US Economy a "House of Cards"

Finally, the Swiss-Cheese and House of Cards known as our "Economy" is starting to emerge from the shadows, though ever so slowly and quite reluctantly, as the Federal Reserve takes drastic measures to maintain the secret: our "economy" is crap! It's smoke and mirrors! It's vapor! It's garbage!

We live in a country where the majority of "growth" in our GDP is driven by military spending, other government spending, "paper gains" (on things like homes - which are finally unraveling), and constant consumption of cheap foreign imports (aka, "retail sales"). And, if that wasn't good enough, this "growth" is all funded by debt-spending (personal and government especially). As for exports and their contribution to the GDP, the bulk of what we export makes us appear more like a 3rd world country than anything: i.e., low-price raw materials that other countries will turn into value-added goods and sell back to us.

Aside from those at the very top of the economic ladder, nobody has any CASH, as the personal *average* savings rate is not .2% (yes, two-tenths of one percent; meaning that for every thousand bucks someone makes, they save TWO!). So, a person making $50,000/year is saving a whopping $100 (if they are lucky). And, what is that same average person's credit-card debt (oh, something like $6,000!) Unreal!

I'm convinced the economy is rotten at the core. Those with mega-wealth are accumulating it faster than ever (thanks to Mr. Bush's lovely tax cut for the rich - especially Capital Gains tax reductions that disproportionately favor the super rich,... which include, gee,... most of our political and business leaders be it Democrats or Republicans alike). The rest of those participating in this economy, whether considered "middle class" or otherwise, are simply doing their part in this mass transfer of wealth to the top of the pyramid-scheme by consuming and spending continually, and much to often via debt-spending.

Now, to keep this screwed up machine (our economy) running, the Federal Reserve is taking unprecedented steps to maintain liquidity throughout the system. Someone has to soak up all that debt, and it seems the Fed has no problem with that. Just watch the daily headlines, and read how the Fed is expanding its debt sucking sponge (oh, I mean, expanding the credit offered to banks) as detailed in stories like today's Bloomberg report on the Federal Reserve steps to Jolt Credit Market further.

All these "experts" and "economist" try to convince us of how great this Federal Reserve intervention is. Well, I challenge that wisdom and declare this all to indicate one thing: how desperate the Fed is to preserve the perception that this economy is healthy when even a cursory exam can produce many, many reasons to believe otherwise. I'm also convinced that the few that run this country (politicians, corporations, and the lobbyists that interconnect them all) will drive this country over a cliff so long as they first have found a way to suck every last bit of blood (i.e., money) out of the country for their personal fortunes along the way.

I say *personal* fortunes even though I used *corporations* in my list just a minute ago, since the only ones at corporations making tons and tons of cash are those overpaid few occupying the upper echelon of corporate management (trust me, they ALWAYS get their overly large "cut" even if a company is going bankrupt! They always "win" personally, even if you, the average stockholder loses your shirt). Just look at the statistics on where CEO / executive pay has gone in contrast to the average working person! That says a lot about things.

Don't count on politicians coming to the rescue. Keep in mind, two of the three Presidential candidates (Senator Hillary Clinton and Sen. John McCain) have familial wealth in the 10's, if not 100's, of millions of dollars. They are making out like bandits in this "economy" of ours. In fact, most of our elected officials in Congress are millionaires, yet they are supposed to some how represent us, the average American? Don't count on it.

My bottom line statement with regards to an analysis of the fundamentals of this economy remain the same no matter what: the United States "economy" is a pile of rotten Swiss Cheese - full of holes and the mice are eating what is left. The Federal Reserve is doing their best to keep us all from smelling the rot or seeing the mice, but the fact is, barring some dramatic change, the secret is soon going to be known by the masses.

USA GDP Grows 14% by Balancing Trade Deficit

My blog-article title today is a forward looking best-case scenario outcome of what is possible if the United States would simply balance its current trade deficit. Stick with me for a minute as I run the (very basic) math that extrapolates a result from today's headline on GDP growth for the first quarter of 2008.

I was just reading on Bloomberg.com how, even though it feels much like the United States is in a recession here in early 2008, that the U.S. Economy Expanded at 0.6% Pace in First Quarter of 2008 (according to the government). From this article, I extracted the following statistic:

Benefit From Trade: "An improvement in trade continued to contribute to economic growth. The trade deficit narrowed to an annual pace of $495.9 billion last quarter from $503.2 billion. The smaller gap added 0.2 percent to growth, after a 1 percent boost the prior quarter."

So, let's do some quick math. If a "small" $7.3Billion narrowing of the trade balance (between exports and imports) in the USA's favor can move the GDP positive by 0.2%, then that implies that every $36.5Billion lower the trade deficit moves, we would realize a 1% boost to the United States GDP (at least, using current 2008 numbers).

