Tuesday, October 06, 2009
A small business decides not to expand because of legislative and regulatory uncertainty. I found this post via a Facebook status that generalized the experience to the broader economy:
Unfortunately, I've heard this from virtually every company I've interviewed this year. Congress has simply scared the crap out of them. The big ones are lobbying to preserve what they've got and the small ones are hunkering down like a tornado is coming.
Economic paralysis. That is what comes from proposing to restructure and regulate 39% of GDP from the top down.
Remember the Dow was actually over 13000 in July of 2008. When people realized Obama could/would be President, and how Business unfriendly this guy is, they pulled in their horns. No sane business person will make a long term plan with Obama induced uncertainty and redistribution.
Obama turned what could have been a severe correction into a freefall. There was no bottom because nobody had confidence in the face of the least vetted President of all time.
Even now, people are holding back due to Obama, who seems to want to penalize success. So he is prolonging the recession. If you want to start the recovery, have Obama stop the foolshness and let people know where he truly stands so business people can plan and commit
Obama's first big act in office was Stimulus. Stimulus turned out to mostly be a bailout of state government, funding for pet Democratic projects and miscellaneous payoffs. Little of it hit in 2009. It's weighted to 2010, so it looks like Sugar Rush for the midterm elections. In Rahm's words ... "never waste a crisis."
To me, this confirmed what Obama is really about. Later big initiatives like Energy and Healthcare show an amazing disconnect between their professed goals and their actual detail. Who'd hire or expand in this environment?
So we're stuck with high unemployment and low or no growth. It's worse if you're in the private sector, or young.
There's a long article in the current New Yorker -- "Inside the Crisis" -- that gives no insight into what went on. MSM sucks.
Just got off the phone with a buddy of mine, a mid-level exec in a major international conglomerate based in the U.S. They are actively disinvesting out of the U.S. and are reorienting all processes in their company away from the U.S. and toward growing economies, particularly the BRIC countries. While the company will grow significantly next year, U.S. operations will shrink significantly.
Will Democrats ever get it??
I am reading The Forgotten Man for a second time. It is obvious to me that Obama is trying to copy FDR. The parallels between what FDR did and tried to do and what Obama is doing are incredible, down to some pretty small details. The point Obama clearly did not get was that the only reason FDR left with a positive image was his management of WWII, something he was good at. By the late 1930's the US was onto his game and realized they had been sold a bad bill of goods.
Of course multi-nationals are leaving. The dollar has depreciated enormously over the last four years, and devaluation has accelerated in the last six months to a rout.
Owning dollar assets right now means you have to earn roughly 20% this year just to stand still. Foreign manufacturers are leaving, as is finance. But the real risk is in energy. Eventually, oil exporters will no longer be willing to take it in the neck like they are, and they will switch currencies.
When that happens, unspent dollars currently used to fund oil trading will come home. Unless those dollars are sucked out of the economy efficiently, inflation will roar.
We are in very deep trouble. Without oil drilling and spending cuts in government, we are sunk. Oddly, the Democrats are committed life and soul to the only two policies that can save our country. Bizarre.
"Oddly, the Democrats are committed life and soul to the only two policies that can save our country."Sorry- poor editing (or, really, none at all). I meant the Dems are committed life and soul to fighting against the only two policies that can save our country.
So far this feels like we're in a repeat of the 1970s. But we're making bad choices that could make it worse still.
Energy. We're terribly dependent on foreign oil, at least in the near-term. Even more so than in the 1970s. But we have a House-approved Energy bill that would only make us more vulnerable. We haven't had a Mideast disruption yet, but it's not out of the question. It'd be catastrophic, were it to happen. We should be drilling for oil like mad and fast tracking 200 nuclear plants.
Finances. The 1970s were a mess. We're not that bad yet ... but we will be. I can't see how we're not stagnant for at least several years. At every level we're still over extended with debt -- government most of all. In this respect we're potentially worse off than the 1970s. If we have no growth, our fiscal numbers will blow up even faster than current projections. We already have projected deficits that are unsustainable. It's the elephant in the room. I'm not a deficit hawk ... we could bear $200 billion to $300 billion per year -- but how do we sustain the official projections of $800 billion deficits to the end of time. Actual numbers will be worse, as growth stalls. Many of our states are already broke -- but got a 2-year reprieve from Stimulus. Inflation / deflation ... who knows? We could have an odd combination of both.
Federal tax receipts have been 18-19% of GDP for the last 50 years, no matter the particular tax regime in place at the time. This is a remarkable fact ... almost a law of nature. It's telling us what we have to manage our federal budget to this level ... unless we want to tear up the Constitution completely and give up on being a free country. We have too many shitheads in this country who think that "money is all ours, collectively" -- that the economic pizza pie just gets magically delivered to our door each day. It doesn't work that way. When you stop paying the delivery boy, he'll stop coming. Unless you order him to do so with threat of force ... but that's a different way to run things than we're used to.
Politics. Circumstances in the 1960s into the 1970s gave us divisive politics ... but the quality of our politicians was actually quite high. People like Humphrey, McGovern, Nixon and Ford were all actually great men. The politicians we have today mostly suck. Blame the parties ... both of them. Gerrymandering is a root cause of this. A lot of it is because of a Washington, DC based political-media-lobbying-consulting class is taking advantage of us.
Media. MSM is totally corrupted, as I've ranted about here at length. Axelrod is a latter-day Goebbels. If you think I'm paranoid on this, then why did Axelrod have a recent secret meeting with the head of FOX -- Roger Ailes ... why did GE CEO have a secret dinner with his network heads months ago.
I believe that things are so bad, it's actually good. We've been through worse as a nation. At the moment, this is all solvable.
THe first thing is take back the House in 2010 and throw Nancy and Barney out of their chairs.