Saturday, July 30, 2011


Austerity IV

Label Obama the "Man Without a Plan" as he stumbles through our fiscal crisis.  He asks for a blank check and more revenue to go along with his 4 Trillion dollar debt ceiling uptick.

This man has to go!

Friday, July 29, 2011


Austerity Program III

Immanent Market Drop of 50% or More!

Within the next two to three months, our markets will fall drastically!  That is how I read the 15 or so market gurus I subscribe to yearly. Virtually every one of them claims to have predicted the last few market drops well in advance, and I can certify that 5 of them did. They are all pessimistic about the US economy, regardless of the actions Congress and the President take now.

As a result, I have divested myself of all bonds and stocks except gold and silver, and one favorite energy stock, DOM (Dominion Virginia Power). I have a strong tax free cash position built up that will allow me to start buying when the signals indicate a favorable uptrend sometime in 2012 or 2013. In addition, I have taken a major position in gold bullion held in a vault with my name on it in Switzerland.

This post is to inform everyone of my thinking and my actions to prepare my portfolio for the worst, in the hope that others can benefit from it.

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Sunday, July 24, 2011


Austerity Program II

Unfortunately, as I read the tealeaves, any rationally-sized tax hike will be gobbled up by the medical programs inside of a year or two from now, leaving us poorer in pocket right now and still needing an Austerity Program of biting depth, such as the plus or minus10% per year or so suggested earlier. Continue this tax hiking act each year and you simply dig us a far deeper hole. Let the debt spiral upwards to boot and the debt service will likewise spiral, perhaps even faster because of drastic hiking of interest rates for our borrowing. Job production would continue to go negative with a vengence.

The way out must be deep spending cuts by the government.

It is apparent that the financial world is watching, and may well lower our credit rating despite a healthy rise in the spending cap, which will raise interest rates on us all very rapidly, and could well lead to the formal shift by the world community from the dollar base to some currency mix. If that happens, we are in for superinflation soon thereafter to go with the interest hikes. We could no longer print funnymoney to pay our bills. All of which would be disastrous for everyone but the very rich. All because some of us want to preserve our lush spending ways in the face of impending financial doom.

Obviously, we need to be sensitive to real needs of the disadvantaged, but we do have to achieve savings in the medical arena, which means a major rework of Obamacare, Medicare and Medicaid. The continuation of the defacto policy of raising the limit and raising taxes while promising spending cuts downstream that never happen must stop real soon now, or we will be in a heap of trouble we just might not be able to work our way out of in a pleasant manner. Whoever thought that SS funds were banked for use is wrong. They were diverted to the general fund, with a piece of paper IOU replacing them. They have been spent.

Whether most Americans or their representatives want to avoid these almost draconian cuts is absolutely immaterial and disingenuous because they will be forced on us from without if we don’t act ourselves while we can still set and pay for our own spending, import and export priorities.


Saturday, July 23, 2011


Austerity Program

We must get serious and take the hits needed!

Looks to me like we need a real Austerity Program for possibly as long as 10 years, depending on the economic level we can reach. This means cuts in spending of about 10% per year each year of the program, with every sector taking a real hit, except debt service. If the economy rises substantially in the meanwhile, rescaling some of these reductions could take place, and national debt reductions could be significant.

It should also mean rooting out fraud and abuse across the board, eliminating a number of expensive but "nice to have" government services, eliminating many donations to foreign nations, and reducing our overseas forces to a minimum. Many advanced weapons systems would have to be put on a "go slow" or even canceled outright until our economy recovers sufficiently to afford them. This could mean a very serious reduction in our military spread over the ten years, again, unless economic activity heats up substantially much sooner.

The Solomon's choices residing in Medicare, Medicaid, Obamacare and Social Security will have to be made in order to reduce both their outlays and their entitlements very substantially. This will be the most probable area of failure of our system to cope. I am not sure what means testing would do for Medicare, but it should be explored. Raising the elegibility level for SS to 68 or 69 may help, but other reductions will be needed.

I am sure that eliminating costly restrictions on exploration, production, and use of our oil, coal, and natural gas would have a strong economic benefit too. Perhaps the EPA needs to be scaled back substantially in its efforts to strangle our economy for the benefit of desert bugs and forest beetles while loading our energy sector with massive costs we now cannot afford.

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Friday, July 22, 2011


Our Spendthrift Administration

Those who want to put the blame on President Bush for our fiscal woes should heed the following facts:

Including all expenditures:

Clinton spent................................$564 Million per day over 8 years

Bush spent ..................................$1.2 Billion per day over 8 years

Obama spent................................$4.6 Billion per day over 2.5 years, so far!

This current expenditure rate is not sustainable.  Source: GAO

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