Continuing with this train of thought: we currently have a trade deficit of nearly 1/2 a TRILLION dollars per year! So, divide the $36.5 Billion into that Half-Trillion number, and you get 13.6% (which I rounded to 14%). So, the United States can gain 14% GDP growth just by balancing its trade with the rest of the world, all other things being equal. That's astounding! Heck, even China's insanely fast growing economy barely approaches a 14% growth rate.

Now, another way to look at this is that our trade deficit is costing us an incredible sum of money and a fantastic amount of growth! We really need to reign in this imbalance if we are to ever have hopes that the American Dream of long-term opportunity for prosperity (for the average American) is always available. Sure, a FEW people are making out rather well during the current mass-export of cash to foreigners, but wouldn't it be nice if there were a few more opportunities for every US citizen to partake in this global economy in a more positive and constructive way (vs. just being a consumer of foreign products)?

Beware of Cannibals!

Ted Turner (of CNN-founding fame, and mega-millionaire status), recently made some rather interesting comments on PBS about how extreme the global situation could become if global warming continues unchecked. One of the dire warnings he put forth for consideration was the prospect of how people, when pushed to the limits with lack of available food, may resort to cannibalism. Here's some of the what was discussed with regards to the global climate change issue:

If steps aren't taken to stem global warming, "We'll be eight degrees hotter in 30 or 40 years and basically none of the crops will grow," Turner said during a wide-ranging, hour-long interview with PBS's Charlie Rose that aired Tuesday.

"Most of the people will have died and the rest of us will be cannibals," said Turner, 69. "Civilization will have broken down. The few people left will be living in a failed state — like Somalia or Sudan — and living conditions will be intolerable."

One way to combat global warming, Turner said, is to stabilize the population.

"We're too many people; that's why we have global warming," he said. "Too many people are using too much stuff."

OK, so this all sounds a bit extreme, or does it?
Fact is, Ted Turner may well be right!

I for one, at least while in my right mind (during this pre-catastrophic-earth period), tell myself I would rather just die of starvation than eat another human being, but who knows... if pushed to the brink, maybe I'd essentially become a zombie where only my deep animal instincts drove me to seek out any and all available "food", be it human or not.

Perhaps Ted Turner had just watched the movie Sweeney Todd (the Demon Barber of Fleet Street), and noticed how Johnny Depp's character (and his fellow house / business tenant) took to killing many a human and turning them into meat pies (which, they served to unsuspecting London consumers during what they characterized as "desperate times" or "hard times"). If 19th Century London is bad enough meat is so scarce, then I guess Ted Turner's 21st post-global-warming-catastrophic-earth conditions would make that look like nothing, and (human) meat-pies may be the menu-item of choice.

Now, instead of becoming a cannibal this year, I have just begun work on my new garden. A nice chunk of the yard (formerly just grass) is becoming what I hope will be a productive vegetable garden. I am doing this for a few reasons: 1) food prices have skyrocketed! and 2) I don't want to rely completely on others for my food. I want variation in my diet, and with this insane push for Ethanol, it seems the only 100% sure way to get the vegetables / crops I want (without paying a fortune) will be to grow my own. So, here's hoping this experiment pays off. And, with luck, I'll raise enough home-grown food I won't have to resort to cannibalism! :)

Food Inflation : How Bad? Extreme!

I hope you are planting a garden this year! If not, don't be surprised if you go broke trying to obtain food.

Ministers from the Group of Eight (G8) industrialized nations this week confronted the issue of extreme food inflation worldwide (and shortages too). Here's a recap from the meeting:

Earlier this month, World Bank President Robert Zoellick called for a new co-ordinated global response to deal with spiraling food prices exacerbating shortages, hunger and malnutrition around the globe.

Severe weather in producing countries and a boom in demand from fast-developing countries have pushed up prices of staple foods by 80 per cent since 2005. Last month, rice prices hit a 19-year high; wheat prices rose to a 28-year high and almost twice the average price of the last 25 years, Zoellick added.

This should be seen as a really scary indicator of what goes wrong when demand and supply are imbalanced, in large part due to our push to consume Ethanol in our vehicles. If you are one of the IDIOTS that think Ethanol is the answer to our energy woes (including any of you corn farmers that really want to believe it is, and want us to believe it is) I don't know how much more proof you need to see there is a real problem emerging.

We are moving to a homogeneous crop-production system thanks to the promise of larger profits achieved through corn production vs. other crops. And, this is putting huge pressure on wheat production and other crops. We need diversity in our food production system!

