While the two are literally a world apart, Greece and a homeowner in Youngstown Ohio have something in common. They are both so indebted and under collateralized that they have no hope of repaying. The difference is that the homeowner in Ohio and their bank have accepted reality - that default was inevitable - and the Europeans are about to.
The ECD and IMF and European banks are still trying to modify Greece. The Ohio homeowner is past that! The creditor in the case of the Ohio homeowner tried modifications too, but in the final analysis there was no way to achieve any viable situation without massive debt forgiveness. Due to the complicated legal structure of the loan and all the interested parties upstream, as well as the ramifications such a policy action would have on other loans, a straight write-down of the balance was not possible. In the end for the homeowner, foreclosure was the only option.
In effect, the foreclosure results in a write-down for the bank anyway. But where does that leave the homeowner? Better off!! The homeowners credit may be ruined, but by the time of the foreclosure their credit was destroyed already anyway. At least after the foreclosure the homeowner is off the hook for the mortgage note. They are effectively released from their indebtedness and free to start life over financially. And, they can go rent or purchase a different house for a lot less than they were on the hook for before. On the other hand, the bank and whatever investor that owned or insured the loan is left with the loss. Repeat this scenario enough times and you've got the mortgage crisis which ultimately grew so vast that it morphed into the financial crisis of 2008 the fall of Lehman, Fannie & Freddie, AIG, and others.
But what about Greece - who's better off when Greece realizes that there is no hope of repaying their debt and just defaults? What happens when mass opinion in Greece is that the stresses of continuing the struggle to pay its debt is simply not worth it to them! Like the homeowner who realized that it was better to accept a new reality, eventually Greece will do so too. Eventually the homeowner decided, and Greece will too, that they need to walk away from their obligations and let the chips fall. And like the homeowner who enjoyed living in their home for as long as they could while continuing to mount up more and more unpaid debt and interest while enjoying free rent, Greece is going to soak up as much time and debt as possible before they pull the plug.
If it were just Greece, and if it were just one homeowner or even one town of homeowners, the creditors would just lick their wounds and life all around would go on normally except for the debtors. If the default of either the homeowner or Greece were an isolated case, the debtor is up the proverbial "shits river without a paddle." But it's not just Greece and it wasn't just one homeowner that is drowning in debt. Therein lies the difference in the financial dynamics which threatens the world's financial system.
Like the USA housing crisis, the scope of European countries that are insolvent is such that if one defaults and the others follow a crisis is set off. I know it seems like there is already a crisis, but I believe what we have now is "strain." A crisis will be the day Greece or Belgium or some other country throws in the towel and defaults. Unlike the current situation with the USA housing crisis which has been adjusted for with USA banks, in the case of the "PIIGs" and others default is not yet "baked into" the Euro or world banking system. While the USA banks have written down their mortgage losses, the European banks have not written large scale defaults into their capital structure. If one of the insolvent European countries such as Greece defaults, the banks will have no choice but to adjust their financial balance sheets to take into account these defaults on a massive scale. Once they do they become greatly under-capitalized. Then, like the USA banks, they will need the bailout! It will be the sequel to the book, and now the movie, "Too Big to Fail."
From a practical standpoint, the credit rating companies are forcing the issue. Which only raises the cost of carrying the debt to these countries and puts more pressure on them to default. The straw will eventually break the camel's back. It could be today or tomorrow or next week, but eventually Greece and a half-dozen other Euro-member countries are going to give their European friends the bird. It's notable that in the case of the Ohio homeowner they also had to give up the keys to their home. Whereas, at least Greece residents get to stay in country. Greece may be better off - even better off than the homeowner in Ohio.
I'd love to play this scenario out further because the outcome sure doesn't end here. But that's all the time I have for this post!
Wednesday, May 25, 2011
Tuesday, May 10, 2011
Can you say QE3?
