Why are the governors of some states committing economic suicide?  You know, states like New York, Michigan, Illinois and California, in particular.

Politicians are not good at very much of anything except one thing – spending other people’s money. They think that money grows on trees.  If you need some, just crank up the government printing presses. AOC, for one, has said that since the government can print money you can spend as much as you want.

Of course, states can also ask the federal government to bail them out. To them, it matters not that taxpayers of fiscally responsible states would then have to foot the bill for bankrupt states. Regardless, you would eventually run out of other people’s money.

California has got real fiscal problems.  There are 340,000 employees/retirees earning over $100,000 a year in base salary.  Truck drivers make as much as $159,000, lifeguards $365,000 and nurses half a million. Maybe, you would like to have one of those jobs, right?  California spends so much on employee salaries yet they don’t bother to fund their pension liabilities.  As a result, unfunded pension liabilities now total $1 trillion.  That’s trillion, not billion. So, now, California wants a bailout from Uncle Sam (you and me). The thing is that they don’t intend on reducing staffing or cutting back on $100,000 salaries.

You would think that the governors of these states would appreciate that the coronavirus lockdowns have exacerbated their fiscal problems. Thirty million workers have filed initial unemployment claims since the coronavirus crisis began. States’ revenues are sinking like a rock making their fiscal problems that much worse.  Yet, these governors seem to be in no hurry to reopen.  That’s because money grows on trees…and they expect you and me to plant the trees. Just don’t touch those $100,000 salaries, though. They only want to use other people’s money to make their problems go away.

 

“When the desirable jobs are spending other people’s money, reporting on spending other people’s money and lobbying to spend other people’s money then you know that the society is f***ed.”  – Tim Worstall

 

 

Your New Prison

11/07/2012

Well, it’s official.  The inmates are in charge of the prison.  The results of the election prove just one thing – that the have-nots now run the country.  As a result, we’re going to follow Europe down the path to socialism and eventual self-destruction.

Now by socialism, I mean a form of government where the government provides for all the needs of its citizenry.  I’m talking about the few supporting the many; the productive supporting the unproductive; and the workers supporting those who don’t work.  The net effect of this will inevitably be a redistribution of the wealth. This may come as a shock to you but most of the burden will have to fall on the middle class since they earn the lion’s share of personal income in this country.

So look at Europe and you’ll see where we will be in the near future – even higher unemployment; rioting in the streets and a middle class that has all but disappeared.  Strangely enough, socialism there has brought on some of the very things that it was meant to cure, turning them into a floundering welfare state in the process.  They started by expanding the role, and cost, of government in order to provide for their new welfare state.  This eventually led to inefficiencies in their economy which in turn undercut their ability to produce and compete in the world marketplace.  This, in turn, led to higher unemployment and finally to rioting in the streets by the unemployed.

The result of socialism is always a large, bureaucratic and corrupt government.  That sucking sound which accompanies socialism is the energy, vitality and wealth of a country going down the drain.  It’s also accompanied by a reduction in personal freedom.  After all if the government is going to meet all of your needs, they are also going to tell you how to live your life.  However, the really scary part is that socialism will usually lead, at some point, to either communism or fascism.

So the election last night was a victory for all those that have their hands out for the government to support them.  In these tough economic times, their ranks have swelled and as a group they voted overwhelmingly for a continuation of the hand-outs.  What else would you expect anyway?  The demographics in this country have changed dramatically.  By that, I mean that the rich are getting richer and the rest of us are getting poorer, with the inevitable outcome that the people in the middle will get squeezed from both sides.  With the have-nots in control of the voting booth, things can only get uglier from here on out.  I hope that you enjoy your new prison.

“When the people find they can vote themselves money, that will herald the end

of the Republic”.     – Benjamin Franklin

So the debates are over and the presidential campaign is winding down.  Yet, I haven’t heard either of the candidates, never mind the totally biased political pundits, talk about the only issue that really matters; namely, the economy.  Okay, I was just joking about that, sort of.  Here’s why.

From my perspective, neither of the candidates has a meaningful plan to turn the country around, let alone return it to greatness.  Heck, Obama seemingly doesn’t have any plan at all.  The elephant in the room that everyone is ignoring is the federal deficit which may be as high as $200 trillion (as opposed to the published figure of $16 trillion), which means that you could conceivably shut down the entire federal government and the country could go still go further into the hole.  Of course, these numbers don’t even count the black budget which absolutely no one ever talks about.

