Swine Flu

As I sit here today with my hospital mask over my face dodging the swine flu something occurs to me. We as Americans allow ourselves to be led around by the nose like a pack of wild animals.

Every time 4 people get sick from the same thing the media starts talking about a pandemic. While that is ridiculous enough on its own we believe it and start strapping on our masks. What is wrong with us?

As most of you are reading my writing for the first time I will tell you a little about myself. I am middle aged, conservative, a little crabby, and not very smart. That’s probably all you need to know I am a good counterbalance to my good friend and the very smart Michael Gross.

While Mike and I have had many discussions about many different subjects the one that always ends the evening is the media. We as Americans believe anything that is told to us.

While the majority of Americans are pretty smart one on one it has always amazed me how dumb we can be as a group. The swine flu is just an example there are many more. Let’s take the current market conditions in my opinion we were on the edge of a slippery slope waiting for a push.

The media started preaching the end of time is near what are we all going to do and us as a group stopped spending money. Well my friends sometimes things can be a self fulfilling prophecy.

For instance a middle income family the husband works for IBM the wife works at Lowes. Every weekend the two do projects around the house they go to Lowes and spend $100.00 a weekend on materials for their projects.

They can afford this 2 nice incomes well planned budgets they are doing well. All of a sudden the news comes on and says we are circling the drain hide the women, children, and cash.

So they do they stop spending the $100.00 a weekend and so do there neighbors because everyone fears they is going to be layoffs. Well Lowes has lost a big customer base and guess what the wife gets laid off now they can’t afford a mortgage and so on.

While I do believe the market is affected by profit forecasts and corporation decisions I also believe that in a capitalist society the markets are affected the most by capital and the ability to create it.

Capitalism is simple land, labor, and capital we have got lazy and the only thing we look at is capital. We have sent the land and the labor out of the country all we look at is capital. What is wrong with us?
Where is the entrepreneurial spirit that once had us starting lemonade stands, cutting grass and babysitting. Has anyone tried to get a kid to cut your grass lately they want $50 it’s all about capital.

In my opinion all we need to turn this economy and the country around is to stop looking for hand outs. Stop sending our jobs out of the country. Stop being scared every time chicken little runs by screaming the sky is falling.

Take our country back from the liberal’s who are taking us down the path of socialism. What business does the government have in GM, Chrysler, Bank of America, JP Morgan, and many others? The strong survive, it’s just a fact and it is better overall for the consumers to let it happen.

It might hurt for a minute but if we as a country need something there is always a new entrepreneur waiting to fill that need. So to end my little rant here whenever you hear something in the media instead of just running with the flock stop think about it, develop your own opinion and go with your gut.

As a matter of fact, what makes this country great is you can be an individual! Don’t allow yourself to be hearded with the masses. If we would all do this imagine how great our country could be.

Guest Author: Jason Ganzel – My brother-in-arms, cousin and compadre! Hope he didn’t offend anyone! LOL Mike.

As The World Turns

As The World Turns is a daytime drama that has been on for years. And as all soap operas are apt to do, the drama that unfolds on a daily basis is so complex and drastic as to be unbelievable. Well the same can be said for the World Economy…

In America we woke up this morning to news that the Swine Flu has broken out in Mexico and Mexico City is like a ghost town. Luckily the epidemic has only spread into 5 states in the U.S. and outbreaks here have been minor.

We also learned that the British Pound-Sterling will stay that way for quite some time. For better or for worse (I think for the better) the Brits will not acquiesce and diminish their economy even further by joining the EU and converting their currency to the Euro.

And yes, there’s even more world wide news, seems that China is developing even closer ties with Taiwan while property prices in Hong Kong are making a huge comeback.

So, why do I report all of these things going on around the world? It’s because they affect our bond market which ultimately affects the flow of capital and the interest rates we pay.

Weak Economies Follow the Strong

Several months ago I wrote a blog titled ‘And So Goes the World.’ The point of the article was that as our economy experienced ups and downs, the world’s economy follows right along.

I wrote that article because many of the more liberal financial journalists were decrying our capitalist system and pointing to the strength of the EU and China and implying that their economic systems were superior to ours. In truth, these journalists with an agenda were wrong.

We don’t live in a vacuum and neither do our trading partners. Many bemoan the fact that America consumes so much, but we consume because our economy is so strong. What is happening to the world economy right now is a direct result of our economy losing it’s ability to consume.

