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Wednesday, February 20, 2008

Common Sense that is DEAD WRONG

Many financial wags -- the ones I read at 2 in the a.m. when the rest of you are peacefully sleeping-- claim that recession and inflation are incompatible. These are the people who are looking for easy interest rates to eventually overcome the problems in a soft economy. They are betting that the cost of living simply DOES NOT GO UP if the economy is shedding jobs and growing at a slow rate, or actually contracting. This is going to be a costly delusion, in my opinion.

Historical measures show inflation has risen dramatically for the last half century EVERY SINGLE TIME WE HAVE HAD A RECESSION. In the wonderful Carter years, consumer prices went up by a half, while the economy contracted. Then, interestingly enough, when the recession of 1980 hit (interest rates were so high they were choking out all economic activity) consumer prices continued to rise even as the economy tanked. We simply had to wash all the "bad money" out of the system, and even stagnant growth doesn't magically erase that.

Most gurus (who know far far more than I do) make their predictions based on an idea that sounds right, but simply does not match the facts. The data simply does not support the idea that inflation is correlated with the health of the economy. Rather, the data shows that inflation tracks almost perfectly with money supply. If what I am saying is true, the DOW can continue to sell off and the housing market can tank and we will STILL have very uncomfortable price rises in the foreseeable future.

The US no longer publishes the most reliable index of money supply, the M3. Best guesses, though, is that our supply of money is growing at an eye-popping FIFTEEN PER CENT a year. If you want to do the dumb man's estimate of coming inflation, subtract our rate of GDP growth (estimates are maybe 2-3 per cent) from the rate of money supply and you will get "Eddie's Index" or my prediction of the real rate of inflation for the upcoming year, which is about 13 per cent. (I should note that no representatives from Stockholm have contacted me about a potential Nobel prize for this staggering breakthrough in economic theory..... yet).

The only good news is that most of the rest of the world is doing the same thing...., if you wanna call that "good."

China has been inflating their currency at rates approaching 18 per cent. Of course, an economy that is growing at 13 per cent a year can swallow most of this, but not all. Food staples are on a rocket ride upwards there.

India has a 20 per cent rise in money supply annually

England has an 10 per cent plus rise in the number of pounds circulating

Europe prints new Euros at a rate of 11 per cent more per year.

Australia and New Zealand have money supply increases of 12 per cent and up.

Yet the fiscal gurus of the world seem slack jawed and confused by the recent explosion in the price of gold and silver, wheat and copper (yeah, copper is back), corn and lumber. These markets are GREAT prescients of inflation, yet all you hear about is our fedsec droning on about how the printing press is the final solution to recession. This is madness.

One of the advantages of being 52 years old is that I can see clearly that leaders are not wise by virtue of their positions of leadership. In fact, they are often utter fools, and lead those following them into ruin.

My advice, for anyone listening, is do NOT count on the bromide that "the interest rates will right the economy and we have inflation under control." Easy money MAY provide an adrenalin shock which will revive our comatose economy. My bet is that it will simply delay the recovery which would have occurred anyway. Of course, if you get politicians in there jacking around with home interest rates and demanding "justice" for poor people who never should have been floated loans in the first place, maybe the housing sector will NEVER recover. Politicians can screw up a steel ball with a rubber hammer. However, best case anticipated, and the economy does right itself, we are STILL going to have a real mess with rising prices, and that is going to wreak havoc with the economy trying to right itself in the first place.

My own portfolio consists of Hecla(HL), Couer D'Alene(CDE), Yamana(AUY), Stillwater Mining (SWC), North American Palladium (PAL), XTO Energy (XTO), and some other smaller stocks. These are all mining stocks except for XTO, and I expect all of these to be my "core," except for PAL and SWC, which I have only had for about 4 weeks, and are short term plays on the current South African Platinum crisis. The financial "gurus" will tell you that these are "too volatile" to be core holdings. That is true, if you have a model of our economy predicated on a sound dollar and steady growth. I disagree. I believe we are entering a period of time where the wisest course is to protect yourself from, and seek to exploit, the devaluation of our currency. Investing in "hard" assets is the only way to do this.

Monday, February 11, 2008

Quoteable Quotes....

I am an inveterate reader, and I run across a ton of good quotes. The first is from the oldest source of wisdom I know of. the others I pick up here and there.

