The president has committed $100 billion in new money to the nation’s public school systems, and required that states accepting the funds promise not to reduce their own k-12 spending. The official argument for this measure is that higher school spending will accelerate U.S. economic growth. But a July 2008 study in the Journal of Policy Sciences finds that, to the authors’ own surprise, higher spending on public schooling is associated with lower subsequent economic growth. Spending more on public schools hurts the U.S. economy.

Ouch! Pretty painful stuff there.  It seems it’s not all about school but more about achievement (something our schooling systems are doing less and less of). Read it all here!  Obama has to be the biggest pork barrel spending, lobby loving, irresonsible, wasteful spender of all time!

Personally I fear it may be worse then sluggish.

Not only are there issues with “failing” banks some of which like AIG that should have already failed but weren’t allowed to and still need to fail (only now fail with taxpayer dollars). There is this issue regarding the commercial retail market that is in the midst of serious deterioration. And also there is the bubble in treasuries which Buffet has been warning about created by our government. Then on top of that there is the mortgage backed securities market which is up over 40% while at the same time defaults are approaching 10%. This is a government created bubble still being pushed by Frannie and Freddie.

Add to this “sluggish” economic recovery a monstrous health care spending and taxes coupled with energy taxes and control under the guises of health care reform and cap-n-trade and “our economy being sluggish” may be quite an understated.

Take a minute to watch this short little video I posted previously and perhaps you’ll get an idea of the size of this problem that Obama giggled about in his interview.

Retail sales in the U.S. unexpectedly dropped in April for a second month, indicating that rising unemployment is prompting consumers to boost their savings.

The 0.4 percent decrease followed a revised 1.3 percent drop in March that was larger than previously estimated, the Commerce Department said today in Washington. Excluding auto dealers, sales fell 0.5 percent.

Fewer jobs, falling home values and the biggest loss of household wealth on record may limit consumers’ ability to spend for years, analysts said. As long as the biggest part of the economy is constrained, any recovery from the worst recession in at least half a century is likely to be subdued.

Things are bad but there are signs of a recovery due to the government pushing massive taxpayer dollars into this giant bucket.  Unfortunately, spending is not what needs to happen.  Savings is what needs to happen? What is the U.S. citizens savings rate? How much debt does the average citizen, business, or government carry?  Unfortunately the government doesn’t want citizens to save money and be self reliant.  As Obama looks into raising taxes on capital gains this surely hurts savings rate.  Additionally, programs such as social security deincentivize savings rates as well as that money is taxed, the tax payer then depends on seeing the money again, without realizing they are actually not going to get back as much as they put in (if they get anything at all) creating a fake sense of “social security”.  

In general an income tax is an anti-savings tax because the goal of savings and planning for the future is to create an income for ones self.  The higher an income tax is for those that earn enough to actually owe income tax the less motivation their is to save.  The less motivation to save the less investment and loan reserves their naturally are to conduct investments and HEALTHY lending.    The only true way to a TRUE recovery is a massive change in our tax code to tax spending and not income.  This way those that spend money on non-neccessities such as nice cars, restaurant food, expensive toys, electronics, big homes, etc get taxed more while those struggling to save don’t get taxed and are encouraged to develop self reliance.  Until debt is paid down and healthy savings rates are established it isn’t a recovery but a proping up of a system based on reckless over leveraging, ill conceived and power hungry motives.   So, to me this is good news that consumers aren’t spending.  They shouldn’t be spending they should be cutting back, downsizing their homes and working harder to create value in their workplaces.  The same with Companies.  As a Chief Financial Officer we’re doing the right thing, as best as is possible, downsizing, increasing savings, paying off all debt, shoring up our banking relationships, and establishing new lines of credit for future unpredictability.  This also goes without saying for the government as well.   Unfortunately, this isn’t happening for them.

When the “recovery” get’s here that is when things will get dangerous.  Out of sight out of mind, will spending sky rocket, will savings decline again, etc.?  For me a “recovery” will be truly bad news and freedom will be in further danger.  Meanwhile, it’s good to hear the good news that spending is down!

I believe we will have a slight recovery perhaps late 2009 or early 2010.  However, baby boomers are begining to retire which will strain the economy substantially of this once great nation.   This will create room in employement but only slowly (65 year old engineer can’t be replaced by a 25 year old straight out of college) but in the interm earnings may come back to Wall Street as companies rightsize (downsize or whatever).   However,  I doubt hiring will come back nearly as quickly as I’d hope and often not at all as companies focus on increasing efficiency first.

So, unemployeement will remain high for some time.  Even if you trend out the slowness of the decline in job cuts it will take literally months for this number to flat line and probably years for it to stabalize.  Meanwhile, the government is propping up an already over leveraged society.  This is why we’re  experiencing deflation now capitalism is trying to deflate the over leveraged nature of the economy.    The government is trying to halt deflation.  They are saying capitalism is dead before they even let capitalism do what it is meant to do and deflate when a bubble has gotten to big.  This is a very dangerous policy as capitalism opperates based on human and social nature.  The government has said that what man/nature naturally does is dead and they are stepping in as the State to do what nature shouldn’t be allowed to do (deflate an over inflated bubble).   So instead of letting natural capitalism work and an overleveraged society (business, government, and persons) deflate the government is trying to get an already over spent society to spend. 