And, if there are major financial incentives to NOT product a variety of foods, gee, guess what happens? You are seeing the results right now. With the government here (in their infinite political pandering to corn farmers - or should I say, large corporations with mega-corn-production interests like ADM) mandating ethanol production now, and offering tax-incentives for ethanol, what do you expect will hapen? Yep: corn production reigns supreme, and other crops are marginalized.

So, be advised: you need diversity in your diet, and the only way you may get that soon is if you convert that beautiful green grass yard of yours into a garden! Here's hoping you didn't put too much weed killer and crap on your yard.

Less Pain, More Gain? Weightlifting rules changed.

I just couldn't help posting about this study that goes completely against the old "no pain, no gain" rule of weightlifting and muscle building.

Check this out:

Taking daily recommended dosages of ibuprofen and acetaminophen caused a substantially greater increase over placebo in the amount of quadriceps muscle mass and muscle strength gained during three months of regular weight lifting, in a study by physiologists at the Human Performance Laboratory, Ball State University

Isn't that just interesting? So, should we change the saying in the weight room to "less pain, more gain?" An interesting question may also be: will taking a daily Tylenol when lifting, or an Ibuprofin, produce gains equal to that of Anabolic Steroids or Human Growth Hormone (HGH) or protein powders, whey protein, amino acid supplements, etc? :)

Regardless, it was an interesting study.

Government Waste: Navajo Internet Contract

The government just keeps pouring out the cash to contractors that, even with insanely high profit margins, just can't seem to get enough. The latest case of pure sickness in government waste and overspending has to do with the Navajo Nation's federally funded Internet connections.

OnSat Network Communications has/had a very sweet deal for providing Internet connectivity to the Navajo nation, via a Federally funded program... OnSat in turn says it sub-contracted the work out... surprise, surprise - typical of this government stuff where no primary contractor does anything, they just win bids, take a huge cut, and sub out the work - then, they of course try to ditch any responsibility or accountability too, which would never work in the *private* sector, but always seems to provide plausible deniability when it comes to government contracts.

OnSat somehow just happened to double-bill the government it seems, and slipped up with a extra $2.1 Million charge, that an internal audit last year finally uncovered, and which the Universal Service Administration Co. (USAC), that monitors the service and operates under the Federal Communications Commission's E-rate program, told Navajo Nation it will withhold a $2.1 million payment to the Internet company.

Now, it gets even better. Since OnSat subcontracted this Internet service, according to an attorney from OnSat, if the government didn't pay them this extra $2.1 million, that meant OnSate would not be able to pay the subcontractor for satellite time for the Internet service. Gee, what happened to the FIRST $2.1 million that was billed for this service OnSat?? LOSERS!! The taxpayers should all be crying FOUL right now!

According to a report I read:

The USAC helps the tribe receive 85% to 90% reimbursement from the FCC for the Internet service for 70 of 110 tribe chapter houses spread across Navajo Nation.

Unreal: do the math... $2.1million for serving 70 tribe chapter houses with internet. That's $30,000 PER HOUSE (yes, THIRTY-THOUSAND each location!).

Only this government could figure out how to justify spending that kind of money delivering satellite Internet that anyone else could certainly find a way to get for $100/month or LESS. Ever hear of Dish or EchoStar or whatever?? Sounds like some serious profit margins - god, how it must be nice to land contracts like this (though, I simply find it sick!)

With the economy going down the tubes, and government spending and debt at all time highs, isn't it time something changes? Keep in mind that it is you and I that fund all this waste through our tax payments. How many of us average Americans working full time all year long and paying taxes does it take to pay just this ONE bill?

Again, do the math: if we each paid $10,000 in taxes, that would take ALL of the taxes paid by 210 of us just to cover this one ridiculous bill! And, this is a SMALL bill - did you see my blog yesterday about the $14 BILLION estimate for the government to perform the 2010 census data collection? Again, if we each paid Federal taxes of $10,000 for one year, it would take the EVERY LAST PENNY OF FEDERAL TAXES PAID BY 1.4 MILLION taxpayers just to cover the estimated cost of the 2010 census!?! HOW CAN THIS BE EVEN SLIGHTLY JUSTIFIABLE!?

How much more clear does it have to get that our government is not representing the interests of the people? We are to work, pay taxes, and in turn get something from our government for that. We have plenty of pressing issues in this country to spend our tax money on, but our government has proven itself incapable of managing ANY AMOUNT of money. No matter what the project, it turns into mega-bloat overspending with no accountability, no recourse against anyone (or any contractor) that doesn't deliver, and instead rewards incompetence with ever-increasing contract-awards to continue delivering zero value to the taxpayers!

