Deadline Looming

We still subscribe to the old idea of Sunday being a day of rest, even though retirement has provided whole weeks of Sundays, at least as compared with the old rat race days. But in many ways, Sunday is still a day for quiet reflection, especially if it includes a little spiritual rejuvenation. And while it generally is a slow news day, we are too well aware of the financial tsunami poised to wash over us this week as the clock ticks down to the federal debt ceiling deadline, which may, or may not, see the collapse of the US economy as Washington maxes out all of its credit cards on Tuesday. Some people are forecasting scenes of anxious Social Security recipients, and other retirees, staring at their empty mail boxes, or the electronic equivalent thereof, while others claim that such forecast are simply partisan hype and the government will somehow avoid a default through some last-minute brinkmanship. While we have generally expected the latter, time is now getting short and the worm in our brain is starting to re-consider the real possibility that Harry Reid and friends may not be up to the task of producing a rabbit from his hat.

Let's be clear, to coin a phrase. We wholeheartedly see this crisis as one of over-spending rather than a shortage of tax revenue. When the pres was pimping for passage of his health care juggernaut, many pointed out the effect that plan would have on the federal deficit. His response? Wait until we come back next year for funding and we'll see how those critics feel about the deficit. There is a subtle, but crucial, twist to this logic, which lies, in our belief, at the core of the problem. The Left pushes for programs solely on the basis of an oft-hazy perceived need, without thought to the source of funding. Then, when the bill comes due, taxpayers are told they must pay more to meet "their fair share" or be labelled heartless and mean-spirited. Any remaining shortfall is then put on our collective tab. What is so hard about understanding that you can't spend money you don't have without running up the deficit? John Boehner and Co. are the only remaining adults in the room, calling for a halt to this irresponsible run up to the federal Master card account. No matter which side blinks first, and especially if neither does, we could be in for one uproarious week of fiscal uncertainty.

What do we do now? It's probably too late to buy gold with the price over $1,600 per ounce. Gold may have a place in some portfolios, but it's not much use in balancing the family budget as it doesn't pay any dividend and it's expensive to buy and expensive to sell. Sell everything and go to cash? Theoretically possible but impractical and you have to be clever enough to know when to reverse the process. Did any of us ever confront the possibility of The United States as a financial banana republic?

Small, and not so small, investors have long used Treasuries as a safe-haven investment, and it's staggering to face the real possibility that the values of these securities are facing a downgrade within the next few days. While we support the Republicans in their efforts to scale back federal spending, there will be enough fallout from this scenario to cover the shoes of everyone, regardless of which side of the aisle they sit. And before the White house says it, this is not George Bush's fault.

So what does one do? Hold on tight, wait it out in the belief that any interruption in the financial markets will be short and reversible. Watch very carefully how this week unfolds. There really isn't another choice.

The Hermit Kingdom - Update

A tip of the propeller beanie to the Boston Globe for picking up and re-publishing the article by Jean Lee of the Associated Press entitled N. Korea Food Shortage is Worst in Years. It seems that after the great 1990's famine, the state established an ostrich farm which it hoped would help feed its people and develop export products. North Korea has many attributes, but a balmy climate is not on of them. In fact, to keep the bird's warm during the brutal winters, they have been equipped with quilted vests. You just can't make this stuff up. Beyond becoming an exotic menu item at some of "Pyongyang's finest restaurants" (maybe they still have a Howard Johnson's or two)those yummy ostrich burgers just haven't found their way to the local commissaries. Meanwhile, the people have been busy, of late, punching multiple new holes in their belts to better facilitate tightening.

Citing a litany of causes for the food shortfall; such as, rising global food prices, shortfalls in fertilizer (there's a good line there somewhere) and adverse weather, the state is quietly sending out requests for aid to avoid mass starvation of its population. Not given as a cause is the abject failure of the communist government which excels only in rattling its nuclear sabre. Apparently, this time around,foreign governments and Relief Agencies are not rushing to provide aid. Probably because this calamity bears a striking resemblance to the famines of the last twenty years or so. Go back and read the prior VIEW POST on this topic. Hasn't anyone over there learned anything during this time? Weren't there at least a few Teachable moments, to coin a phrase.

There is also suspicion that the government is stockpiling food in order to distribute gift baskets during next year's one hundredth anniversary of the birth of the late president, Kim Il Sung. Won't those be welcome by those that manage to survive until then. Agencies that might otherwise provide food relief are also demanding guarantees that any relief supplies will, in fact be given to the people rather than being stolen by the military and resold on the black market, an all too common practice. Once again, we are not making this up, read the AP article.

Please understand that this is no excursion into schadenfreude as we take absolutely no pleasure in the suffering of the North Korean people. But an ostrich farm? This sounds like one of Ralph Cramden and Ed Norton's get rich quick schemes. How can this government, or any government, with 24 million souls under it's wing, continue to exist in face of this totally inept and incompetent record? While you think about it, ponder this: gaggles of ostrich, wearing quilted vests, wobbling around, trying to stay warm, all to the tunes of an accordion ensemble.

The American People

We don't know about you, but we are more than mildly annoyed every time The President tells us what the American people want. I mean, no one has asked me, and I am very definitely a card-carrying member of this ultimate special interest group.

What to do? Beside the obvious remedy that will be available in November of 2012, you can drop the Pres an email (Hey, let technology work for you) by clicking here: YO, MR.PRESIDENT. No disrespect meant, he was a community organizer.

A few pointers, however.

Be sure to identify yourself as one of The American People. Even better, indicate that you are part of the subset that votes.