It's been widely assumed that QE2 is the end of quantitative easing and that there will not be a QE3. Could the Federal Reserve be willing to risk the economy contracting as result of the Fed pulling back the punch bowl cold turkey, at the same time congress is doing major fiscal tightening? With the Federal Reserve buying nearly 70% of Treasury issuance do they expect to simply stop buying and still have successful auctions? I don't buy it. QE3 may not look like QE2, and it may not even be branded "QE" any #, but I think whatever the Federal Reserve calls what they're doing it will "walk and talk like a 'QE' duck." So what might it be?
I have a few thoughts about this. (Not surprising.) My first hunch is that they do some restructuring of their balance sheet in cooperation with the Treasury such that they extend the terms on shorter term T'Bills to longer terms. By converting their 1, 2, and maybe 3 year notes to 10+ years they reduce the strain on holding successful actions by reducing the need to refinance these notes as they come due over the next few years. Second, the Federal Reserve could to look for a way to write down their MBS holdings, thereby giving relief to the obliges. This would be a great back door way to give relief to the housing market and at the same time help to further repair banks and mortgage holders balance sheets. No doubt that would produce liquidity that would make its way into the economy. Last but not least, they have to find a way to motivate banks to push their reserves into the economy. Maybe they will stop paying interest on reserves.
Do you remember when Paulson, Geitner, and Bernanke dreamed up TARF and produced a three page document that sailed through congress in a few days to save the world financial system from ruin? My sense is that something is brewing that will be announced before QE2 wraps up and the debt ceiling needs to be raised. What they come up with will have to be sold to the financial markets and congress. It will have to include something from Congress on adjustments to entitlements and other spending in order for the whole package to be credible. It will be pitched, with the help of the President, as the best (only) way to save the Federal government from default. But it will also be sold as positive solution that will put America back on solid ground and lead to years of economic expansion.
If this happens, and the Federal Reserve and the Treasury can pull this off with the help of the President, I think Dow 16K is a real possibility!
I have a few thoughts about this. (Not surprising.) My first hunch is that they do some restructuring of their balance sheet in cooperation with the Treasury such that they extend the terms on shorter term T'Bills to longer terms. By converting their 1, 2, and maybe 3 year notes to 10+ years they reduce the strain on holding successful actions by reducing the need to refinance these notes as they come due over the next few years. Second, the Federal Reserve could to look for a way to write down their MBS holdings, thereby giving relief to the obliges. This would be a great back door way to give relief to the housing market and at the same time help to further repair banks and mortgage holders balance sheets. No doubt that would produce liquidity that would make its way into the economy. Last but not least, they have to find a way to motivate banks to push their reserves into the economy. Maybe they will stop paying interest on reserves.
Do you remember when Paulson, Geitner, and Bernanke dreamed up TARF and produced a three page document that sailed through congress in a few days to save the world financial system from ruin? My sense is that something is brewing that will be announced before QE2 wraps up and the debt ceiling needs to be raised. What they come up with will have to be sold to the financial markets and congress. It will have to include something from Congress on adjustments to entitlements and other spending in order for the whole package to be credible. It will be pitched, with the help of the President, as the best (only) way to save the Federal government from default. But it will also be sold as positive solution that will put America back on solid ground and lead to years of economic expansion.
If this happens, and the Federal Reserve and the Treasury can pull this off with the help of the President, I think Dow 16K is a real possibility!
Saturday, May 7, 2011
On the Edge of Mutual Destruction
We are finally on the edge of financial mutual destruction. If congress fails to address our deficit and debt crisis in a credible way and investors around the world lose faith in Treasuries and the dollar collapses the USA standard of living will be destroyed. American's buying power will be annihilated. Then what?
There's no question that IF this happens the world will be thrust into a great depression! The USA is the biggest customer on the planet and if we stop buying international goods and services from around the world because our dollars are so devalued our pain becomes the pain of the entire world and everyone's economy. Talk about "too big to fail," there isn't any country that could bailout the USA. If our boat sinks we're taking everyone to the bottom with us! But that's a BIG IF!!!!
We've been bad. We spent too much. We're virtually insolvent. But so is Japan, Ireland, the UK, Spain, Portugal, and dozens of other countries! Have you looked at the Debt to GDP ratios in France and Italy? Forget about Belgium, Denmark, Norway, and Switzerland! Euro zone Debt to GDP is higher than the USA! You have to wonder who's lending everyone the money cause we're all broke.