The plans of the diligent lead to profit,
as sure as haste leads to poverty - Proverbs

The market can remain irrational longer than you can remain solvent - Lord Keynes

I would argue that the greatest threat to our nation is not someone hiding in a cave in Afghanistan or Pakistan, but our own fiscal irresponsibility. - David Walker, US Comptroller

In his state of the Union Message last night, Bush did not mention the word "debt" once, even thought our national IOU just crossed the 9 TRILLION dollar threshold. - Addison Wiggin

You can’t really make people wealthy by resorting to "Zimbabwe economics." A society grows rich by producing things... and saving money. There is no other way. Cheaper credit won’t do it. More consumption won’t help. Printing money -- and dumping it from helicopters -- is a losing proposition. - Bill Bonner

The US is currently in the position of General Motors in about 1970, splendid in its possession of a majority share of the US automobile market, and apparently invulnerable to competitive threat, yet in reality burdened with impossible welfare programs that a foolish management had negotiated during the good years. For General Motors, the future after 1970 was one of steadily slipping market share, from 60% of the US market to about 25%, of a steadily aging workforce, and of a retiree health benefit obligation that if valued appropriately is today worth far more than the value of the company itself. - Mark Hutchinson

The practical reality today is that "we the people" are all traversing leftward together ..... toward an authoritarian socialist state. Christians who cannot see the light and who continue to support establishment candidates in-waiting become the unwitting enablers of this perpetual shift. -- David Cross

It is lunacy to place international socialists known as communists on the left and national socialists known as Nazis on the right, or to put moderate socialists in the virtuous middle. The whole spectrum is socialist. Simple logic requires that we put all authoritarian socialists on the left. The opposite of TOTAL government on the left, is NO government, or anarchy, on the right. Traditional Christians do not belong on the right, since we are neither moral nor political anarchists. Rather, we stand within the vertical mainstream as true centrists in the American tradition, not only of the true faith as we believe it to be, but also of the Constitution and the rule of law. Christian preachers and parishioners alike played a vital role for liberty in the first American Crisis, and various signers of our founding documents were ministers. -- David Cross

“At some point, you have to choose between trusting the natural stability of Gold, and the honesty and intelligence of members of the government. With due respect for these gentlemen, I advise you, as long as the capitalist system lasts, to vote for Gold,” George Bernard Shaw

"The companies representing the Standard & Poor’s 500 index now derive 49% of revenue from foreign markets" - unknown

Saturday, February 09, 2008

Bubbles - Tech, Housing, and now Gold????

Money has to go somewhere. A simple observation. It runs where people perceive the most opportunity/security. The fed flooded the markets with money in 98-99 in anticipation of the much-balleyhooed "Y2K" crisis, and the money went to stocks, mostly tech stocks.

That bubble eventually popped, and we were beginning to work through the excesses of flushing so much cash into the system when 9/11 hit. Several of the world's largest reinsurance facilities (the entities which provide insurance to insurance companies..... yes, there are such things) technically went bust. The different regulatory agencies allowed them to continue to operate out of a fear of what it would do to the world economy if they went under. The world, and ESPECIALLY the federal reserve in the USA, flooded the markets with money yet again -- they call it "liquidity" -- in that they printed a bunch of paper and shoved it out there at extremely low interest rates.

However, with people having just been burned in a big way by the tech stock bubble collapse, they were reluctant to shove this money back in the stock markets. Memories of Enron and MCI scandals were too clear. Plus there were plenty of stock collapses with no scandal at all. Look at a 10 year chart of JDSU, one of the darlings of the techies. It went from over 200 dollars a share to under one dollar. Who wanted that kind of risk?

People invested their money in something "hard" and that would endure, and could generate rental income. Real estate was secure, solid, and unplagued by the excesses of valuing something at 50 times future PROJECTED values and other such foolishness. Thus a real estate boomlet began.

