The World Catches Up To The Bush League Economy

The Bush League Economy

Look, let me be clear here when discussing Bush- if I met him at a party, chances are I would like him. I don't believe he is an evil or bad person, but as a leader, he was an absolute failure ....

America already had a big deficit prior to Bush, but with with the help of a catalyst named Osama Bin Laden, El Presidente implemented ruinous policies to American might and economic well being.

9/11, courtesy of Osama. Damage to American economy- trillions. Not only the immediate obliteration of the Trade Centers, planes, lives lost, etc. but the added mega-billions of dollars a year we spend on Homeland Security, time lost at airports, and the action we had to take in invading Afghanistan.

Sadly, W uses "terror" as an excuse to invade Iraq and depose Sadaam Hussein. Who benefited? The military industrial complex, big oil, Al Quaeda (til the Muslim world soured on their continued unjustifiable violence) and the Shiites now in control of Iraq; at the expense of-- bolstering Iran and their search for a nuclear "deterrent," thousands of brave American soldiers lives, not to mention tens of thousand more innocent Iraqis, and over a TRILLION dollars of borrowed money for the American taxpayer.

Bush used the military might of the United States like a teenager at the mall with an American Express Black Card, and paid for it with such. For politicians to have voted to go to war with Iraq and not find a way pay for it, and then holler today about balancing the budget and say that we cannot afford health care or college scholarships is hypocrisy on the Highest level. Should these people be shot? Well, only where it wouldn't do much damage: the head.

Look, I am not meaning to get political here. This is a financial column. But it is important to understand some of the background ... let me summarize the Bush years economically and end the political rhetoric ...

Spend, spend spend spend. On everything. Don't pay for it at all, put the wars on a credit card instead, lower taxes for the wealthiest in the process. Balloon the deficit til we rapidly approach the debt ceiling.
Overdose on Ayn Rand. Laisse Faire politics- allow the housing bubble where people took out home equity lines on the appreciating value of their homes to keep up with Joneses so they could buy, buy, buy- from jet skis to big SUV's as if their house will appreciate 25% a year for the rest of eternity. The banks still take their commission.
Lessen restrictions on lending. Hey, go ahead Bank Of America, lend out a half million dollars to a truck driver who makes thirty thousand dollars a year (not enough to pay for the interest even) if by some MIRACLE he wins the lottery and pays up great, if not, you still pocketed your mortgage commission and the tax payer can bail out your "too big to fail banks."
Turn the financial markets into a giant casino, where you can leverage yourself (betting more money than you have) trying to make the huge score, and if you lose, oh well, those hundreds of millions of dollars you lost are someone elses problem, be it the stockholders or, is there a recurring theme here, the American taxpayer.

So, predictably, everything implodes, except now the US Government and the Federal Reserve come to the rescue, via quantitative easing. Look, when you see stocks trading as they were in March 2009 at such low multiples there are buys out there based strictly on valuation, but when the Fed prints money, increasing the money supply, creating inflation, which also lifts the numerical "value" of stocks, artificially keeping the market afloat, this does nothing to the real value of stocks other than reducing their debt levels by inflating money away. Debtors win, savers and lenders lose ...
In reality, the Fed printing money is an added tax on the hard working American who saves a percentage of their income every month so they can pay ever rising college tuition for their children, while we bail out big investment banks who bet billions of dollars they didn't have and lost. (seem fair?)
And guess who is the biggest borrower in the world? The US Government/Taxpayer. You think we MIGHT we see another round of quantitative easing to "get us out of this mess/US sovereign debt" make the public feel better that their numerical asset value might not go down as much, but the real value of their holdings almost certainly will, one way or another.

The Rest of The World

As I reported, China holds two trillion dollars plus of our debt. They already warned us after the near default that the days of easy lending are over.
And in terms of our competitive edge. The brain drain river that swept notable minds to American shores which I discussed in part 1 of this article, while it still exists, is a trickle of its former self. Both post 9/11 immigration laws in addition to the fact that the situations, political stability, and economic outlook in other countries is improving, decentivizing many brains to move to the USA.

Additionally there are whole new labor markets out there that will work for far less than the average American worker. All other things being equal, a company based solely here in the United States cannot sell the same product, say a car, when overseas labor is willing to work for 1/4 of the price of the average American.
Do you understand how hard the average Ukrainian works for $500 a month?? If you make $1,500 a month you are upper middle class there. Are they not entitled to the same opportunities as Americans? Are they not born of the same energy, do they not have the same potential?
There is no social safety net in the Ukraine. You work or you don't eat. It's that simple. And work hard they do.
Yet here in America, we feel entitled. because every one else has an SUV, a big house, we feel that we deserve/must have one. Go ahead, buy it on credit. Oh wait, someone in Vietnam is willing to do your job cheaper than you. Pink slip? Sucks, but now you're a slave to paying off the interest, on whatever you scrounge up in terms of employment.
Americans are physically the fattest people on earth. Is this reflective of our current national mindset? You can't compete fat and lazy, you're going to get pummelled. The truth is, eventually the rest of the world was going to catch up. They are.

Unless we have marked increases in productivity/ new technologies like the Internet of the late 90's which is what CREATES REAL WEALTH, the majority of capital flowing into countries like the Ukraine, Vietnam, and Indonesia, is going to come out of the pockets of the developed world, namely the United States.
The average unskilled worker in the US is not in the same enviable position he was twenty years ago.

Worse yet, so many more PHD's and mathematical minds are going into the finance field, which creates next to no real value, rather applying their brains to engineering, robotics, material science, etc.
Too many people are looking for the big score, to become wealthy for doing nothing, in a zero sum game, rather than CREATE something useful and new. Which, as I state over and over again, is what builds real wealth.
Okay, enough already. here is the bottom line-
The Bottom Line
We are going to have a market correction. I have been calling for this since before the US Debt Debacle. We need to get government spending in check, and start producing something of value. Google, Apple, Caterpillar, all produce something, and do it very well. Goldman Sachs masters of finance that help set up the casino of the stock market rather than the market being there so that companies have access to capital needed to grow- fuck 'em.

America is going to get its comeuppance. It's just gotta happen. We cannot have this level debt, excessive spending, not enough revenue coming in, with fixed low interest rates the Fed recently announced desentivizing anyone with a brain to lend the government money cause its likely going to be inflated away anyways.

Companies that will do okay, won't go down as much as the rest if you call that "okay" -- multi-national conglomerates- Proctor and Gamble, Johnson + Johnson, Coca Cola, etc.
Companies to buy as they sink lower-- Google, Apple (in fact I repurchased Google recently after selling it much higher prior to debt debacle)
Companies to avoid-- any company dealing only in the US Market, anything tied to the dollar (which will decrease in value)

Look for Dow sub 10,000.
 Lastly, I wanted to address the Vladamir Putin who stated the following about America: "The US is living beyond its means and shifting a part of the weight of their problems to the world economy. They are living like parasites off the global economy and their monopoly of the dollar."

My rebuttal: Hey, aren't you worth 40 billion dollars without creating Anything? Just found the money on the street huh? Oh, whats that you say, you stole it from your own people?? Who's the parasite? Hey Vladamir! Vlad Vlad wait come back. I want to see if you can answer the following quiz question:

Test Question for Vladamir The Russian family of the local village idiot has taken out a HUGE life insurance policy on him. Which job should they encourage him to take?
A: Black mamba handler
B. Crocodile cuddler
C. Bloody water great white shark hand feeder
D. Russian investigate journalist
Answer: While any of these jobs is an excellent choice, the only one with a 100% certainty of death is D: Russian investigative journalist


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