Sure there are some countries with a great debt to GDP ratio. Those are the countries supplying the world with natural resources or who have exploited their workers and kept their vast populations living in poverty. (Can you guess the names of these countries?) They have also been huge buyers of USA treasuries. Who's better off? Well, let's see what happens when we stop buying their stuff and their debt, valued in dollars, is nearly worthless as well!!
The bottom line is that if America goes bust we're taking all of these countries with us. So where would you like to be living the day America goes broke? If you ask me, I'd rather be living in America when it goes bust than in China!! Somehow the image of civil unrest in America seems less scary to me. And what will Saudi Arabia do with all that oil if American's start burning more gas and coal and conserving energy because we can't afford to buy OPEC oil?
What's the value of a dollar, or any currency for that matter? None of it (currency) is backed by anything more than faith & confidence in the financial system of the Nation that prints it. It's only worth anything if you believe it's worth anything! So, do you believe in the "worth" of America? Pick a country, any country! What's it worth? Seriously, what is the worth of a country? When I think about it, if you ask me, America is still very wealthy! I could give you a long list of reasons why but that's not the point of this blog post.
We are going go the edge of the cliff here. In financial terms, America and a slew of other countries are for all intensive purposes insolvent. If America goes over the cliff the rope tied to most of the developed world will take them over the cliff with us. It will be mutual financial destruction! Nobody wants that, so we all need to step away from the edge. The problem as I see it is that no body has figured how to "step back" in a way which will enable people around the world to believe once again in the value of the USA dollar or the Euro. But I am pretty much sure that we will find a way for the same reason that nuclear war has not happened yet. Most people and most countries are not suicidal.
It should be very interesting to listen to how Fed Chairman Bernanke, ECB President Trichet and China's Chairmen Hu all talk us off the ledge. Listen up people.
There's no question that IF this happens the world will be thrust into a great depression! The USA is the biggest customer on the planet and if we stop buying international goods and services from around the world because our dollars are so devalued our pain becomes the pain of the entire world and everyone's economy. Talk about "too big to fail," there isn't any country that could bailout the USA. If our boat sinks we're taking everyone to the bottom with us! But that's a BIG IF!!!!
We've been bad. We spent too much. We're virtually insolvent. But so is Japan, Ireland, the UK, Spain, Portugal, and dozens of other countries! Have you looked at the Debt to GDP ratios in France and Italy? Forget about Belgium, Denmark, Norway, and Switzerland! Euro zone Debt to GDP is higher than the USA! You have to wonder who's lending everyone the money cause we're all broke.
Sure there are some countries with a great debt to GDP ratio. Those are the countries supplying the world with natural resources or who have exploited their workers and kept their vast populations living in poverty. (Can you guess the names of these countries?) They have also been huge buyers of USA treasuries. Who's better off? Well, let's see what happens when we stop buying their stuff and their debt, valued in dollars, is nearly worthless as well!!
The bottom line is that if America goes bust we're taking all of these countries with us. So where would you like to be living the day America goes broke? If you ask me, I'd rather be living in America when it goes bust than in China!! Somehow the image of civil unrest in America seems less scary to me. And what will Saudi Arabia do with all that oil if American's start burning more gas and coal and conserving energy because we can't afford to buy OPEC oil?
What's the value of a dollar, or any currency for that matter? None of it (currency) is backed by anything more than faith & confidence in the financial system of the Nation that prints it. It's only worth anything if you believe it's worth anything! So, do you believe in the "worth" of America? Pick a country, any country! What's it worth? Seriously, what is the worth of a country? When I think about it, if you ask me, America is still very wealthy! I could give you a long list of reasons why but that's not the point of this blog post.
We are going go the edge of the cliff here. In financial terms, America and a slew of other countries are for all intensive purposes insolvent. If America goes over the cliff the rope tied to most of the developed world will take them over the cliff with us. It will be mutual financial destruction! Nobody wants that, so we all need to step away from the edge. The problem as I see it is that no body has figured how to "step back" in a way which will enable people around the world to believe once again in the value of the USA dollar or the Euro. But I am pretty much sure that we will find a way for the same reason that nuclear war has not happened yet. Most people and most countries are not suicidal.