That series of events coincided with an interesting cultural phenomenon. For years, a little known radical leftist group which advocates for "social justice" had been screaming that minorities are discriminated against for housing loans. ACORN convinced a large mortgage lending facility to --in the words of its CEO-- "bend the rules" so that lower income people who would not normally qualify for loans could get them. The company was called Countrywide, and it was just saved from complete bankruptcy by being bought out by Bank of America. However, in 92, things were different. They bragged about "bending the rules." When no one slapped their hands (they were actually praised by the head of the Boston Federal Reserve), everyone else jumped on board. All kinds of hinky loan packages were contrived. Everyone was buying, and with the flood of money goosing the system, housing prices were rising like YAHOO of the 90s, so no one was getting hurt. Everyone was getting rich. I had two of my own customers speculating in real estate rentals who literally could not pay their cell phone bills monthly. Yes, it was another bubble, and it was bound to pop.... and so it did.

The fed is responding to the present "crisis" in the same way it always does......, by inflating the currency (aka "providing liquidity"). So where are we now? People don't want the risk of equities, and even if they wanted to speculate in real estate, there aren't any mortgage companies left to lend them the money to speculate. The ones that have survived are looking for stability, security and solid future numbers......, and those are in short supply until the present meltdown in housing prices finishes out.

The fresh flush of money is finding its way into the last, "safest" refuge in this world, that of hard "real" stuff. Gold, silver, platinum, wheat, steel. corn, lumber, etc. All are going up at a dizzying pace. It is a return of the 1970s, with an inflationary recession. The noteable thing about the volume of money we have that is starting to chase commodities is how thin these markets are and how easily distortable they are. When you compare the vastness of equities, or currencies, or real estate with the paltry amounts of money traded in say, silver, you are witnessing the potential for a price explosion that makes the Hunt Brothers attempted corner in 1980 (silver went to 50 dollars an oz) look like a small blip. There are limited amounts of these items, and if things continue, there will simply be price explosions, not "rising markets"

It is going to be a wild ride.

Friday, February 08, 2008

Relevant then, relevant now

I was "cleaning up" the drafts in the blog and ran across this from 11/13/04:

Dunno why I never posted it.

Makes sense now, and I thought it made sense then.

George Will NAILS it on why I am against the war in Iraq, in some hypothetical questions for Condoleeza Rice in her upcoming Senate Hearings. I quote:
" The president says it is ``cultural condescension'' to question ``whether this country, or that people, or this group, are 'ready' for democracy." Condescending, perhaps, but is it realistic? Tony Blair says it is a ``myth" that ``our attachment to freedom is a product of our culture." Are there cultural prerequisites for free polities? Does Iraq have them? Do the Palestinian people, after a decade of saturation propaganda inciting terrorism and anti-Semitism? Does the United States know how to transplant those prerequisites? "

Those questions (or, those questions) encapsulates what I believe to be the fatal flaw in the idea of extending democracy to the middle east by way of military power. That vision is the core of the so called "neocon" plan for the middle east.

Bush haters will tell you that Iraq is just a cynical grab for power, and that Bush and company are simply imbeciles, evil plutocrats after oil, or both. I don't think so. While I am cynical enough to question almost anyone's motives, I think the impetus for our intrusion into another sovereign country really does lie in seeking security. Our leaders really do believe that a "friendly arab democracy" will be a hedge against radical islamic attacks.

George Bush and Tony Blare are both a professing Christians. They have stated that they believe that the desire for freedom is resident no less in the hearts of Iraqi's than in the hearts of westerners. That is a non-religious way of stating a Christian doctrine --or part of the doctrine--that all men share the imprint of their Creator. Christians call this the "image of God." This is an example of how I believe well meaning people can take a fact, combine it with good intentions, and misapply it.

Is it a noble thing to fight for the rights of peoples to enjoy freedom? Sure. And they want freedom because they share the same desire for freeom that their Creator instilled in them, right? What is so wrong with using our massive military might to accomplish it?

Again, George Will gets it. Stated simply, there are cultural prerequisites for the responsible exercise of freedom. Attempt to transplant democracy into a culture which is not ready for it, and you wind up in a colossal exercise of futility. Jeffersonian Democracy was formed in the crucible of a world which had been profoundly influenced by Calvinistic Protestantism. Despite the attempts to rewrite history, Chrisitanity nurtured and shaped the views of western Europe, and the rights of the individual at the core of western democracy sprang from it. That belief is totally lacking in the mideast. Our secular society studiously ignores its own roots when it can, and mocks when it cannot, but we are coasting on a heritage we just can't pick up and transplant at will.

