One Shovel Full At A Time

The United States Court of appeals has held up the bankruptcy court’s opinion by passing the Chrysler case on to the Supreme Court, assuming of course the Supreme Court agrees to hear the case. Bankruptcy law declaring secured creditors as primary have been in effect for 150 years, not to mention the 5th Amendment to the Constitution which prevents the government from confiscating private property without due process. For the purposes of political pay back President Obama is taking the wealth of secured bond holders and handing it over to the UAW and a foreign corporation.

The Obama administration has not only shredded the constitution, it has somehow coerced the federal courts into being complicit in ignoring the rule of law. From my perspective, and at a personal level, I would never purchase another corporate bond in my lifetime. I did hold several corporate bonds inside the bond fund of my 401k, and if you have a 401k or a managed IRA, or any retirement investments such as a pension, you do as well. In some cases you do have some control over those investment directions. In others, such as pensions, you have zero control over the investment direction. Two weeks ago I dumped all of my bonds in favor of cash positions, until I can determine another investment direction that pays more than 1.5%, and offers as little risk as I am comfortable with. The bond market has been that choice for most of us until now. I am not alone, as the bond market has dropped like a rock in recent weeks. There are many factors affecting bond prices, but the lack of faith in the U. S. government by investors will ultimately render bonds as high risk, and drive prices to unheard of levels. The relationship of bonds to interest rates could in fact reverse as a result. Bonds are quickly becoming worthless right now, and even the federal government will feel the pinch when trying to sell treasuries to China.

Anytime the government takes action that is in violation of its own laws, the markets will react, and they are reacting to what our government is doing in 2009 in a very big way. That's why Timothy Geithner was in China this week, and the reason Hillary Clinton was there earlier this year. If China doesn't continue to finance our debt, and the fed has to keep buying the treasuries to finance the Obama budget, our dollar will drop in value relative to other major currencies to the point our corporations won't be able to compete in the international market, and we will go into hyper inflation. That isn't theory, it is economic consequences.

We must get the people behind the effort to stop the government from stomping on our rights. We are at a critical point in our history, and if we do not stop the president and the Congress from passing legislation we can't afford, our country will go functionally bankrupt. It is not out of the realm of reason to expect that to be the outcome in the not so distant future. Obama's economists are arguing it is temporary, but their numbers assume GDP will grow by 3 % in 2010. Those same economists predicted we wouldn't get to 10% unemployment until next year if ever. We hit 9.4% today, even though the government changed the method of counting jobs, and just added 225,000 new jobs for the month of May by assuming that number of jobs are added every May due to the birth/death rate. By the way, the birth death rate has nothing whatever to do with life, but business being created and failing historically in the spring. They really just fudged the numbers to make the economy look better. We are still losing over 500,000 jobs a month. This isn’t the first time Obama’s czarist administration has fudged the numbers. Many economists argue the government is using Goldman Sachs to bolster the stock market on a daily basis. You certainly don’t hear that on NBC or in the NY Times


When last we had a government this far out of control, in 1977, interest rates were at 6.25%. When Jimmy Carter left office, in Jan 81, interest rates were over 21%. There are a great many people now who are where I was then. I didn’t realize that the president’s actions were affecting me personally. I knew that interest rates were high. I knew that inflation was out of control. I new I got laid off, and had a new baby, but didn’t realize what caused all that nonsense until much later. I think there are a great many people today, about to hit those same hard times, if they haven’t already, and they are still enamored with Barack Obama, thinking he is going to make everything better, just as we were happy with Jimmy Carter when he took over after the disastrous Nixon/Ford administrations. All these people who are in favor of Obama and his policies now will find out after the fact that the media doesn’t tell the truth. The media is liberal minded. They attack conservatism, and applaud liberalism. They punish conservatives mercilessly, and forgive liberals right up until the bottom falls out, and then they turn vicious, after the damage is done.

Yesterday Microsoft announced they are moving a significant number of jobs overseas to avoid the increase in the corporate tax rates. The U.S. already has the highest corporate tax rate of any developed country in the world. Continuing to tax at a high rate is counter intuitive. That has been proven many times around the world. Finance and economics are complicated subjects, but people understand very well their personal finances. It is the same, even at the national level. You can't spend more than you make. We have been doing it for years, but at the levels we are now spending we won't be able to even pay the monthly minimum! Congress initiated legislation last week to implement a federal sales tax. They are calling it a VAT, value added tax. Collecting an extra 20% on every purchase made in this country would likely pay our bills for the next few years, but our standard of living will change drastically. That is where we are headed, full bore, in broad daylight. The mainstream media isn't telling anyone it's coming. You will know when it gets here though.

The president owes the UAW and the AFL/CIO for their support in his election. He is paying them back in full, and in many ways, not only by giving them preferential treatment in this case, where the rule of law is ignored. He is also supportive of the so called card check law, which removes the secret ballot from union organizing, in the event it is passed, thereby thwarting right to work laws in many states, including most states in the south.

If it were just this, perhaps it wouldn’t be so scary. But it isn’t just this. President Obama is already up to 16 Czars, unaccountable to anyone but the president of the United States. These Czars do not have to be approved by the Senate. They aren’t accountable even to the press. No one, other than the president even knows how much they earn for their efforts. Their power is apparently limitless. The car Czar has just determined which car dealers are out of business, and which ones still have a franchise. Even the CEO’s of GM and Chrysler have no idea how the losers and winners were determined. We will have Czars making decisions that affect every one of us every day inside a year.

Remember typing class? Now is the time for every good man to come to the aid of his country. If ever there was a time, this is it. Many of us already get it, but even more still do not. We have to get the word out to our friends, family, and coworkers. We must all do everything we can and then some. Not only do we need to help garner support to defeat the out of control government, we are going to have to live the difficult times. There is no free lunch, and we will most certainly have to suck it up in the coming economy. People still approve of Obama because he is promising to give everyone a check, a free pass, and the promise of a nanny state to adjust the mortgage, provide free health care, reform education, get us off the Mideast oil addiction, all while cutting taxes for 95% of us. The truth is that can’t be done. Not by Obama, not by anyone. We all know that, but 60% of America is still living in a pipe dream. I don’t understand it, even in the people I know, who argue in favor of Obama passionately, and unreasonably.

We have a lot of work to do, but convincing that 60% will become easier and easier as time goes on. Many are already waking up, and as the promises are broken one by one, and especially as liberties disappear, our friends and family will come around. That is when the heavy lifting will come. We have to deal with the mess caused not just by Obama and his Czars, but the mess we’ve all collectively made for decades. We have to take our country back by taking our government back, then by digging out of this hole the hard way, one shovel full at a time.