It should be very interesting to listen to how Fed Chairman Bernanke, ECB President Trichet and China's Chairmen Hu all talk us off the ledge. Listen up people.
Monday, April 4, 2011
Two Moments at Holocaust Museum
We chose to come to Washington as way to celebrate Mary's last chemo treatment and to see two things we've wanted to see for some time. One was the Capital monuments (from the outside) with Cherry Blossoms in Bloom. The other the Holocaust Museum.
The span of from the Capital building, through the Mall, to the hill perched with the magnificent Washington Monument looking over the reflecting pond with the Jefferson Memorial and all around the spectacular planted flowering Cherry Blossom trees has to be one of the most remarkable scenes on earth. The other, the Holocaust Museum, everyone on the planet should see and know what others had to witness so we may never again be a witness.
"I call heaven and earth to witness this day: I have put before you life and death, blessing and curse. Choose life -- that you and your offspring shall live" Deuteronomy 30:19
Spending the day between two such extreme contrasts is evidence to the remarkable range of human capacity. On the one hand, the most profound horror and on the other hand the most profound glory.
Two moments from my experience shocked me. In addition to thousands of photos, the Museum set up exhibits with physical remembrances. Things like concentration fence posts that would have been be run with electrified barbed wire, the wooden prisoners' barracks (cells), an operating table where unimaginable atrocities occurred, thousands & thousands of shoes from people who removed them to take their last steps. It is all so so horrible!
As we made our way around, I found a few minutes when I could be alone inside an actual rail car that transported the Jews, and others, to the "final solution." The museum wisely provides places for private meditation. One of mine, was this rail car. I think I was alone, but I don't know. It was dark with only filtered light. The wood floors and ceiling where all scratched. I paused and closed my eyes and put my hands flat on the boards and let my imagination run. Voices came to me! Many voices, little children, mothers, an old man. They weren't speaking to me - the voices were talking to one another and I just listened. They said different things - but they all were about the same thing - FEAR!! Oh, my G-d, the FEAR.
"What have you done? Hark, thy brother's blood cries out to me from the ground!" Genesis 4:10
The other moment that grabbed me with my own personal fear was a juxtaposition in time and space. I had just exited a glass room where an audio tape played narrations of survivors' memories. One listens and may cry or want to scream. How could they survive? But that is not the part that grabbed me with fear. I must have been in that room for a little while and when I came out I noticed I was in a re-creation of a concentration camp. I stepped into a foreign and frightful place. There are photos of prisoners all around the walls, with museum visitors wandering through and mixing in with the images. Then it struck me! I had lost Mary. My eyes searched and for just fraction of time, maybe 2 or 3 seconds at the most, I imagined the unimaginable. Then I saw her hat - the hat with the flower that she wears to hide her bald head. Her beautiful head, her beautiful face. Relief!! And then I thought to myself, I couldn't stand 2 seconds and their nightmare lasted for eternity.
"Only guard yourself and guard your soul carefully, lest you forget the things your eyes saw, and lest these things depart your heart all the days of your life, and you shall make them known to your children, and to your children's children." Deuteronomy 4:9
The span of from the Capital building, through the Mall, to the hill perched with the magnificent Washington Monument looking over the reflecting pond with the Jefferson Memorial and all around the spectacular planted flowering Cherry Blossom trees has to be one of the most remarkable scenes on earth. The other, the Holocaust Museum, everyone on the planet should see and know what others had to witness so we may never again be a witness.
"I call heaven and earth to witness this day: I have put before you life and death, blessing and curse. Choose life -- that you and your offspring shall live" Deuteronomy 30:19
Spending the day between two such extreme contrasts is evidence to the remarkable range of human capacity. On the one hand, the most profound horror and on the other hand the most profound glory.
Two moments from my experience shocked me. In addition to thousands of photos, the Museum set up exhibits with physical remembrances. Things like concentration fence posts that would have been be run with electrified barbed wire, the wooden prisoners' barracks (cells), an operating table where unimaginable atrocities occurred, thousands & thousands of shoes from people who removed them to take their last steps. It is all so so horrible!