The middle east of today shares no such culture or history. Afghanistan and Iraq are experiments in whether western style democracy can take root and grow in Muslim countries. I hope they work. I really, really do. But I doubt it.

I think this foolish in the extreme. The very last warning by Washington in his farewell address was against foreign entanglements. Our attitude should be that of cheerful, well wishing indifference to other countries.

Eighteenth and nineteenth century Christian England viewed its imperialism as a beneficence to its subjects. The problem was that they were blind to some critical truths. Men in power are blind to their own stupidity when exercising that power.

Thursday, February 07, 2008

Why are we where we are?

“There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved.”
- Ludwig von Mises

Read it and weep.

Von Mises was saying that there is no escape. There is no magic free lunch. When you borrow money, you have to pay it back. You either pay it back with "responsible money" and endure the pain of an economic contraction, or you pay it back with "fiat money" and destroy the money itself. End of story. Wanna take a guess which one we have chosen?

The borrowing phase – a credit expansion – is pleasant enough. You feel rich...and smart. You have money to spend. Your assets go up in price. Your stock rises. You even think you’ve discovered some miracle formula – some way to get rich without working or saving. It’s as simple as buying a house. Then, it goes up in price. So buy another one...or two or three of them.

And then, alas, along comes the day when you have to pay back the money you’ve borrowed – the credit contraction. Now, you don’t feel so smart. Because, when everyone is trying to pay down debt, no one has money to bid up asset prices. Your house actually falls in price ...and you desperately try to get rid of those extra houses, hoping to get back what you have in them.

Yesterday, the Dow fell, again. (I orignially did the draft of this post two weeks ago.... I could post it most any day now and it would be accurate). It is a bear market, dear reader. That’s what stock markets do in a credit contraction. Assets, generally, become cheaper.

“Home sales dive” in South California, comes another report. Sales are off 42% from a year ago. Prices are down more than 10%. And it won’t end there...

Even the slicks on Wall Street are having trouble. The expansion stage of the credit cycle was pure molasses to them. But the contraction stage is bitter medicine. The International Herald Tribune tells us that Citigroup has turned to the moneybags in Singapore for a $22 billion bailout. Over at Merrill Lynch, they already hit up the Singaporeans for $6.2 billion in December. They’re writing down some $8.4 billion in subprime debt, creating the biggest loss in the firm’s 93-year history. This month, they turned to Korea and Japan to fill a $6.6 billion hole.

Why go to Asia to raise money? Because that’s where the money is.

“Asians have trillions in dollar reserves,” Lord Rees Mogg explains. “They probably think they have enough of our money. Over the next few years, it looks as though the Western currencies...and Western economies...are going to be in trouble.”

Finally, the retail sector is also showing signs of slower consumer buying. Even the luxury outlets – such as Tiffany and Ralph Lauren – have seen their stocks cut 20% to 50%.

What can be done about it?

As von Mises describes, above, the only alternatives are to stop the process of credit creation voluntarily...or to continue to a “final and total catastrophe of the currency system.”

In the late ’70s, the Fed chose to abandon further credit creation. It was obvious that more money and credit was making consumer prices rise without causing genuine economic growth.

Now, three decades later, consumer inflation rates are still tolerable. It’s the threat of recession that seems insupportable. And so, between sooner or later, the choice is clearly – later. Better to try to fight the little devil in front of us, they say; let someone else worry about that big devil Beelzebub.

Well, we know how the fed has chosen. They panicked and cut rates by a whopping 0.75%, and in less than a week cut them another.50%. I has slowed the current correction (the dow popped about 600 points, but we have given back about half of it. Either way, I would be short most equities and long precious metals. Buy gold and silver on the dips. You don't worry about "catching a falling knife" in a bull market.

The feds can control only the quantity of paper money or the quality of it. If they lean down hard on the quantity side, pushing trillions of dollars worth of new cash and credit into the system in order to try to avoid a serious recession, the quality of the money will suffer. The Asians will be more eager than ever to dump the dollar; the greenback will fall...and gold will soar .

If, in the unlikely event that they were to voluntarily give up on credit expansion, reducing the quantity of dollars in order to protect the quality, they may be able to stop gold’s rise. In that case, a sharp recession would mean falling share prices. This is the trick that Paul Volcker pulled off in the early ’80s. The price of gold collapsed...and stocks took off. But not before he had pushed up short-term lending rates to 20%...and drove the economy into its worst recession since the ’30s...and knocked down stocks so low you could buy the entire Dow for the price of one ounce of gold.

