The Buffett Rebuff

Stimulus Success = Consumption

I will say it again – the US is a consumption Economy. This is a rock solid fact. Even Berkshire Hathaway is feeling the impact. Buffett said himself it will get worse before it gets better. I think I have heard this before – hummm in fact I even said it!

The stimulus packages – certain to be more of them – are not getting to the street. In fact, even if money does get to the street it will be stepped on so much that it won’t stimulate consumers to consume. Worse, if you see all these programs they mostly target low income families. Another fact is the consumption power of these families is not close to the consumption power of the rich and upper middle class that represent a large percentage of consumption worldwide and definitely in the US. I frankly don’t see the entitlement consumers shopping at Dillard’s, Nordstrom’s, airlines, fancy new cars etc… Even if they did the money they will get in stimulus may not even pay for one month of their utilities. It wouldn’t even pay my electric bill.

So “Here We Go Again” to borrow a famous line from Regan – bailing out large businesses only to face a marketplace that is devastated and can’t or won’t consume their products, goods and services. So will this hurt for a long time – you bet! Why? Because manufacturers can’t make more goods if retailers don’t buy them and retailers can’t buy them into their stores because consumers aren’t buying from the retailers. It is a very vicious cycle and one we will not get out of until the government and private industry realize – close out sales, rebates, discounts and more won’t solve it. Also, take into account that all the sales and sell offs are severely reducing margins on products so their sales will continue to suffer while they try to unload things people can’t buy. You get the point.

Unemployment. Forget about those 10%+ buying anything shinny and new. Worse and not presented to us is underemployment. Yesterday a family member was hiring for a front desk position. A man came in having made over $100k last year and was applying for a front desk job at $20k. This is a huge problem too. There are millions having to accept much lower pay to even try to make ends meet and I assure you this puts our figures in the toilet for sure. Then there are those 30-60-90 days late, foreclosures, bankruptcy and the unemployable. That is more tens of millions. That is the consumer landscape. If you believe me that the US is a consumption economy and every business has to sell something – then take the facts above and add them up. Yes it equals prolonged – perpetual economic turmoil and decay in all sectors not just those with high visibility.

First force credit bureaus to adjust FICA scores for the economic conditions to enable people to get on their feet. Those that have kept good credit may cry out for justice but frankly it is what it is. The last 2 years and next 2 years need to be calculated differently or not weighted as heavily in the credit ratings. An immediate mental boost and a chance to even get back into the market in say 2 years not 5 to 7 to 10. We need these people to be able to just live and provide for their families but we also need them to stimulate the economy too.

Second allow a onetime refinancing of all credit held by anyone and any business. You want to free up capital and have banks make a boatload of money then package up everything and get it in line with the economy so people are not under pressure and devastated further again so they can feel good, have mental relief and key – HAVE CONSUMER CONFIDENCE. I assure you if you don’t fix that everyone will lose. And by the way it will reduce the toxicity of all those loan portfolios We The People – as we are called – own now.

Third stop the government borrowing any money. The National Debt is cancer – it is likely already terminal. I offered the 10% solution and getting traction but clearly not enough. America needs to own America. Period! We have to rally, and even by law, have all institutions in the US managing, today over $70 trillion, invest in a US debt fund to buy all this currency and debt back. I just ask for 10% of the total value of their portfolio (not individuals – but they can opt in) into this debt buyback fund. It’s a great investment – because we all know the stock market would boom and their portfolio value would go up far above 10%.

Oh by the way these are just a few – and can you see one thing – NO MONEY required from the government. That’s right, sell Economy Bonds to create a savings nation. Commercialize government like the US Postal Service did. Reduce every faction of government – State, Local, Municipal and Federal. Treat the US like a business. Get an Office of Financial Defense in place to clean America’s clock before the world does it to us. Fact is

You are making it happen.

Watching it happen

Or

It is happening to you.

We are clearly watching it happening and you better believe me it is happening to YOU.

What The Numbers Mean to Main Street

World Bank, Unemployment, Trillions in Spending

Is there an end in sight? Nope! The news keeps getting worse and these projections made by our Government and the guessing game around the world should not surprise us. But what do all these facts and figures mean to us?

Unemployment. Reaching over 10% in modern America is an unrealistic number and equivalent to an American nightmare come true. The figures, as vile as they sound, do not represent all the facts. Underemployed and unemployable workers would paint a true picture and believe me it is far worse than 10%. State by state is even a worse picture. This means that a large portion of workers in America and therefore families are being wiped out. In order to pay bills savings, stocks, mutual funds and 401k’s are getting raided every day. Are these numbers reported? No! we just give Americans the broad strokes to keep our education at a minimum. Remember in the long run the only thing that kept Japan out of a complete national meltdown was they are a savings nation. You hear that! Because we aren’t even if you were its not the case now is it.