So where is all this heading this morning? I’m not trying to make a political point here, I’m making a statement of fact. Property values in Europe have fallen and their banks are a mess. Their economic cycle follows ours by about 12-18 months.

Next it’s the BRIC economies …Brazil, Russia, India and China… These economies follow ours with a 20-24 month lag.

Stabilization is the Next Step

In the US we have seen a recent stabilization of property values and in the economy overall. Things may still be trending downward but not at as rapid a pace. The same is starting to happen in Europe, however, they still have a few big hits before they get to where we are.

But, China and the other BRIC nations are just starting to feel the heat. Remember earlier in this article I mentioned that property values in Hong Kong were on the rise? That’s because Hong Kong is one the few places in the world where the economy is somewhat insulated.

Their tax system (a consumption tax akin to the Fair Tax) has made the economy very insulated over the years. They follow patterns similar to the US so now that China is feeling the squeeze money is moving from China to Hong Kong!

What does all this mean to us …US…? It means this. We are getting close to the end of our economic down turn. Nobody knows if growth will be robust or sluggish, but that’s not the point. The point is we probably have one more big-hit coming and then we stabilize.

Ferocious Entrepreneurial Spirit!

This also proves another point. Many left-leaning ideologues would have us believe that capitalism can’t work without highly restrictive government oversight. But, they are wrong, capitalism works in spite of highly regulatory environments.

If you look at the data you will find that the government actions did very little to stop our precipitous fall. Some will argue that the TARP helped save banks, but did it really? Not all of the TARP money was even used.

The government still has hundreds of billions in unspent TARP money and the banks have stabilized. A very, very small percentage of the pork-filled, ear-mark laden, $800 billion dollar stimulus package has hit the economy. Yet, we are stabilizing.

The correction of the bubble in the economy was due to normal business cycles within the world wide Capitalist economy. No the ferocious entrepreneurial spirit will turn the American and World economies around despite the best efforts of central governments around the world and NOT because of them and their actions!

Lending Lies

There is a great new show on Fox called Lie To Me. In the show the main characters are experts at facial expressions. They can literally tell when someone is lying by the look on their faces. Pretty amazing and fun to watch.

I wish I could get the bank execs in the room with these experts. Here's why, the banks say they are lending, but are they really? The truth is that many banks have increased lending but at a paltry rate.

Bank of Americas recent revelation that they earned a profit of almost $4 billion dollars in the last quarter was quickly quashed and the ‘real’ number was reduced to $2.5 billion. But even that number may not be accurate.

B of A, Citi and other large banks would have us believe that these profits stem from an increase in lending to home owners, when the truth is that lending increased less than 2% over the same period last year. So where did the profits come from?

The profits came from thin air. As reported in a very eye opening article on MarketWatch.com, much of the banks profits were driven by the TARP money they received. With TARP plugging gaps in the banks balance sheets, huge write downs allowed by larger banks swallowing up smaller failing banks and additional relaxed accounting rules allowed by regulators, the banks all of the sudden look very strong.

But that’s not the real story. The real story is this, banks aren’t lending for good reason. After years of excess and easy money the banks have learned their lesson and their hording their cash to protect them from further market turmoil.
In a recent quote in The Wall Street Journal, Fed Chairman Ben Bernanke talked about the need for more education about credit by addressing the inequities in wealth between whites and minorities.
He stated: "Part of it has to do I think with financial education," Mr. Bernanke told students at the historically black college. "There needs to be broader understanding in minority communities … about the importance of saving and building a credit record."
In my opinion Mr. Bernanke missed the point. This is more than a white vs. minority issue. He could have just said; There needs to be a broader understanding …and a core curriculum starting in grade school that teaches… the importance of saving …money… and building a …good... credit record. (the bold comments are mine.)

Additionally, I still hold to my belief that America needs to change our economy from a spending based econ to a savings based economy. Some have argued that this will limit growth and achievement.

Those that argue against a savings based economy miss the point completely. All a savings based economy refers to is an economy where the pace of credit spending does not outpace the rate of earned income and savings.

http://www.marketwatch.com/news/story/Banks-say-theyre-lending-theyre/story.aspx?guid=%7b4280B32E-53CB-49A7-8DC8-D0E95F855358%7d&print=true&dist=printMidSection

Danger, Danger Will Robinson

It seems like I’ve been running around like that silly, bubble headed robot from the 1960’s ‘sci-fi drama’, Lost In Space! Danger Will Robinson, Danger!

