting on their cash. 17% say they plan to hire in the months ahead. Only 5% say they plan to lay off employees in the months ahead.

The Bad news is that 90% expect the economy to get worse so manager confidence is very low and that is not good for the unemployed. And, most say they have no confidence in the Administration, the economy and are being hampered by new regulations.

AMERICAN WORKERS----

Even though 91% of the workforce is employed 53% report they are under employed. That means working less hours than they want or are working in a job below their expectations.

GREEN JOBS---

Solar panel companies continue to struggle to survive despite massive investments made by the government. One that received over $500m in stimulus money went under recently. Solar panels that they sell and install are made mostly in China. CEO's of companies that are doing ok report that were it not for the utility credits and tax rebates they get they would fail.

THE CHICAGO POLITICAL MACHINE---

was never more evident than on Labor Day when Jimmy Hoffa Jr addressed his teamsters and called the Tea Party SOB's. Then VP Biden called on Unions to go to war against the Tea Party. Pretty disgusting political behavior but remindful of days gone by.

THE SPEECH----

tomorrow we hear the Jobs Plan we have waited for. My guess-- lip service on reducing regulations, extension of payroll tax reductions, infrastructure spending and spending on unemployment benefit extensions. A political speech designed to give hope and to set up the Republicans for their veto. It may backfire on the President, however, as 56% of Americans do not favor another huge spending bill. I know that his jobs commission gave him specific recommendations on what to do but as of this morning he had not told them what his plan is. Whatever it is I hope it works for all of us.

OBAMA FLINCHED-----

(from Bill's Column): - During the deficit increase negotiations John Boehner was apparently willing to offer up to $800 billion in tax increases over a 10 year period in exchange for major spending decreases and significant entitlement reform. The deal fell apart when Obama tried to up the ante to $1.2 trillion.

When this surprising move was made by Republican's the President must have been shocked and felt trapped: what will his base say to these massive cuts in their programs? And, now th elctorate will accuse him of raising taxes the same thing that doomed George Bush I for reelection. So what to do? Bailout--and that's what he did. He immediately raised the tax increase ante on Republicans hoping to kill the deal and make himself look good and Republicans bad. To some degree the political move has worked. Republicans look to be unwilling to negotiate. But, the time bomb for the President is ticking. Today's jobs report contains some troubling news on the June and July #'s. Both were significantly revised downward. Manufacturing job growth is slowing. In the long run the President likely made a mistake. Nest week we may see how big it really was when he announces his program--one likely to be designed to get Republicans to veto it. With nothing positive to run on the President is likely to contimue to run on the antiBush, Anti Tea Party and Anti Republican platform. His fate is in the hands of the economy.

DEBT COMMISSION 1st Order of action;
Petition to have members declare themselves INELLIGIBLE for re election. We might have a slight chance of retaining the military.

Not being able to comprehend the impact of a Government being involved in an equal no. of currency transactions as the entire Economy ; the target $1.5 trillion cut over 10 years seems futile. What does Debt = GDP signify ? Does it mean that the sum total of all our daily work efforts are eventually managed by the US and foreign governments ?
Isn't this the part where we boared the Mayflower ?

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