Monday, June 11, 2012

Contraction:Them=Stimulus, Me=Tariffs...L&C

The pundits are getting fidgety in their chairs on TV. The reasons are multiplying. One, the volume on the Big Board is stronger on the down days and weaker on the up days. Two, the global community isn't helping either when for instance, the Euro members reveal one financial crisis after another as they play musical chairs with the winner getting a chance to play Russian roulette with a loaded gun. On the other side of the world, Premier Wen of China is worried. He is cutting interest rates and putting up some stimulus. Australia joined with an interest rate cut. India is the first BRIC nation to face a ratings downgrade and of course, the granddaddy of them all, the Fed, is on watch with everyone guessing about QE3.
History Does Repeat
Whenever there has been an economic slowdown since WWII, the Fed has pumped money out of thin air and our government assists by launching various stimulus spending programs from transportation, construction, infrastructure or tax benefits.. In fact, I could argue that we no longer have a free capitalist economy, but a socialist government sponsored interventionists economy. The financial crisis of 2008 revealed once again the main reason that the Fed exists, to aid the banking industry. It wasn't the first or will it be the last time unless we terminate it. Whether you are a small business owner or investor one must be aware of how Wall Street interacts with the market, the Fed, Global Central Bankers, Energy Cartel, the Media's psych spin or Government regulations affect on things. These factors more or less have been in play for the past 60 years. No matter how you are introduced to the people "in know" their creative idea is this: more debt is the solution to debt problems. Today for instance, we have people like Peter Orszag, you know, the ex-CBO who spoke out about the dangers from the deficit. Well, his true colors came out last week when he said a little more stimulus won't hurt. We can worry about the budget later. How about Clive Cook, the Simpson-Bowles advocate. He now wants some stimulus. Of course, you can pick and choose your favorite Keynes economic analyst like Paul Krugman who continually complains that the first stimulus was not enough and we need more. Like I said, tt is always more with these people. Spain just received $125 billion more to cover their asses which makes me ask this. If you cannot pay your debts with your present revenues, how can doubling down on your debt solve your problem? It can't. Look at our history. We added a growing total of $16 trillion of known debt with another $70 trillion in unfunded debt. In reading this we grew another billion give-or-take.
 LBJ began the mess with tax and spend with his Great Society. We doubled down with Reagan, later with Bush and yet again, with Obama without ever addressing the cause. These ideas are like a drug addict. The shot relieves but, the relief gets shorter and shorter and more and more chemical is needed to obtain relief. There is also the problem with capitalism that it demands new to replace the old.
Albums, VCR, Typewriter
and you can think of many more. According to IDIS World there are 200 industries in decline in the US, but not all of them are due to innovation. Textile Mills are down 50% and China benefits. They control one-third of the world production with cheap labor and government subsidies. Record stores are in ICU for obvious reasons, but Mobile Homes dealers are dying too. Facing cheap paper and rising costs, they are down 73% in the last ten years. The Internet is killing newspaper circulation, but don't overlook the fact that people cut out buying the daily newspaper just to save, especially when gas prices rise.
are coming and even in places that use to be full proof like health care, police and administrative support. Peter Schott and Ben Polak, both Yale economic professors, blame the slowness of the latest recovery on government cutbacks. I have a different view and I am from a small New York college in Dobbs Ferry.
Felix Zulauf
a market legend agrees with me that all of the above ideas are failed exercises and only by fixing the core problem will generate a solution. We probably differ with the core choice.
and only tariffs will solve our problem. What about retaliation? We export what they need and it is less than 14%. Protect the 86%. They need us. We don't need them. We only need to import oil and coffee and fairly soon we won't need to import oil. (Yea!) A by-product of tariffs is a lower deficit.(Double yea!!)  By the way the world uses them to the max along with currency manipulation. The average tariff on American products in China is 25%. A Jeep cost over $100K. Can you imagine? They ban certain products. You cannot buy a Harley there or a Bud anywhere in Germany. A pink grapefruit cost $8 in Japan and the list goes on-and-on. There is no such thing as free trade. The only way to protect our jobs, economy and way of life is to put tariffs on imports so that we stand a fair chance to compete or we will all be in the ICU as well as the present 200 industries.
LIARS and CROOKS: Repeat Winner! President Obama because he found out about two programs that President Bush hid from everyone. The drones began with Bush and Obama doubled their budget. The other begins a new terror for all of us with the "Olympic Games." This is cyber warfare. The CIA, NSA or some Pentagon agency started a virus to attack Iran and their nuclear program to slow it down. This escalation will only come back to make us all suffer as our airlines, utilities and other outlets will be hacked and or contaminated with viruses. This is very bad and like the advent of the A-Bomb puts us all in danger.