Catch-22

All that seems indispensable in stating the account between the dead and the living, is to see that the debts against the latter do not exceed the advances made by the former.
-James Madison


As Pres Obama tours Asia this week, I cannot help but be reminded of our economic situation here at home. Rising unemployment, falling dollar, enormous deficit spending, imbalance of trade reflect on just how we got where we are is just the last 60 years?

We came out of WWII as the most powerful economic nation in the world because 1) our ingenuity and creativity and 2) we were spared the devastation on our homeland. Our currency was strong, our exports large, taxes low, factories full, and revenues substantial. However, today we faced trade imbalances, weak dollar, factories empty, and a $12 trillion debt. The very Japanese that we fought against in WWII and Communist China that we stood against in the frozen winters of the Korean War have become our economic masters. Is it Washington's fault? Is it corporation's fault? Is it union's fault Is it our own fault? There is enough blame to go around.

Washington concocted poor trade policies with countries that had no intent on keeping up their end of the bargain. Japan for instance...we opened our markets to their electronic products and vehicles, yet they continue to put high tariffs or roadblocks on our agricultural products. China shows little respect for intellectual property rights while flooding our markets with lead-filled toys and cheap knockoffs. Everyday, we buy tankers of oil from the Middle East where radical Islamic groups plan our destruction, yet we refuse to explore and refine energy reserves in our own country.

Corporations have become so global that there is no allegiance to any country. Corporations only have obligations to their shareholders who are global themselves. Corporations will move to where they can produce and operate more cheaply, thus the move away from the U.S.

Unions, once needed to abolish unsafe working conditions, are only concerned with their own power and survival. By embracing the very greed they labeled on corporations, have insured their ultimate demise and painted a bad light on the American worker.

Finally, its our own fault. For we have weak personal constitutions. We seek comfort and status in material things, not in our morals and faith. We have been told that we can "Have It All!", "Buy Now, Pay Later!", "No Credit, No Problem!", and we fell for it hook, line, and sinker. While it is OK to dream, plan, and acquire pleasantries of life, it can't be our over-riding goal each day. It's SUPPLY and DEMAND. We DEMAND cheap products and corporations SUPPLY them.

Now here's our Catch-22:
1) We import far more goods than we export creating a deficit.
2) To pay for the deficit, the Government borrows money by issuing Treasury bonds or prints more money.
3) Printing more money makes the value of it less, so our demand for cheaper products grows.
4) Borrowing by issuing Treasury bonds - The bonds are bought by those countries that have money, those with a trading surplus, i.e., China, Japan, Saudi Arabia, etc.
5) Because the surplus countries now own our debt, our leverage in trading negotiations is greatly diminished.
6) The voracious cycle begins again with destruction of our economy inevitable if not reversed.

Is it too late for the USA? Maybe not...but time is of the essence and now is the time! Start by implementing the Fairtax and we will begin to gain some of our economic freedom back!

Healthcare Debate - Costs or Agenda?

In the rush to “solve the healthcare crisis” (as our esteemed President likes to put it) there have been many arguments put forth by members of both parties as how to “fix” the “crisis”. If the concern is so much about the affordability of healthcare, then why is the discussion been about political idealogy and not about getting to the root causes of the costs?

It is true that the costs of healthcare has significantly outpaced inflation in the last 25 years…but why? Is is due to the aging of America, the abuse of emergency room care, malpractice insurance costs, etc? The President can only seem to put the blame on insurance companies and their apparently evil desire to make a profit. From someone who doesn’t know the difference between an income statement and a balance sheet, that is a pretty bold statement! But what are the cost drivers?

In a company, if rising costs of doing business outpace the natural rate of inflation, best practices teach us to form project teams to perform deep analysis of why and where. Sometimes, the findings may lead to simple solutions (low-hanging fruit), while other findings lead to very complex solutions that require a careful and thoughtful approach that may lead to a change in strategy for the long-term. Whatever the case, the best decisions are made based objective data and not knee-jerk subjective “feelings”.

Unfortunately, I have not seen this best practice approach in any of the discussions. Therefore, in the absence of objective decision making, one can only assume that the debate is being driven by an agenda and fueled by subjective knee-jerk reactions. Unfortunately, unlike business, once a program is inacted in Washington, it never goes away no matter how ineffective it may be. With 16% of the Gross Domestic Product at stake, this “crisis” is simply too important to be rushed.

Any smart business would not make rash decisions with 16% of its production at stake and neither should our Government. Call your Congressman or Senator and urge them to take a rational approach and not be bullied into making a subjective decision that effects everyone’s lives by a President only seeking to capitalize on what’s left of his popularity. He promised Change that was not business as usual, its time to hold him to that promise.

Other News

The confirmation hearings on Sotomayor...important, but does it really matter what this woman thinks? The Democrats have the votes to confirm her. The only thing that matters to the Democrats is that she would uphold Roe vs. Wade.

Second Stimulus - What's wrong with the first? Oh, it gave tax breaks instead of spending ALL the money on important issues such as turtle crossings and pig farts...Congressman David Obey in TheHill.



Deficit Breaks $1 Trillion mark...something to tell the kids and grankids about!