Be brief and concise. Short declarative statements are best. The Pres is much too busy to read long treatises, no matter how well constructed. So many vacations, so little time. So get to the point and hit it hard and plain.

Once you get started, move on to the other co-conspirators. Drop an email to your senator(s) and congressman.

For Example: Senator Scott Brown If anyone needs the encouragement and support, Senator Brown, as the Bay State's lone Republican on the state's legislative delegation, needs to hear the love. Go Scott!

keep going.
To find other Senatorial emails, search U.S. SENATE

For Congressmen, search; USCONGRESS

Don't stop now. Consider contacting legislators who serve in key chairs, like House Speaker John Boehner and Republican Minority leader Mitch McConnell. It also doesn't hurt to include those in the opposite party. Harry Reid may not be thrilled to hear from Republicans, but we need to let folks like him think a bit before speaking for the American people.

Admittedly, this might seem like a small step to take, but if enough of us take the time to pass on our views, they may just start to get the idea that they don't, in fact, speak for all of us. At the least, you will feel a little better. Don't curse the darkness, light a match.

Priorities

Did you ever notice (maybe you were on Mars for the weekend) that every time government is looking for new revenue, or taxes as we know them, the pols roll out the same threats to discontinue the most sensitive services. Top of the list is always the possibility of interrupting Social Security checks. Visions of grannies scrambling for a crust of bread are envisioned, followed closely by shutting down help for the poor, the sick and the lame. On a local level, the perennial favorite is a reduction of public safety entities. No cops to answer the 911 calls and get ready to watch your house go up in flames for lack of adequate fire protection. Laying off teachers is usually in the mix too. And the (greater) we usually fall for it. If legislators comes out against new taxes, they will be pilloried during the next election for fiscal crimes against humanity.

We aren't buying it.

Here are a few suggestions for alternative measures of reducing the spending gap. Rather than raising taxes, they could:

Defer indefinitely the plans for new high speed rail lines. Who would notice?

Cut the funding for pork-laden earmarks. Talk about a target-rich environment.

It may be too late, but who thought that we had to have all those new mile-marker signs on our highways at two-tenth mile intervals. These could wait, maybe forever.

Speaking of signs, how about those beauties that announce the fact that the federal government stimulus money is paying for road maintenance? Insult added to injury.

Obamacare off the table? Trimming this porker might just restore fiscal sanity and mental health all by itself.

Social Security was designed to be an insurance plan. Everyone received benefits in proportion to what they had contributed. This was not a handout funded by general tax revenues. Moreover, the contributions were to accumulate to pay benefits, not to be looted to fund pork. Tip O'Neill said that Social security was the third rail of politics. Politicians who tried to cut benefits got fried. On the other side of the coin were those demagogues who would vote benefit increases in order to be able to crow about it during the next election. To the uninformed it seemed like a free lunch, when in fact, it was a step towards destroying a reasonably equitable, albeit government-mandated, program.

You get the idea, there are at least a zillion things that could be deferred or even eliminated before you need to go after the Golden Agers. Send in your suggestions and we will give you full credit when we compile the comprehensive list.

A Tale of Two Arguments

Sometimes it's hard to keep things straight when listening to the two conversations going on in the federal government. Both sides claim to be addressing the same issue, but their collective arguments seem to exist in parallel universes.

Lead by the democratic president, the left has produced at least two blockbuster spending bills. First there was the stimulus package which seemed to be a thinly- veiled attempt to re-pay public employee unions with a flood of federal money ostensibly to revive the flagging economy. Why is anyone surprised that the economy hasn't revived? Next came the massive new federal health care program, which we are still trying to figure out. The only thing about this monster, that was rammed through congress with Houdini-like deftness, is it's massive costs that spiral off into the future like the Eggplant that Ate Chicago.

So now, the creators of these two deficit-busting gems are arguing that taxes must be raised, while Republicans stand like the Dutch boy with their collective fingers in the dike of fiscal restraint.

The left is calling for higher taxes, even in the face of a protracted recession as well as warnings from the debt-rating agencies that U.S. debt stands a good chance of losing its AAA rating. This comes while, at the same time, vilifying the Republicans who want to solve the problem by reducing spending and who recognize the dangerous fiscal abyss that yawns ahead.

Often, in these discussions, the metaphor of the household budget is used to illustrate the problem. Ok, so it's not sophisticated economics, but it does have some illustrative value. To wit: Families have recognized for eons the importance of living within one's means. New purchases, no matter how rationalized, must be subjected to a means test. The choice is usually clear. If you can't afford it, you can't buy it. If the expenditure is, in fact, absolutely necessary, then cuts in other areas of the budget must be made to accommodate the new item. The alternative to making these adjustments, is to crank up the credit card balances, or perhaps tap into the equity in one's home through additional mortgage debt. Well, maybe that option isn't quite as available as it used to be. Such actions may bring temporary relief, but the eventual result can be a painful reconciliation with reality. Being underwater on your mortgage, or in default, or both, can be very unpleasant as way too many of us now know.

It's easy for demagogues to paint the Republicans as uncaring tightwads. In fact, they are the last bastion of fiscal restraint standing in the way of our country's slide into third-world status. We have a president who has a vision of the U.S. as neo Sweden. A president who claims that 80% of the U.S. population wants higher taxes! A president who, doesn't know what he doesn't know. A president who is supported by the takers of the left. Our only hope is that the Republicans can prevail and preserve our precious way of life as the August 2nd debt-limit deadline approaches.