Government Shutdown - Starbucks

So today is Day #2 of the Federal Government Shutdown. 

This is a picture from the local Starbucks that is typically billowing at lunch time--as you can see it's basically a morgue. 

Unfortunately, hard-working Federal employees, contractors, and local business are feeling the impact!

Even from those that are still working, there is word of "survivor's guilt"--like with a plane crash or other calamity, when those who survive the catastrophe question why they were so fortunate when the others weren't so lucky and perished. 

With both the budget shutdown and the impending debt ceiling showdown--we are facing the perfect storm, with real negotiation and compromise yet to emerge.

With this all, our significant national problems aren't going away--to the contrary, Iran and North Korea are still global nuclear threats, Syria still has chemical weapons, the economy remains on shaky ground (in the paper today, the once high-flying pharmaceutical company Merck is planning to lay off 20%!), the national debt continues to spiral out of control (albeit at a "slower pace"), cybersecurity remains a major national security risk (although Cyber Command continues to stand up its new headquarters and firepower), and so much more. 

Bubble stocks rose again yesterday after an almost 20% one-year return. Not only that, but the safety of gold took a beating again after an almost 40% one-year decline (full disclosure, I am a recent investor in the latter). One has to wonder how long it will take for sanity to prevail once again. 

(Source Photo: Andy Blumenthal)  

Government Shutdown - Starbucks

Is This The Way It's Supposed To Work?

As talk and warnings escalate about a potential government shutdown next week (not that long since the last time this happened a couple of years ago), one cannot help wonder is this the way government is supposed to work?

The partisanship and fighting has gotten so that either nothing significant gets done or get's done by just one party leaving the other fuming.

The fight over healthcare reform pushed through for better or for worse has come back to haunt the Hill. Aside from a lot of talk about exchanges, I haven't found many people that even really understand the changes or whether it actually benefits them or not. 

The continuing Fed stimulus that many anticipated was going to start tapering off, but hasn't, has left many concerned whether there is another huge economic bubble building and what will happen to stocks, housing, and jobs when the Fed finally does pull back. 

The Sequestration which was never supposed to actually take effect, but was to replaced with more surgical budget cuts, continues to leave the nation vulnerable in terms of potential budget shortfalls for areas of national priority (e.g. defense and so on) and still leaves a mounting national debt (albeit growing at a slower pace). 

The seesaw between the threat of military intervention and the potential for diplomatic solutions with Syria and Iran on no less than weapons of mass destruction have us asking whether these countries are serious, stalling, and really willing to give them all up or just buy time in their efforts to get over the finish line of proliferation, hiding, and burying the stockpiles.

Somehow we seem to be fighting each other more than we are tackling the issues. 

Are we really talking with each other, listening with intent to understand, and seeing what is at stake?

We are playing brinkmanship on critical issues of national security that may leave us holding the toilet paper and plunger as we swirl around the bowl ready for the royal flush. ;-)

(Source Photo: Andy Blumenthal)

Is This The Way It's Supposed To Work?

Back To The Computer Stone Age

According to Charles Kenny in Bloomberg BusinessWeek (20 June 2013), the Internet is quite a big disappointment--because it "failed to generate much in the way of economic growth."

While on one hand, the author seems to see the impact that the Internet has had--"it sparks uprisings, makes shopping easier, help people find their soul mates, and enables government to collect troves of useful data on potential terrorists;" on the other hand, he pooh-poohs all this and says it hasn't generated prosperity. 

And in a sense, don't the facts seem to support Kenny: GDP is still in the 2-3% range, labor productivity growth is even lower, and unemployment is still elevated at over 7%?

The problem is that the author is making false correlations between our economic conditions and the rise of the Internet, which already Jack Welch pronounced in 2000 as "the single most important event in the U.S. economy since the industrial revolution." 

Kenny seems to think that not only aren't there that many economic benefits to the Internet, but whatever there is we basically squander by becoming Facebook and Youtube junkies.

It's a shame that Bloomberg BusinessWeek decided to publish such a ridiculous article as its "Opening Remarks," blaming the failure of the Internet for economic challenges that have been brewing for decades--with high-levels of debt, low levels of savings, hefty entitlement programs based on empty national trust funds, the global outsourcing of our manufacturing base, elevated political polarization in Washington, and various economic jolts based on runaway technology, real estate, and commodity bubbles.

It's concerning that the author, someone with a masters in International Economics, wouldn't address, let alone mention, any of these other critical factors affecting our national economy--just the Internet! 

Kenny adds insult to injury in his diatribe, when he says that the Internet's "biggest impact" is the delivery of "a form of entertainment more addictive than watching reruns of Friends."

Maybe that's the biggest impact for him, but I think most of us could no longer live seriously without the Internet--whether in how we keep in touch, share, collaborate, inform, innovate, compute, buy and sell, and even entertain (yes, were entitled to some downtime as well). 