No matter what happens, we’ve got a long way to go before we reach that kind of turnaround point. And most likely – given the situation – it won’t come at all until we’ve been through Von Mises’ “crack-up” – the final and total catastrophe of the currency system.

Whee! Ain't life fun?????!!!!!

Friday, February 01, 2008

The meltup???

So, the market is up over 600 points since my dire predictions of imminent fiscal collapse. I am reminded of one of my "quotable quotes" by John Maynard Keynes, "The market can remain irrational longer than you can remain solvent."

However, in the long run, being short this market is good, as is being long gold/silver. (Gold is up over 13 dollars this a.m. as I write this, and silver is up another 33 cents). I am convinced that this is a dead cat bounce and that the DOW has yet a long way to fall.

Never bet the farm on a short term play.

Tuesday, January 22, 2008

The meltdown........

As you watch the financial markets melt down...... Hope you are long gold and long puts. Puts for the short term and gold for the long.

The markets are simply telling us that we have borrowed long enough and allowed the fed to inject money into the system to save us too many times. I don't know if this is "the big one" any more than any one else does. However, if you are living on the San Andreas fault, you don't laugh when you feel a serious shake. Eventually, the whopper is coming, whether you know "when," or not.

What we do know is that the fools we have put in positions of power have no answers. Our esteemed head of the federal reserve admitted last week he had "run out of answers" for the presentcredit crisis, which has caused almost a 2,000 point selloff in the Dow over the last six months.

One thing you can be sure of, though, is that we will NOT be willing to undergo the pain of getting our economy back on a stable footing. The grit and resolve needed to do that belongs to past generations. If we were so minded, we would be willing to weather a downturn and a recession, as the fluff is gradually absorbed by a market which returns to sanity and begins pricing investment instruments with principles of sound money. If the present generation of clowns we call "leaders" tells you anything, it tells you that people willingly believe in easy lies rather than hard truths, whether it applies to sexual license, dissolution of marriage, hard work, parenting, our ability to influence and/or rule other countries to our advantage, or easy credit. Once we have chosen to believe these lies, we seek leaders who will reinforce them and tell us that our foolishness is not only true, but that living lives based on lies is a "right." All the hoopla in the markets today is just another example of the effects of people unwilling to accept unpleasant truths, only this time it is in respect to money.

The fed WILL attempt to rig the markets. If we see a serious enough inversion in equity prices, we already know what our government will do. Witness this quote by Bernacke:

"As I have stressed already, prevention of deflation remains preferable to having to cure it. If we do fall into deflation, however, we can take comfort that the logic of the printing press example must assert itself, and sufficient injections of money will ultimately always reverse a deflation."

Rest assured, folks. This is helicopter Ben (Bernacke)'s assurance to you that he will continue to destroy the value of the dollar on international markets rather than allow the markets to contract. If you doubt this at all, consider that Bush has a "crisis team" to "deal with" serious market turbulence. That always means only one thing....., printing money to prop up prices, or refusing to let people sell when they want to (shutting down the markets), or a combination of both.

UPDATE: They have just cut the fed funds rate 75 points. This is panic, people, not a considered well thought out strategy. Bank of America just joined the group of banks announcing huge losses.

Dump equities. Buy gold, oil, mining stocks. You might want to buy bullion. The worst is a long way from over.

Sunday, January 13, 2008

US to lose its AAA credit rating

This is unthinkable, yet is projected by Moody's, the formost credit rating institution in the world. For years,the definition of AAA rating, the most secure rating that can be had, has been measured by US government bonds. Now, according to Moody’s, unless the U.S. can curb booming health care and Social Security spending, it could lose its AAA credit rating by 2017. If the government were to lose the ranking -- which it has held since 1917 -- confidence in the U.S.’s ability to pay back debts will be seriously damaged, and the U.S. economy could face a disaster which has been heretofore unthinkable.

Current holders of U.S. government debt include foreign central banks, huge pension funds and sovereign wealth funds. They have traditionally looked to the USA as a "safe haven" for money. If funds (domestic and international) which ONLY invest in AAA rated securities have to eschew the US treasury market, we will be in the interesting position of having no one left to loan us money on the international market...., or at least we will have to pay significantly more for what we borrow.