Unfortunately we may start spending again.   As we get use to the following three key things:

• The bad news
• Realize unemployment has slowed
• Realize those of us that haven’t lost our jobs are probably ok 

Then we will start to leverage up again.  When this happens WATCH OUT because the foundation has been laid for big time inflation.  Now, the inflation can’t come until the deflation stops and the deflation can’t stop until jobs stabalize  late 2009/2010 (my prediction).  When this happens we will still be at high unemployement with stagnated ecomony.  Inflation is going to hurt bad if it comes in late 2010 and then by 2011 we’ll be hit with another serious depression VERY serious in my estimation.  This is my prediction and there are others out their that I’ve read have made the same prediction so I feel I’m in good company. 

With a government that is already MASSIVELY over leveraged and and is printing money like crazy we might have some serious troubles.  This will be more likely the real financial armageddon.   Further it will be spured as baby boomers continue to massivley pull their money out of the stock market and place it in treasuries and other more secure places.   What is worse is that this does not bode well for liberty and freedom.  Pain and fear will continue to spur the oppressive regimes alreay strongly supporting our government. 

But there are even more concerns.

In recent months, senior Chinese officials have expressed concern that the U.S. financial crisis and efforts by policymakers to lower lending rates by flooding the system with cash would impair the value of its massive U.S. bond holdings.  ~MarketWatch

As people move to treasuries a strong bubble is taking place here.  Something that concerns China as our largest debt holder.  It is something that should concern us here too and baby boomers that move their monies here as well.   Without our ability to take out treasuries the government will be forced into a true monetary crisis due to the serious nature of our now HUGE need for debt to fund this government and the current State power grab.  This is part of the move why so many liberals strongly support the oppression and slavery of the successful working business class with taxes.  If they can enslave us like the Jew or Black man in the past these liberals like Obama will have somebody they can tax to force the stablization of the government.  This is when I fear that revolution will become dangerous.  An indicator of what is taking place is well documented in most financial media today.

Having cut their key rates to close to zero, the Bank of England, U.S. Federal Reserve and Bank of Japan are now buying bonds, essentially printing money to reflate their economies in a policy known as quantitative easing.

“It is clear now that the ECB has set its sights on boosting inflation,” said Brian Kelly, chief executive officer of Kanundrum Research, a commodities and macroeconomic research firm.

“The worry in the market is that central bank tools are notoriously blunt instruments,” he added. “The central banks are trying to write a book with a can of spray paint. Investors are flocking to the soundness of gold in anticipation of a messy manuscript.”

Gold is seen as the ultimate protection against inflation and a better store of wealth than paper money. ~MarketWatch

The rapid expansion of gold prices over the years and recently is an indicator of this.  The fact that gold prices have remained high in a deflationary cycle is a further indicator of the EXTREME level of expectation for inflation and economic difficulty.  Even when the mainstream media continues to be largely bullish dont be fooled.  Fact is bad news sells when it’s not about you but when it’s about the stockmarket that effects EVERYBODY it doesn’t sell.  It’s sort of a strange corallary.  Everybody likes to watch a car crash unless it is a car crashing into you or your car.

What is of big concern to me is the position our federal government is putting us in as they begin to strengthen and shore up the oppression of the successful business class of our society while they make fascist moves to control segments of our society.  Jean-Baptiste say coined the phrase “supply creates demand”.

Unfortunately this phrase is very misinterpreted. Say is not telling us that when you supply something that demand will arise and consume it. In the case of exploding toilet paper, what demand will exist? There will be none. What Say is telling us is that if you supply something, you now become a demander of all other products in an economy. Say is telling us that our consumption comes from our production; our ability to demand comes from our ability to supply. This phrase outlines the very fundamental nature of trade.

via “Long-Term Bear Markets, Say’s Law, and the Bailout Frenzy” by Travis Steward, FSU Editorial 05/01/2009.

Supply occurs when members of society produce something of value.   Because to produce something of VALUE (that being the key word) they demand other goods.  As the government takes over banks, autos, health care, energy and now disgustingly credit cards and says what society will create they risk forcing us to create something of lesser value or no value (when it’s government beaurcratic paperwork or tax paperwork).  For example, I surely wouldn’t buy a Fiat.  Or they will force loans to be made that don’t have value because of the customers inability to pay.  They’ll push green energy policies that create further bubbles like in Spain.  It is a dangerous path to walk down.  Not only is it dangerous they’re doing it in a dangerous method with absolutely grotesque spending. 

