Hornet's Nest

Friday Vice President Joe Biden continued to amaze me with his ability to say what he thinks without consideration of the potential ramifications. Speaking at the University of Louisville in Kentucky, he urged Iranians to let your people march, let your people speak, release your people from jail, let them have a voice. By doing such things we only promote the negative perception of a dangerously meddling nation trying to impose our belief systems throughout the globe in the name of Democracy. We portray ourselves as the worlds savior, when in reality we only increase global Anti-American sentiment and hatred with such remarks. There is a key difference between what is occurring in Egypt between demonstrators and the Egyptian military, and potential demonstrations in Iran and its called lethal force, its much more probable under the same conditions that the Iranian military would open fire on its own people and Biden should consider this possibility before he makes such comments. The Muslim brotherhood and others throughout the world view this as an opportunity to continue to market us as president Mohammad Ahmadinejad likes to call us the Great Satan.

Quantitative Easing 2 = Great Recession 2

As Ben Bernanke is questioned by members of congress this week in relation to the Federal Reserves recent Quantitative Easing position and the potential inflationary pressures it could apply here and abroad, one got the feeling old Ben was talking down to those that questioned his strategy and authority. He deflected the notion that policy here in the United States was causing a rise in commodities such as food and energy, and the resulting civil unrest in Tunisia, Egypt, and potentially other nations. The fact is clear that debasing the value of the worlds reserve currency which the dollar is, applies inflationary pressures and commodities rise, the civil unrest usually occurs first in poorer nations where they cannot sustain such increases in the cost of such vital resources. Here in the United States we are better insulated from these increases due to a far greater standard of living, and wealth of its average citizens. Strangely enough the complaints of the Egyptian people of a broadening disparity between the rich and poor are starting to sound like a familiar theme in the U.S. between the middle class and the rich. Such issues as national deficits, unfunded pension liabilities, and the diminished wealth of average Americans will probably increase in the years ahead if comprehensive and effective solutions are not made.

Municipal Meltdown

As state after state continues to take in less tax revenue than is required to float its operating costs, the need for a potential third bailout by the Federal government becomes more imminent than ever, and all taxpayers are justified in asking where does it all end?. The situational thinkers in Washington seem content in continuing with a borrow and spend strategy, and the passing on of the generational buck to future taxpayers. A destabilized foundation is being laid at an alarming rate for our children and grandchildren and it seems that poor and middle class Americans can due little to avert a financial disaster. Thomas Friedman said it well in a recent interview, that America has become as dumb as it wants to be. And in his opinion the only way out of this is to invent our way out, by allowing a thousand cutting edge companies to attract highly innovative talent from around the globe to create the kind of products that other countries demand. This is what made us great in the past and will work again in the future. In my opinion the next twenty four months will be even more pivotal than the last twenty four in deciding our continued direction as a world leader, or a new role as a third world follower.

Ponzimerica

Our government has conducted one of the greatest ponzi schemes for six decades straight, by taking ever larger resources from the young and giving them to the old while promising the young their turn at passing the generational buck. In 1835 Alexis De Tocqueville warned of a time like this in his book entitled Democracy in America when he stated that the American republic will endure until the day when Congress discovers that it can bribe the American people with its own money. Who are we trying to fool when we borrow money from China in the form of U.S. TREASURY'S at a high interest rate and use these funds as bailout money all at the expense of the U.S. taxpayer. Nothing good can come from this inept fiscal policy position. As the Fed described its latest strategy as quantitative easing which we all know is code for printing money and crediting its own account, it will effectively open the floodgates of monetary velocity and the result will be a crushed U.S. dollar. When will the American people realize that an elite class of less than one percent of individuals will benefit from such activities.

Deflationary Spiral

Today's revelation from the Federal Reserve that a continued cooling of economic indicators is to be expected in the near future, and we now have to consider deflation as an equal if not greater threat than inflation. The prospect of falling prices on goods and services, and an unwilling lending environment is not what an already fatigued small business sector needs to hear in this fragile recovery of ours. Negative dialog from the powers that be can only ad volatility to markets that could easily take a turn for the worse and relinquish hard earned and unexpected gains. One meeting they say that economic green shoots are growing everywhere, followed by an austerity like quantitative easing type strategy at today's meeting. This is like following a squirrel down the road not knowing which way its headed. A comprehensive game plan with structure is needed as opposed to lets try this and if it doesn't work we can try that. The only sure thing is that when this whole thing blows over this nation will have one hell of an increase in the national debt. Why not use Japan as a template as what not to do? as they are the most recent example of a recession with these type of conditions, and develop a model accordingly.

Social Insecurity

For the first time in 30 years more Social Security benefits are being paid out than taxes coming in. And an oversight committee has projected that in 2015 the fund could quite possibly be permanently in the red. This is not good news for the estimated two thirds of Americans that will need these benefits to just survive. Currently fifty percent of all baby boomer's are receiving early retirement benefits at the age of sixty two instead of full benefits at the age of sixty six. A whopping fifty three million Americans received benefits last year while only one hundred fifty six million paid into the system. This disparity will increase dramatically as the lions share of boomer's will take retirement income in the near future. The current withholding rate is 12.4% and half is paid by workers and the other half by employers. The Social Security trust fund which is currently 2.5 Trillion will be completely depleted by 2037. Medicare is estimated to fare better because of the recent health care reform legislation recently passed, but this issue should dwarf many of the most pressing issues this century.

Decisive Phase

As Nato-led troops make strides to secure the city of Kandahar a Taliban stronghold and a key piece in the mission to gain an upper hand on the War On Terror. Political support back in the U.S. continues to erode. With U.S. death tolls at 60 in June and 66 in July many Americans are now calling for troop withdrawal and the war is now in a decisive phase. Our original goal of destroying Al-Qaeda now seems to be a distant memory as we are faced with the prospect of either power in the hands of the Taliban, or a corrupt Hamid Karzai led government. The pentagon has been warning of higher casualties this summer as troop strength approaches 100,000 and we are faced with yet another monumental decision as to whether we continue our military presence and for how long.