As we made our way around, I found a few minutes when I could be alone inside an actual rail car that transported the Jews, and others, to the "final solution." The museum wisely provides places for private meditation. One of mine, was this rail car. I think I was alone, but I don't know. It was dark with only filtered light. The wood floors and ceiling where all scratched. I paused and closed my eyes and put my hands flat on the boards and let my imagination run. Voices came to me! Many voices, little children, mothers, an old man. They weren't speaking to me - the voices were talking to one another and I just listened. They said different things - but they all were about the same thing - FEAR!! Oh, my G-d, the FEAR.
"What have you done? Hark, thy brother's blood cries out to me from the ground!" Genesis 4:10
The other moment that grabbed me with my own personal fear was a juxtaposition in time and space. I had just exited a glass room where an audio tape played narrations of survivors' memories. One listens and may cry or want to scream. How could they survive? But that is not the part that grabbed me with fear. I must have been in that room for a little while and when I came out I noticed I was in a re-creation of a concentration camp. I stepped into a foreign and frightful place. There are photos of prisoners all around the walls, with museum visitors wandering through and mixing in with the images. Then it struck me! I had lost Mary. My eyes searched and for just fraction of time, maybe 2 or 3 seconds at the most, I imagined the unimaginable. Then I saw her hat - the hat with the flower that she wears to hide her bald head. Her beautiful head, her beautiful face. Relief!! And then I thought to myself, I couldn't stand 2 seconds and their nightmare lasted for eternity.
"Only guard yourself and guard your soul carefully, lest you forget the things your eyes saw, and lest these things depart your heart all the days of your life, and you shall make them known to your children, and to your children's children." Deuteronomy 4:9
Wednesday, March 9, 2011
Inflation Isn't All Bad!
Inflation is devastating in a poor country. It can cause unrest, uprisings, starvation, and other awful effects. But, in a country with abundant natural resources, vibrant entrepreneurial activity, access to capital and equity markets, and a skilled and available labor force, inflation isn't all bad! In fact, it can actually lead to very positive outcomes such as job creation!
I realize that those higher costs put pressures on the economy, but we also need to consider the benefits they lead to. Inflation can also lead to greater profitability which in turn leads to job creation. Take oil producers today. With the recent inflation in oil prices oil companies are making windfall profits. The cost of producing a barrel of oil isn't going up. The price has simply skyrocketed over fears of Libya disrupting the supply. Take the rising price of copper, silver and gold. Miners are making a fortune from higher prices because the cost of mining those materials hasn't gone up.
Greater profitability attracts more competition. There is more oil exploration > more jobs. More equipment is purchased to drill for more oil and mine metals > more jobs. More research is done to create alternatives to higher material costs > more jobs. Consumers purchase energy inefficient cars and therefore car manufacturers make and sell newer automobile models > more jobs. Homeowners buy replacement windows and a new furnace so they burn less oil > more jobs. Manufactures replace old inefficient equipment and look for ways to consume less oil and materials > more jobs.
Eventually, the extra profitability attracts enough competition and a more robust supply which in turn drives the price back down again. In the process the supply of those materials has been increased to meet greater demand while at the same time producing greater output at a lower cost. And there are consumer benefits too. Take the automobile engine as an example. Today you can purchase a car with 300 horsepower that get's nearly 30 miles to the gallon! Or, you can purchase a hybrid that gets 50+ miles to the gallon. Or an all electric vehicle. These developments would not have happened if oil hadn't spiked to over $100 a gallon in recent years. Think about all the green jobs that have been created due in large part to the rising cost of oil!
When the cost of any commodity rises it can lead to inflation in goods that are made with it or are used in the process. But eventually the free market works its way in order to either drive raw material costs back down, or lessen the impact of those material costs, or provide alternatives altogether. In the process typically jobs are created! And consumers end up with better products that require or use less of that commodity. Advances in automobiles and solar energy and new materials are just the beginning of what happens of what happens as a result oil price inflation!