But enough about that. Let's move on the to the REAL important stuff! Have you seen the latests Brittney Spears video? Isn't she just hot??? Oh My God. She is just soooooo slutty!! And have you seen the Golden Globe awards? And doesn't Hillary just look OLD in her pictures? Isn't the internet wonderful? We can just chat away about all the stuff happening every day in our culture. I might buy a new car if I can get a new credit card with a limit high enough to make the down payment with it.

Thursday, January 10, 2008

Save me, Ben Bernacke!!!

Legend has it that on Jan 24, 1936, Alan Foster, the first black prisoner to be executed by gas in North Carolina, cried out on his way to the chamber "Save me, Joe Louis!!" The event made its way into a speech by Martin Luther King, and since has been researched, debunked, and then resurrected as a historical....., "maybe." Who knows if it really happened.

I first heard it as a powerful illustration in a talk about how men look to false hopes for their security and well being.

The same principle holds true here with the financial big boys and their attitude towards easy money (aka "lower interest rates"). The fact is, that we have a dedicated Keynsian as head of the fed, with a "religious" faith that easy money is the way to stimulate the economy. (In essence, this means simply print more money when we need it) He has seen Japan for the last 20 years and he has a terror of deflationary recession. Thus his famous line about "we will be throwing money out of helicopters if that is what it takes."

Saint Ben

The book of Jeremiah (that is the Bible,folks) talks about the people putting their trust in broken cisterns, which hold no water. Men put their trust and hope in that which cannot rescue them. Thus is the trust of fools who believe that violating the basic rules of fiscal discipline can "save" an economy. The principles are as timeless as Proverbs: Hard work and thrift brings prosperity. Your property is YOURS (more technically correct, it belongs to God, but you maintain a delegated sovereign right to control over it). Wealth gained by deception is an illusion and will not last. Men (including leaders) are corruptible, weak, and untrustwothy. The borrower becomes the lender's slave.

One of the most recurring themes in those timeless principles is that God hates "deceptive weights." In the old days, men "measured" the gold/silver you paid for an item, and corrupt merchants would keep two sets of counterbalances. This allowed them to lie to you about how much your money was worth. Inflating a nation's currency is simply a more technological method of the government progressively changing the weights, thus progressively stealing wealth from its citizenry, and making our currency "worth less." (yes, the double entendre is intended)

The one reliable indicator of how much money there actually is in the economy is the M3. Interestingly enough, the gov't has decided about a year ago that they no longer need to publish it. There are other more abstract indicators out there, but the government chooses to rely on the "consumer price index" to measure the effects of inflation, rather than the source. The problem with the CPI is that it is a crock of manure. No one who fills up with gas or goes to the grocery store believes that our inflation is rising at less than 4% a year. This may be a difficult thing for the "party of the evangelicals" to grasp, but your government is lying to you. They are ruining our economy and the wealth of future generations because of one simple reason: they won't stop spending, regulating, and doing what bureaucrats love to do, accumulating power.

Printing money will NOT stop the slowdown. It won't save the economy, but it will ruin the dollar. If you are too young to remember those happy times of the 1970's (I was in grad school), then you don't know what it is like to have the economy slow (very few jobs, and lots of folks losing theirs) combined with inflation (every month prices are going up, up, up). The problem is that now, inflation is thought of as a cure, rather than a disease, as it will "get the economy going again."

The ultimate evil of inflation is twofold. One, it hits the poor the hardest. Two, it benefits the rich AT THE EXPENSE of the poor. The middle class, although they cannot "keep up," at least have salaries which will index for inflation. The poor do not, nor do the elderly. They don't know why, but they fall further and further behind. However, the flip side is that inflation benefits the very wealthy elite, because they "see" the money first, before it loses its spending power. Nowhere is this more true than the big money managers and bankers on Wall Street. This is an economic evil of tremendous proportions, stealing from the powerless to give to the rich. It is not just unwise. It is evil. Advocates of "social justice" who are perpetually arguing for more government intervention are encouraging you to dive right into the broken cistern. Likewise, those who wave the flag of "terrorism" as a justification for maintaining an empire of over 800 military bases around the world are, in fact, destroying your future security in the name of upholding it.