Why have I been flapping my arms wildly about and pronouncing warnings for so long? It’s because our elected officials seem to have no concept of reality.

Little did I know that when I put the motto of my blog up; Cracked Up, Whacked Out and Completely Out of Control, how right I would be!

From our president who is proclaiming that we will unilaterally reduce our nuclear weapons arsenal while at the same time North Korea launches a test of an intercontinental missile capable of carrying a nuclear warhead to him bowing at the waste to the so-called King of Saudi Arabia, we seem to have lost our since of pride.

Added on top of these foreign relations miscues are domestic issue missteps such as the bonuses for AIG execs that were approved by a Democratic congress and signed by the president. Did Senator Dodd and the President really believe we would believe them when they said they knew nothing … didn’t they write the bill?

Now we have the situation of an American Flagged ship being held hostage by pirates. This demands a quick and concise response from our government.

Now I hear the Obama Justice department has sent FBI negotiators to the seen as if this were a criminal action. It is not, it is a war. I hear the DOJ wringing their hands over what to do and it sickens me.

‘We haven’t had to deal with this for 200 years…’ bla,bla,bla. Can someone help me out here, how do we deal with scum bags when we have a Navy ship in the area?

Can anyone say; Navy Seals? How about .50 cals and 5 inch deck mounted guns?

Negotiations my eye! In the old days we didn’t send out the constable to try to get Black Beard to stop terrorizing the Barbary Coast did we? Nope, we put a bunch of our war ships out to see and when we found him we blasted the heck out of him!

I’m fed up with the American Apology tour, the diminution of individualism and the fear of naming a ‘thing’ for what it really is because we might offend somebody. These pirates are thugs and terrorist and they deserve to be treated like we are at war with them!

This is NOT a police action. Let the military pop a few of the pirate support ships and put them on the bottom of the ocean and then see if this crap continues. Come on people, let me here a little H**L Yeah! (sorry, got a little carried away with that last part. LOL)

A Lesson on Greed

When you look around the world and see the haves and have-nots, does it make you wonder if this capitalist society filled with greed is injurious to the world?

A powerful question to be sure. I like the answer given by Milton Freeman and countless other modern day philosophers. Is there some benevolent benefactor within mankind that is so pure that they can order our society for us?

The answer is NO. When you look around the world, the truth is that the societies with a free enterprise system (capitalism) have the highest living standards on the planet. As a matter of fact the freest people have the best quality of life.

However, look at the world where governments restrict free trade and control societies. Their standard of living is squashed and the motivation to improve society is squandered.

Ah, but human nature is not abated. The leaders of these ‘controlled’ and closed societies are greedy. We need only look at the standard of living the leaders enjoy as compared to the poverty they force upon their populous. Is this not Greed?

The problem with heading towards socialism was best stated by Margaret Thatcher when she said that the problem with Socialism is that eventually you run out of other people’s money.

But I think there is an even greater problem. When you look at the history of countries that trend towards Socialism and Communism you see what happens when men are entrusted with ultimate power.

Their Human Nature overtakes them and the next thing you know you move towards Totalitarianism. In a free trade, free enterprise, capitalist society with a Republic form or government, the market and the rule of law helps to minimize our human nature and acts as a checks and balance to human greed.

Sure, greedy people do succeed, but so do people those that aren’t greedy. In a capitalist system, the non-greedy can compete with the greedy and many times the non-greedy win. This creates a better society, not control by some authoritarian overseer.

Some would blame our current economic situation of the greed of capitalism, but the truth is that this situation was caused by poor government policy, shoddy oversight and mismanaged regulations.

In other words, this problem was caused by powerful politicians attempting to dictate to industry how they should operate.

Now the USA moves towards Socialist policies and I find it ironic that as our President visits his once vaunted campaign trail in Europe he is being met with cold shoulders and words of warning.

Even the once Socialist stalwart nations of Germany, France and Italy are now looking upon the actions of Barak Obama with disdain. They have publicly questioned the soundness of the Presidents push for governments to spend more money to get the world economy moving again.

What they are saying (without saying it) is that this has been tried before. They have tried it before …and…. IT DOES NOT WORK!

So I leave with this one question. If the great Socialist Utopias of Europe are not willing to go further down this path because they understand that it will only do more harm than good, then why are we the citizens of the freest nation on earth allowing our government to lead us this way?

Watch the video and learn… I welcome your opinion.