In conclusion, a healthy economy adjusts to inflation. America has a healthy free market entrepreneurial based capitalistic system that naturally adjusts to inflation, unlike a closed dictatorship like there was in Egypt or still is in Libya and other underdeveloped countries. In fact, you might even say that inflation is what really caused the uprising in Egypt! Countries that don't have an economy like America are vulnerable to inflation. In the end, it may be the Federal Reserve that over throws Iran!
I realize that those higher costs put pressures on the economy, but we also need to consider the benefits they lead to. Inflation can also lead to greater profitability which in turn leads to job creation. Take oil producers today. With the recent inflation in oil prices oil companies are making windfall profits. The cost of producing a barrel of oil isn't going up. The price has simply skyrocketed over fears of Libya disrupting the supply. Take the rising price of copper, silver and gold. Miners are making a fortune from higher prices because the cost of mining those materials hasn't gone up.
Greater profitability attracts more competition. There is more oil exploration > more jobs. More equipment is purchased to drill for more oil and mine metals > more jobs. More research is done to create alternatives to higher material costs > more jobs. Consumers purchase energy inefficient cars and therefore car manufacturers make and sell newer automobile models > more jobs. Homeowners buy replacement windows and a new furnace so they burn less oil > more jobs. Manufactures replace old inefficient equipment and look for ways to consume less oil and materials > more jobs.
Eventually, the extra profitability attracts enough competition and a more robust supply which in turn drives the price back down again. In the process the supply of those materials has been increased to meet greater demand while at the same time producing greater output at a lower cost. And there are consumer benefits too. Take the automobile engine as an example. Today you can purchase a car with 300 horsepower that get's nearly 30 miles to the gallon! Or, you can purchase a hybrid that gets 50+ miles to the gallon. Or an all electric vehicle. These developments would not have happened if oil hadn't spiked to over $100 a gallon in recent years. Think about all the green jobs that have been created due in large part to the rising cost of oil!
When the cost of any commodity rises it can lead to inflation in goods that are made with it or are used in the process. But eventually the free market works its way in order to either drive raw material costs back down, or lessen the impact of those material costs, or provide alternatives altogether. In the process typically jobs are created! And consumers end up with better products that require or use less of that commodity. Advances in automobiles and solar energy and new materials are just the beginning of what happens of what happens as a result oil price inflation!
In conclusion, a healthy economy adjusts to inflation. America has a healthy free market entrepreneurial based capitalistic system that naturally adjusts to inflation, unlike a closed dictatorship like there was in Egypt or still is in Libya and other underdeveloped countries. In fact, you might even say that inflation is what really caused the uprising in Egypt! Countries that don't have an economy like America are vulnerable to inflation. In the end, it may be the Federal Reserve that over throws Iran!
Everyday Versus Someday
Everyday the Federal government borrows nearly $4 billion dollars and puts in the hands of consumers! How so? The Federal deficit is some $1.5 trillion which works out too approximately $4.1 billion dollars a day on average that the Federal government spends more than it brings in revenue. Where does that money go? Everywhere, but at the end of the day it's ultimately in consumers' hands. The consumer may get it through social security benefits, a medicaid payment, salaries at some defense contractor, school teacher pensions, or some government workers paycheck. Some slips off to foreign countries, but one way or another the bulk of it ends up in the American economy somehow. And, because Americans buy products from all over the world, that $4 billion dollars a day impacts economies around the world!!
To come up with this money the Federal government borrows it from all over the USA and the world. We borrow and spend. Nothing new. What is new is the scale to which we borrow and spend. The size of the debt and deficit is staggering. It's such a big number that it's too difficult to read or calculate it with all the zeros, so people HAVE to use the word trillions!
Someday that has to stop! One day soon the Government is going to hit the borrowing wall. The $15 trillion dollar question is what will happen when the government stops spending $4 billion a day? To put it in perspective, how would you're household feel if you cut your spending by over 10%? How would your employer react if revenues were down 10% plus? How would your county or town or school deal with a 10% budget cut? Is your answer "not too good?" That's probably how the economy will do when "someday" is "everyday!"