Contraction of growth. The World bank is right on when it reports the world has become an economically smaller place. People see this and say hmmm the world is suffering a bit too. They may even take solace in that fact. But as the world goes the US goes worse. If the world can’t consume and we can’t consume then the writing is on the wall. Yes more layoffs and unemployment. With that comes more businesses cratering because they can’t sell products goods and services. Airline solution for example – raise rates and make it even more unaffordable to travel for those who don’t have the money. Go to Arby’s for example. Last night I spent almost $20 for 3 roast beef sandwiches and some taters. Find Chache’ Lux for me. Strasburg Kids? Real Bargains there. Car dealers – construction – you name it. At least Wal-Mart is hanging in there but we all know why that is true.

Currency. Printing day and night. A lot of people think there is a Fort Knox somewhere. Well there isn’t. It’s just paper and the US isn’t the only nation printing it. The tragic thing is that it is not backed up by anything except by the world’s faith in governments. This means the more of it out there the more commoditized it becomes. That means inflation is coming and coming hard. So already hobbled consumers will pay even more for stuff. The fact is that what the economy needs is consumption and the people are broke. The US is too. When history writes about the fall of America the abandonment of the Gold Standard will be one of the most impactful decisions ever made.

Spending, Health care, Welfare – our entitlement society. Spending is untrue. We are borrowing to spend. Health Care reform? A Trillion dollars? Our government is crazy! We can’t afford the debt we have already and we want to borrow more for screwed up entitlement programs that have already been pilfered. I wonder if people know Federal programs own a huge portion of the US debt. Where is the money? Not there for certain and we want to borrow more to see it drained and accessed by the big, rich and powerful. Madoff looks like a walk in the park against the ponzi scheme our leaders have perpetrated upon us. Healthcare - what happened to Tort Reform? Well the lawyers’ lobbyists – those that John Edwards was so close to – obviously are not be fooled with. Therefore insurance premiums for doctors are so astronomical that combined with taxes many physicians can’t keep their heads afloat either. So create a huge government entity, fueled by borrowing while the people that provide services have insurance nightmares and people jammed down their throats. Sickening. Ask listeners if they see any end in sight to the lunacy and borrowing in DC.

Stimulus. The G8 nations have concluded that it needs to stop. Why? They can’t afford it. Well the American government already pandered all this stuff to us and instead of standing there and retracting all spending and unrealistic promises they put trillions of debt on our debt to follow through on things that are not possible to achieve without further bankrupting the nation. Now take into account the tens if not hundreds of billions unaccounted for and slipped into pet projects that politicians can claim credit for to be re elected. Is this working? Absolutely not – there are way too many pigs at the trough to ever see the money pour onto Main Street – a label by the way that makes me sick too.

Every single subject to be covered is sold to us like kids. Americans are simply ignorant and uneducated on all the facts and what they mean. Fickle? You bet. The stock market is the same. We see the headlines and political entertainment geared to cover our eyes with wool. Worse there is absolutely nothing average (imagine even being called average) Americans can do. We forfeit our voice to politicians that cumulatively spend over $100 billion each 4 years cycle to get themselves to DC to borrow and spend our money. Wouldn’t you agree that 90% or more of what we see our “LAWMAKERS” actually do is spend money. No wonder why they use TV so much. It’s a bunch of commercials created for us to consume more crap being doled out onto our plate.

I am so upset, disenchanted and outraged it is hard for me to sit down each week and write about this. We get sold “our children and grand children” – “The American Dream” – “Leaving this a better place then we mismanaged it”. Forget about them they are already bankrupt and devastated. it is us we should be worried about because in our lifetime we are very likely to see America’s collapse as so many predicated our Capitalist society would. I have to wipe my chin now because I dribble down my neck when I RANT because I am so enraged that I would puke on my bib otherwise.

Obama "Spend What You Have"

Back Peddling is a Direct Result of China Visit

I am certain as you are that the recent change in tone coming from the White House about debt and spending is a direct result of our Treasury Secretary’s trip to China. Invoking 2007 Democratic rhetoric “Spend What You Have” the administration is doing an about face as the world is threatening to bring our wild spending to a halt. This quick turnaround is on the heels of our leaders having to go pander to China to get permission to issue new debt and print more currency. We haven’t received the official politically correct download yet and won’t get the detailed version anyway but China and the rest of the world is FED up. We just got spanked!

Like Great Britain that couldn’t sell its bond to fund its debt at an attractive price – the US is heading right down that path. In fact, the major rating agencies are already preparing to downgrade the British Credit worthiness if they don’t clean up their act. Do we really believe this won’t happen to us? How much leverage does the world have over the US? Obviously a tremendous amount.

Now the spin is to make sure we don’t spend what we don’t have all of a sudden. With a Trillion dollar health care overhaul in Senate and projected $9 trillion dollar debt increase in the next decade (of course this will be higher) how can the DC elite keep running the nation into the ground. Political promises and emptiness to get elected and then borrow huge sums of money to make them happen is lunacy. Warren Buffet, Pete Peterson, Ross Perot – hey even Billy G – have stood up nationally and keep warning us about the grave nature of our National Debt.