The reason is that the government lies about most things pertaining to the economy.  By that, I mean they lie about little things and they lie about big things; certainly important things like the rate of inflation and the unemployment rate.  For example, if the inflation rate is kept artificially low then workers’ salaries, most of which are driven either directly or indirectly by the Consumer Price Index, have less value relative to the cost of products that they buy (food, gas, housing etc).  This is one of the reasons why the savings rate has plummeted over the last 30 years.

David Walker, a highly-respected and former U.S. Comptroller General, has launched the Comeback America Initiative to discuss the looming crisis in government spending which he says is a bigger threat to the country than terrorism.  In fact, he has labeled it a threat to the very survival of the republic. Yet, go on the six-o-clock news and see if anyone is talking about it.  Alternatively, attend a local town hall meeting and see if anyone is even remotely aware of the issue.  One must also question why Mitt Romney is not making a big deal out of this either, as this has the potential to swing the election to him.  I’ll leave that to you to ponder.

The bottom line is that the government wants to hide how bad things really are.  Sure, Obama is politically motivated to suppress the truth – he has an election to win.  However, this problem has been around for a while.  President Clinton left office with a surplus so just how could things have gotten so bad so fast?

So there you have it – political intrigue, government bailouts to corrupt financial institutions, including foreign banks, and a cast of characters worthy of an Agatha Christie novel.  It’s a $200 trillion secret that they don’t want you to know about… but, of course, now you know.

Shakespeare would have loved it.  Romney and Obama debating each other – a real American tragedy.  If you saw the debate last night, you would have seen both Mitt Romney and Barack Obama misleading the American people about government spending.

As a result, the founding fathers are now turning over in their graves and I even hear that Wil Shakespeare might try to make a comeback with a new play entitled, “A Midsummer Night’s Fantasy”.  The play, as I understand it, will be about two politicians both of whom have taken to fantasizing about how to solve their country’s economic woes and thereby win an upcoming election.  The play shows what will happen to the country economically if either candidate wins.  The plot line takes a dark, somber turn near the end as the two candidates are shown to be mannequins taking their direction from a powerful puppeteer who is pulling all the strings.  Wil must have read The Wizard of Oz no doubt.  The real tragedy is that it didn’t matter which candidate was elected.  The outcome was the same – economic disaster.

In some respects, Mitt and Barack are two peas from the same pod.  They both dance to the same fiddler (biggest contributors) and they both pretend (fantasize) that they have a solution to the country’s lack of a balanced budget.  But here’s the real problem: the size of the federal deficit is way beyond what the two candidates are talking about.  The number that has been continually thrown around for the annual deficit is $1 trillion, with a total cumulative deficit of $16 trillion.  Believe it or not, that’s the good news.  The bad news is that the real numbers are $11 trillion annually and $222 trillion in total, and that’s without addressing the black budget which nobody ever talks about.

So the two candidates have some vague ideas about trimming the federal deficit by making cuts in some minor programs.  Am I suppose to get a warm-puppy feeling about that?  Total government spending is less than $4 trillion a year, as compared with an annual deficit of $11 trillion, which means that you could totally close down the government and the deficit would still continue to grow.  Now that’s some kind of crazy math!

The source of the discrepancy in these numbers is the creative bookkeeping done by the Government Accounting Office.  But why blame some lowly bookkeepers when it’s the politicians who pull the strings.  It’s the same for the fallacious numbers which the government publishes on unemployment and cost of living increases.  By hiding the ball, the government disguises the very problems it’s creating.  How’s that for transparency!  So the next time that I see Wil, I’ll have to ask him if he knows “where goeth thou balanced budget”?

One thing that I’ve learned in life is that figures lie and liars figure.  Case in point – the stock market had a big rally today based on what the analysts are calling the “improving jobs picture.” 

The good news that they’re talking about is a decrease in new unemployment claims to 368,000 for the latest one week period.  At that rate, we could have almost two million more new claimaints on the unemployment rolls over the next twelve months. Now that is really something to cheer about!