Maybe some would like to forget all the benefits of technology and send us back to the Stone Age before computing, but I have a feeling that not only would our economy be a lot worse than it is now, but so would we. :-)

(Source Photo: Andy Blumenthal)

Back To The Computer Stone Age

Not A Cloud In The Sky

I thought this picture was sort of humorous. 

This lady is walking down the street with this big green umbrella, but there is NOT a cloud in the sky. 

In fact, you can see in the upper right that it is a beautiful and clear sunny day. 

Also, where she is walking, it is clearly shady and cool--so the umbrella is not needed as a sun screen either. 

From a technology annoyance perspective, it is long past time to invent something more creative than a cheap, crappy umbrella--like from Charlie Chaplin and The Umbrella--to protect us from elements. 

Someone, please come up with a push-button protective bubble that envelops us--clear for visibility, of course--and keeps us dry and temperate. 

A beautiful, futuristic clear dome over the city would be nice too, but probably cost prohibitive and not as adjustable for each indiividual and their respective needs. 

Hopefully, someday soon. ;-)

(Source Photo: Andy Blumenthal)

Not A Cloud In The Sky

Getting Off The Debtor Highway

I.O.U.S.A. (2008) is the best explanation of our nation's financial problems and the deep severity of these that I have ever seen.

This video is a 1/2 hour condensed version of the full almost 1 1 /2 hour award-winning documentary.

David Walker, the former Comptroller General of the U.S. (1998-2008) is the star of this movie.

The documentary, with Walker's steadfast warnings, describes the 4 ominous deficits that are driving this country to Financial Armageddon:

1) Budget Deficit

2) Savings Deficit

3) Trade Deficit

4) Leadership Deficit

What is incredible is how rather than listening to Walker's exhortation, when the National Deficit was $8.7 trillion in 2007, just 5 years later now, there is a deficit going on nearly double that of $15.7 trillion.

We are facing a financial ticking time bomb that could result in huge inflation, economic stagnation, and the undoing of our economic and national security.

Moreover, towards the end of this year, we are facing the economic one-two punch of rising taxes and reduced national spending that could easily send our economy spiraling into recession or even depression.

Add to that rising interest rates, a financial crisis in the  European Union, a continued housing crisis and high unemployment at home, and a true economic reckoning is at hand.

Watch I.O.U.S.A. and become proponents for financial discipline for ourselves and for the country.

Getting Off The Debtor Highway

Visiting The Sins of The Fathers

Everyone was waiting for the big news this week out of the EU on how they were going to bail out their troubled economies--way too many: Greece, Spain, Portugal, Italy, Ireland...and more.

Their debt is through the roof--Greece is at 164% of it GDP and Italy is saddled with 1.9 trillion euros with more than 200 billion of it coming due next year.

Unemployment is soaring...with Greek unemployment of 16.7%, topped by Spain's at 21.5%.

Economies are grinding to a halt: "Euro-zone economic data point to gloomy year-end...0.2% latest quarterly growth" (Wall Street Journal, 29-30 October 2011)

So news this week of a yet bigger (much bigger 4x or 5x) bailout fund of $1.4 trillion to backstop the losses, while sending the stock market soaring, left the pundits a little more than skeptical.

Why? Because where did the losses go...did they just disappear or is this a thoroughly massive shell game where the losses are spinning faster and faster under the shells of economic protectionism until they disappear altogether under the slight of hand of ministry of finance magicians?

I thought to myself this week--am I missing something? I wrote a friend--this guy is a genius--top of the class type, CPA, MBA and asked what he thought of the bailout? He too was baffled and said somebody just took a "50% haircut" referring to massive number of Greek bondholders who just took a huge loss--how is that a good thing?

And I thought what about the rest of the losses yet to be realized in the $1.4 trillion European Financial Stability Fund (EFSF)...by naming it "stability," does it actually make people feel more secure, better?

Then came the reports later this week--"Doubts rise about EU deal"--that the financial rescue plan is short on details, and as we all know "the devil is in the details." Moreover, it's just a plan--that's the easy part--words are cheap! The real test lies in whether the financial rescuers can actually execute this time or will we be back at the drawing board in 6 months time again?

Then I thought of the saying from the Torah (Bible)--Exodus 34:7 that G-d "visits the sins of the fathers on the children." Not in a malevolent way, but in an almost natural way--our actions have consequences.

While not limited to any individual, country, or continent, when we live beyond our means--when greed and gluttony surpass our ability to control our appetites for more, then a bubble builds and down the road, it eventually bursts--whether real estate, the dot com boom, stocks, commodities, or even tulips in the 17th century!

As we all know deep down, no shell game can go on forever--the hands tire, the players become more astute, and most importantly, the excesses of the past must be paid up--so that the next generation can eventually go on to a more stable and brighter future.

Both sides of the spectrum, the Tea Party and the Occupy Wall Street protesters know the same economic reckoning is coming--and even though not everyone can articulate the rising doubt and fear, we go toward resolution, hand-in-hand together.

(Source Picture: here and here)

Visiting The Sins of The Fathers