Now our President has to listen to our Chinese parents that clearly have massive influence over the US. We got spanked for being bad children of the world. It is clearly because of our debt and need to borrow and spend trillions that we are fast becoming a second rate power in the world.

If You Own GM Stock - You Have Worthless Papers

Obama calls it sacrifice – I call it being wiped out

Economic Rape!

Wiped out. All your GM stock whether you are a private citizen, an institutional investor, an autoworker or anyone that invested in GM you have lost all your money. If you think the portfolio of other stocks you own won’t be affected even worse than it already is think again. Yes the stock market is up – but it goes up and down every day. Yes the general economy needed an unprecedented government intervention. But at what cost to the American Company itself? We are not investing in these companies – we are borrowing money from the world to invest and loan this money. So we shore up the balance sheets of all these companies while our balance sheet is so upside down we are essentially getting a bailout from the rest of the world. Do you think Clinton and Geithner going to China is a coincidence?

Fiat is swooping in on Chrysler. A surgical bankruptcy? Selling GM assets to Germany. The government getting 60 percent of GM. Come on now. Who is buying cars? Can your listeners afford to run out and get a new car? Will consumers buy “Green” cars that will eventually be built in America or will they shift heavily into foreign cars – more than they are already? Will they accept a tax credit of more borrowed money to trade in their cars for a more fuel efficient car? America making more promises to now support warranties on cars – like the $5 trillion in government guarantees to Freddie and Fanny. The real question is can America stay in business itself? Do you believe the US can keep borrowing and spending money? I bet if polled overwhelmingly Americans would say absolutely not. But as you know we the people as we are called have no say in any of this.

It is not about the government owning all these companies. It is about you losing all your investments in those companies. It is even more so that the governments of the world own the US and therefore those companies and you and me as a result. This will continue to cascade industry by industry. I have been saying for a year that America is a consumption economy that is devastated therefore everything – up and down the food chain – is also and will be devastated ongoing. This is not over by a long shot. And the GM, Chrysler, AIG, on and on supplemented by all the horrifying policies, business operations and the economic rape of us as Americans is at best much much worse than horrifying.

Geithner Panders to Chinese on the Heels of Clinton

US is begging to Borrow Money for GM Bailout and More

Timothy Geithner is making an unprecedented trip to China to reassure them that the US remains a good investment. On the heels of Hilary Clinton’s trip the US goes hat in hand to make sure it can keep borrowing money to spend on bailouts, big government and failed Federal systems and polices. It is obvious the US has become a bad investment and our new stock broker – the government – is borrowing trillions to turn around and make loans and investment on our behalf. That is called buying stock and debt on margin. This is the fundamental issue that caused the stock market to crash leading to the Great Depression. If you do not believe this is national security issue, a catastrophe that is happening now all of us are gravely mistaken.

I have said the world is losing confidence in the US ability to support its borrowing and spending and its Treasury instruments and currency. This couldn’t be more evident by our need to go to our Chinese parents to ask for more. It is like Oliver with a money bowl in hand asking for more money. If we don’t continue to borrow more money from the world the US will come to a screeching halt. I can’t imagine the world will continue to allow the US to borrow and spend for everything Obama and other administrations have had their hand out for. It is all coming home to roost now and I believe strongly our entire culture is in jeopardy.

Think about this. We would need $40+ trillion in the bank today to fund Federal programs like Social Security. These programs own a huge percentage of national debt and make Madoff look like a petty criminal. Taking money from the systems we all pay into to spend like wild drunk sailors is by itself criminal at best. Expanding government and investing money for you and me in failed companies and systems has forced us all into a corner and we have no say into how the government is bankrupting itself and us. The financial bailout on one hand was necessary to avoid the collapse of our financial markets. The perpetual bail out of industry after industry and company after company is another issue. I said GM would go bankrupt a while ago and here we are. Do we all think that is a good investment to make? Would you invest in GM? Would you invest in the US? Our US company is so wrecked that I do not believe the capitalist system will survive itself.

Approaching $12 trillion in debt and adding on a deficit of over $1.3 trillion more – that has to be made up by more borrowing – will bring our downfall as this is sure to continue and continue in DC. When is enough – enough? Well it is right now or our officials wouldn’t have to go to China to beg for more money. How we got ourselves into this catastrophe doesn’t matter anymore. What does matter is how in our lifetime we will ever possibly get ourselves out of it. Frankly I don’t see any way the US can possibly avoid being cut off from the world and I see no policies or behavior in DC that will stop that. The banks were cut off from rolling over debt and here the government is caught the same way. If we cannot keep borrowing from the rest of the world what do you think is going to happen? Do you think the stock market will remain stable? Do you really think our government can continue to even operate? Unless radical and aggressive plans are enacted immediately this country, our industries and our way of life will be driven into the ground as we already sit in an economic coffin.