At the same time though, the U.S. government announced that planned firings for the month of February increased by 20% over the same month a year ago.  How’s that for an improving jobs picture for you. Not only is that statistic moving in the wrong direction  but it’s likely to get worse in the future (since government at all levels is by far the single largest employer in the country).  Of course, that’s because nearly all of the state and federal bureaucracies are flat broke and in the process of shedding jobs.

President Barack Obama recently said that the U.S. must foster a business climate that encourages job creation.  I assume (rather naively perhaps) that that would include sound fiscal and monetary policies like balancing the budget.  Of course if we weren’t fighting two wars against terrorism(?) half the way around the world, maybe we would have a better chance of accomplishing that.  Funny, I haven’t heard any anti-war protests, though, from the far left since Obama was elected.

Instead of balancing the budget,  Obama has opted  instead for deficit spending by the trillions (which has all but destroyed the dollar) and bailouts for too-big-to-fail financial institutions.  I guess by now encouraging others to create a business-friendly environment which would lead to job creation Obama is finally admitting the obvious. After all, unemployment is still much higher than what Obama promised when he asked for the bailouts. But then, the bailouts were never about saving the economy anyway – only about saving Wall Street.

All of this discussion about unemployment rates belies a critical issue – how to calculate them. You see the government has changed their accounting rules for counting heads. Therefore, any comparison with Great Depression figures is simply invalid.  Broader current measures of unemployment come in  around 20%.  How’s that for a depression…I mean recession. The broader measure of unemployment includes people who have left the employment market for lack of finding a job as well as those who have taken part-time employment because no full time job was available. I wonder how those people are going to fare when gasoline hits $5 a gallon or when food prices double.  Will anyone ever tell them that they were lied to all along.  As I said, figures lie and liars figure.

 

 

 

 

 

There has been a lot of talk during the current economic downturn about a so-called jobless recovery. It’s confusing, to say the least, that you can have a recovery without creating any new jobs. For starters, consider the use of the term jobless recovery.  It strongly implies a recovery.  But the bottom line is what it is – no jobs, no recovery.  The reason is simple.  The engine of the nation’s economic growth is consumer spending and without jobs consumers will have less to spend.

The only way to make the country’s economy grow is to produce something of value (e.g. cars, machinery, food, raw materials).  Instead, the government has chosen to allow jobs (and production) to go overseas under the guise of free trade.  Never mind that free trade is never free.  Somebody profits, but in this case it just isn’t us. Of course, the problem is that interference with the market system is usually doomed to failure.  As Ronald Reagan said, “government is not a solution…government is the problem.”

So then what’s with the use of the jobless recovery terminology?  Well, the government couldn’t very well tell everyone that the stimulus plan didn’t work (and was never really necessary), so they created the fiction of a jobless recovery.  After all, a recovery of any kind, even in name only, is better than the alternative.  Psychologically, the government couldn’t have Bill Maher’s stupid Americans waking up to the fact that Wall Street was bailed out by Main Street.  They had to hold out the hope of a recovery, even if it was an intentionally false hope. Keep the little people in the dark, so to speak.

Their theory is that you only need to occasionally throw your poor dog a bone. Under that theory, the thinking is that people will be happy as long as they get their food stamps and unemployment benefits. Further to that theory, Nancy Pelosi recently said that food stamps and unemployment benefits are leading ways to help the economy grow. Say what!  I have my own theory which I think explains this bizarre kind of thinking rather nicely.  It’s called figures lie and liars figure.  Under my theory, the inflation and unemployment numbers are fictions created by the government to keep the masses from revolting and Nancy Pelosi…well, I’m sure you get the picture.

For all those who are currently in search of a job – good luck.  A lot of jobs today are not exactly what people are looking for. You know, working in a fast food restaurant or any one of a plethora of part-time jobs.  Of course if you take a part-time job, or give up looking altogether, it will make the government very happy as they will not have to count you as unemployed!  Presumably, that means that you would then have a real job.

So the next time you hear the term jobless recovery, make note if you are one of the14.5 million people out of work or one of the 44 million people living below the poverty level. If you are fortunate enough to still have a job, check the last time that you got a wage increase; then check how much food prices have gone up, say, in the last twelve months.  Now, a show of hands. How many of you agree with the government that the recession ended over a year ago?