Meanwhile the government is stress test testing our banks which I wrote about previously.   We’ve already suffered a collapse nearly as bad as the Great Depression and the government is testing our banks to see how much worse they can handle.  Nearly half the banks faild this test and most raise further capital which is another way of saying sell their debt and convert it to equity.   Who is holding these big banks debt? The government.  Now the government get’s more stock in the bank as their debt is converted into equity (covert nationalization).    What ELSE does that mean?  Half the banks will fail if things get worse!  But think about what I documented about the stress tests.   They used a 25 to 1 stress liquidity ratio.  During the Great Depression the ratio was more like 12 to 1 and I think things could get worse this time around maybe even 8 or 6 to 1.    Therefore, they made the test twice as easy as the most severe situation in our history which we’ve almost already nearly repeated and are now struggling to recover from.  If inflation comes, if the job market hasn’t recovered, if treasury bubble burst (no more debt), who will bail out the still overleveraged banks, business and individuals of course nobody.  Then who will pay taxes, who will bailout a government with a popped treasury market?  However, not only will nobody be able to be bailed out when the treasury bubble bursts the government will need to be bailed out.   This will be done through further oppression then the current oppressive policies Obama is now taking.

With regard to the way the tax burden is distributed across income cohorts, it is increasingly concentrated on upper-income taxpayers. Federal statistics show that the top-earning 25 percent of income taxpayers paid 73 percent of all federal income taxes in 1980. By 1988, that percentage had increased to nearly 78 percent. By 2000, after the Clinton tax hike, it hit 84 percent. And by 2006, the last year for which the data has been compiled, the top 25 percent of income taxpayers shouldered just over 86 percent of the federal income tax burden.

And Obama doesn’t plan to ease that burden—or so one might infer from the next $1.4 trillion over 10 years tax increase that was included as part of the budget he sent to Capitol Hill. To put it another way, the Obama budget included $3.61 in tax increases for every dollar of so-called tax cuts.  ~ US News

• Spend trillions (9.3 trillion and counting)
• Expand TARP
• Continue Bush’s spending programs
• Lead a pork laden government program and spending bill and call it a Economic Recovery Bill
• Spend more money in the standard OMB spending bill
• Raise taxes on American’s (But lie and say, “They were tax cuts.”)
• Show America’s fealty to a Muslim king
• Act weak on Korea’s missile program
• Join the Hugo Chavez book club
• Apologize to Europe for America’s bad behavior while failing to get European support for Afghanistan
• Call succesful people lucky
• Have horrible troubles getting a cabinet with resignations and the such
• Give bad gifts to foreign dignitaries
• Appoint an idiot Treasury Secretary who is in fact a documented tax cheat
• Pretend that capitalism is to blame for the economic bubble instead of saying it like it is; when it is human greed and government incentive
• Snub his nose at our top allies
• Allow the Department of Homeland Security to label Right-Wing people and vets as potential violent terrorist that should be monitored
• Fire CEO’s in private corporations in line with Fascist economic principles
• Attempt to overload the US & Russian relationship
• Promote abortion globally by using tax dollars to expand abortion in the US and internationally
• Release CIA and military interrogation methods further empowering our enemies
• Bailout poorly run states and locals
• Pretend that our interrogations methods are torture
• Sign blatently Unconstitutional bills of attainder
• Pretend that torture is always wrong
• Slow down military spending
• Act like he is going to prosecute those that ok’d approved torture methods to politicize our military and intelligence gathering industrial complex
• Allow the military to shoot a few pirates
• Spend more money funding illegal immigrants and call it economic stimulus

Well, his first 100 days are now behind us.  What lays in store? More spending, more tax increases, more bad leadership, more erosion of American strength, etc. 

He will also continue to talk and talk, while lying through his teeth, (with the aid of his teleprompter) knowing that the majority of American’s will get their news in sound blurbs and never take the time, like I have, to look at his policies.  Therefore, his approval rate will remain high as we head down this wide path and through the wide gate.  What of Obama’s policies do you like? Which ones do you dislike?  Anything to add?

This is what you voted for it’s time to own it!  You may like these policies or you may dislike these policies; but we as a nation have to own them.

“Uncertainty about the value of legacy assets is constraining the ability of financial institutions to raise private capital,” he said, adding that he hoped a public-private investment program will improve the ability to put a price on troubled mortgage and other assets.

PPIP has been so successful. I guess if you keep banging your head against a wall the thing to do is keep banging your head against the wall eventually it will get numb and all your problems will be solved. To Geithner the fool and tax cheat this logic makes sense.

No crisis like this has a simple or single cause, but countries around the world, borrowed too much and allowed the financial system to take on irresponsible levels of risk, Geithner said in his opening statement.

And to the Mr. Geithner, the fool and the cheat, the answer is to go further into debt.  Well tax cheats, government officials, liberals, and fools all think alike.  No wonder this idiot thinks it’s hard to set these prices on these TARP assets.  Oh, and don’t forget they’re supposed to sell back these assets (that they can’t value) once the market returns – dumb, dumb and dumber.

But wait… It’s ok after all the TARP money is already being “lost” by the hundreds of millions.  And is completely lopsided towards the Wall Street elite and against the US taxpayers.   But what would you expect from fools and liars like Obama and Geithner after all isn’t it Obama that thinks tax cuts are welfare checks.  I guess losing money is getting money.

Of course liberal’s have no arguments against this.  So the mainstream media remains quiet about these going on and ignores the tea bag  protests.  After all one can’t defend stupidity with logic.

Remember Democrats AND Republicans are doing this in DC. This is truly bipartisan action in Washington DC.