We have to stop spending, both on the Republican vision of "empire" and the Democrat nanny state. Both are liars who are selling you water from a broken cistern. You can only get away with it for so long. Our time is coming rapidly.

Have you begun to feel the pain?

If you follow the stock market at all, you might sense that something is beginning to go wrong. Or, if you make weekly trips to the grocery store...., or if you are trying to sell your house, or are involved in any number of normal activities.

The Dow is off a thousand points from August, and things are NOT picking up. Just off the top of our heads, we can think of a couple other issues that will continue to make for a weaker economy in 2008:
The current credit contraction is bad, and getting worse.
The collapse of the financial sector (Merrill Lynch just wrote off 15 BILLION in bad debt this a.m)
Two "market corrections" in the last six months
The dollar has declined to an all-time low against international currencies
Oil is at $100 or thereabouts ($94.59 as I post this)
Gasoline is over $3
Unemployment at 5% and rising
Food prices are at all-time highs, and rising
The national debt is over $9 trillion, It rises One Million dollars every 47 seconds, and that rate is accelerating
We have as a nation over $47 trillion more in unfunded entitlement programs
Social Security (what a name!!) will be busted at current spending levels in less than 15 years

....... Just for starters.

Our "conservative" president has gone back to the supply siders' basic argument, which is that the "Laffer curve" has no limits to which it can be pushed. He wants to cut taxes. From his last speech: " seems like Congress ought to be sending a message that we're not going to raise your taxes in the next three years by making the tax cuts permanent."

The idea behind tax cuts is a good one. Idiots have screeched that the tax cuts are for the "rich." My question is, who else can you cut taxes FOR? The poor in this country pay no appreciable income taxes. Arguing against a tax cut because it discriminates against the poor is a fool's argument. That is not the problem. It is the "rich" who start businesses, create jobs, and create wealth for the "oppressed poor." The trouble with the tax cuts in the USA nowadays is that they are NEVER offset by spending cuts, not that they put more money in the hands of the "rich." Ideally, tax cuts should be linked to the choking the REAL problem, which is the growth of government. Unfortunately, we have married tax cuts to the idea of deficit spending ("deficits don't matter" --Dick Cheney).

We have used the fiscal stupidity of collectivists to cut our own throat. Leftists, blinded by class hatred, argued that cutting tax rates reduces government revenue. This is nonsense. The "Laffer curve" is the theory that reductions in marginal tax rates (the higher rates the rich pay) produces GROWTH in federal revenue and not reduction. This is a good argument for reducing the tax rates of the rich. We actually get MORE of their money by taking a lower percentage of it. Leftists don't like it because they view taxes as a mechanism for punishing the rich and making sure they don't keep "too much" money (whatever that is). If we view taxes as a mechanism to raise revenue, rather than some halfwitted tool for social engineering, then cutting the tax rates for the "rich" makes perfect sense. Yeah, ok. Hooray for Rush Limbaugh and all that.

However,. the present bunch of leaders have taken the benefits of tax cuts (money in the hands of the people), which in fact produces more revenue, and failed to even take a passing glance at the necessary flip side of fiscal responsibility, which is restraint in government spending.

The congressional budget office released their report Monday, and the one thing you can be sure of is happening. Federal spending keeps rising by the billions. Our debt is also rising at the rate (checked yesterday a.m.) of approximately one million dollars every 47 seconds, and this rate is rising.

$Loading... = the
National Debt

This is just plain immoral. It is selling out our children for the feelgood present. My generation, the baby boomers, has to be the most selfish, self-absorbed generation in our nation's history.

The effects of our orgy of spending on our failing "empire" and the incredibly stupid attempts to address social programs/policy from a federal level will finally come home to roost (we are seeing the beginnings of it now), Ironically, it will be as the boomers (my generation) are entering the period of greatest need coupled with our time of least power. Do not be surprised if the youngsters decide we just aren't worth the trouble and refuse to shoulder the lion's share of the debt, which is the 47 TRILLION dollars in unfunded Social Security obligations we have racked up.

"Sorry pop, I hate it about that heart valve. I am flat broke. Billy needs surgery to correct his _______ and you know, he has a FUTURE. Yeah, I know you really need it but, ya know.... YOU SPENT IT ALL!"

Wouldn't that be cosmic irony?