I can't help thinking: a recession could be totally avoided IF our government would direct spending in an efficient manner towards projects that generate true long-term value for America. But, I still posit that such a thing is impossible under the current regime of corruption that permeates every level of Federal, State, and regional government.

As such, this great Country of ours will continue to see its standard of living erode, and our standing on the world stage further diminish, as greed and power-quests ROT us at the core and dictate business-as-usual in government while the money flows in torrents to those with great connections / lobbyists. It makes me sick.

Government Waste: 2010 Census

If our government overtly tried to waste more money, I'm not sure it could. Nary a day goes by without yet another headline about some insane waste of huge piles of our hard-earned (and easily wasted) taxpayer contributions (a nice way of saying TAX) by a Federal, State, County, or Local government agency.

Have you ever sat down and calculated how much a particular incident of waste is on a per-person basis (for every man, woman, and child in the USA, or in whatever tax jurisdiction is in question)? When you put waste in terms of a per-capita number, it really drives home how insane and staggering the waste truly is.

Today's example is courtesy of the United States Census Bureau (part of the Commerce department), and their current (and typical) government waste project(s). For the 2010 census, the goal was to use some nebulous "technology" to help make the process simpler, and ostensibly more efficient too I presume. As always, instead of cost-savings, every one of these contractor-laden money-sucking waste-maximizing projects ends with the same result: i.e., no results! Well, no result except mismanagement, overspending, under performance of all parties involved, etc. etc.

Here's a quote from an AP news story on the matter to give you a feel for what idiocy is involved THIS time:

Commerce Secretary Carlos Gutierrez told Congress Thursday his department will scrap plans to use handheld computers to collect information from the millions of Americans who don't return the census forms that come in the mail.

That's one of a number of changes that will add as much as $3 billion to the constitutionally mandated 2010 count, pushing the overall cost to more than $14 billion.

This was to be the first truly high-tech count in the nation's history. The Census Bureau had awarded a contract to purchase 500,000 of the computers, at a cost of more than $600 million. The contract is now projected to balloon to $1.3 billion, even though bureau will scale back its purchase to only 151,000 computers.

Wow, you have to be loving this last sentence if you are the contractor providing those computers.

In a time where the price of technology everywhere (except government settings) always goes down and the power of the equipment increases with time, again, the government contractors find a way to get the US Taxpayer to continually fund these jerk-the-taxpayer never-ending no-questions-asked no-accountability contracts where prices can keep escalating with every passing moment, regardless of any original agreement. The "computers" in question went from an original price of $1,200 each to $8,609 each!!! That's nearly 7.2 TIMES the original price (i.e., 620% cost overrun!), but yet, the money keeps flowing.

Will this ever stop? NO! We will all continually be fleeced. Just calculate the cost per person (using 300 million as the approximate United States Population). Yes, we each are on the hook for $4.33 JUST for the computers, which, it turns out, were found to be too tough to use (and won't be used from the sounds of it)...

"The computers proved too complex for some temporary workers who tried to use them in a test last year in North Carolina"

If they really didn't work or meet the needs, then don't pay for them!!

OK, now let's examine the whole picture and how the cost per every USA resident for the 2010 census is going to be nearly FIFTY DOLLARS (based on the the current $14 billion estimate, divided by the 300 million people here). HOW IN THE HECK CAN IT COST $50 per every man, woman, and child here to count each of us and collect some basic information?? UNREAL!

How many of you would LOVE to just get a $50 bill handed to you to spend for completing an online web-form with information required by the census. Better yet... $50 for every member of your family? Wow... better yet... how about $50 for each person's information you collect and turn in (I'll canvas my neighborhood and collect thousands!!!). This is INSANE that data collection for the 2010 census can cost $50 per person (and, this is under the almost certainly false presumption the cost will not go higher as time passes!)

If the Commerce Department offered a "bounty" for collecting information, I'm rather sure they could cut the total cost in half or less. I'd be fine with getting $25/head for any information I submit or collect from others. I'll go to all the nursing homes in the area and make a fortune. I'll scour the neighborhood.... etc. I'm sure MANY people in this country would gladly take on a task for such an incentive.

That's my point! Why the heck does it have to cost so damn much to get ANYTHING done by the government? Introduce the words "contractor" and "government" into the equation, especially in the same sentence, and prices go through the roof, and we all have to pay for it. I'm sick of working and paying taxes just to see it wasted with little (if anything) to show for it, and with no accountability (doubtful anyone, at high levels especially, will lose their jobs over this).

So, just think of this right now: count the people in your household... multiply by FIFTY... yep, that's what your share of TAXES to pay for this 2010 census are going to be. Not only will you not get paid to submit your information, you will get to pay for others to collect it - at seriously inflated prices. Ah, what a wonderful system that is bound to collapse.