To come up with this money the Federal government borrows it from all over the USA and the world. We borrow and spend. Nothing new. What is new is the scale to which we borrow and spend. The size of the debt and deficit is staggering. It's such a big number that it's too difficult to read or calculate it with all the zeros, so people HAVE to use the word trillions!
Someday that has to stop! One day soon the Government is going to hit the borrowing wall. The $15 trillion dollar question is what will happen when the government stops spending $4 billion a day? To put it in perspective, how would you're household feel if you cut your spending by over 10%? How would your employer react if revenues were down 10% plus? How would your county or town or school deal with a 10% budget cut? Is your answer "not too good?" That's probably how the economy will do when "someday" is "everyday!"
Friday, March 4, 2011
It's A New Day for Business
I believe it has actually finely dawned on nearly ever senator and congressman countrywide at the federal and state level as well as every state governor and the president that they need to get business friendly as fast as they can. It's their only hope for jobs, tax revenues, and a means to meet their debt obligations and keep their bond ratings.
It's not that all of politicians have really become pro businesses, it's just that they have so many constituents who love their pensions, health care, union benefits, and social security. And the thought of cutting what their voters love scares the heck out of them. The bold writing on the wall which reads, "You can't raise taxes rates to close the budget shortfall!" Just as clear is the message that the only way they can pay for what their voters love is if the economy dramatically and rapidly advances sending employment and tax revenues way up!
With no time to lose, and may even be too late, it will be interesting to watch statehouses and the federal government racing to encourage business expansion. Frightened politicians and desperate officials will be slashing excess regulations, granting permits, knocking down walls, and opening doors to do as much as they can to stimulate business as fast as they can, even if it makes them sick to do it. From the FDA to the EPA, from the Nuclear Regulatory Commission to the Commission on Transportation, to the Federal Communications Commission, anyone standing in the way, be they environmentalist, union leader, or regulator, will be pushed aside. Conversely, anyone with good ideas and plans that will lead to business investment and jobs is a hero!
Although it's a risky way to get where we need to be, the best thing to happen for business in decades is for government to have a financial crisis. It's the only thing that forces government to shrink and cut needless regulations and agencies. It's also the only way to get unions to give back. As government borrows less, businesses will be competing less with government for investment dollars. Capital will be able to flow more to business development instead of government borrowing. Plus, by making it easier on businesses to do business more business will be done. It's such a simple concept. Along the way entrepreneurial opportunities will be given life. Yes, it's a new day for business - a brighter day is dawning. And when it does it will bring with it a truly sustainable recovery.
It's not that all of politicians have really become pro businesses, it's just that they have so many constituents who love their pensions, health care, union benefits, and social security. And the thought of cutting what their voters love scares the heck out of them. The bold writing on the wall which reads, "You can't raise taxes rates to close the budget shortfall!" Just as clear is the message that the only way they can pay for what their voters love is if the economy dramatically and rapidly advances sending employment and tax revenues way up!
With no time to lose, and may even be too late, it will be interesting to watch statehouses and the federal government racing to encourage business expansion. Frightened politicians and desperate officials will be slashing excess regulations, granting permits, knocking down walls, and opening doors to do as much as they can to stimulate business as fast as they can, even if it makes them sick to do it. From the FDA to the EPA, from the Nuclear Regulatory Commission to the Commission on Transportation, to the Federal Communications Commission, anyone standing in the way, be they environmentalist, union leader, or regulator, will be pushed aside. Conversely, anyone with good ideas and plans that will lead to business investment and jobs is a hero!
Although it's a risky way to get where we need to be, the best thing to happen for business in decades is for government to have a financial crisis. It's the only thing that forces government to shrink and cut needless regulations and agencies. It's also the only way to get unions to give back. As government borrows less, businesses will be competing less with government for investment dollars. Capital will be able to flow more to business development instead of government borrowing. Plus, by making it easier on businesses to do business more business will be done. It's such a simple concept. Along the way entrepreneurial opportunities will be given life. Yes, it's a new day for business - a brighter day is dawning. And when it does it will bring with it a truly sustainable recovery.
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