Denial is not a river in Egypt

Hi,
A few thoughts for today -Hope is not a strategy, The big "W" is not Bush, and a Light at the end of the Tunnel:

---Hope is not a Strategy----
Hoping Iran will not develop nuclear weapons is a flawed plan at best. If you had a plumber who constantly lied to you and did bad work, would you let them bid on your next job? Of course not, so why do we believe that talk will do us any good? Quite simply it is because the politicians are not people of principle, they are self interested cowards. We voters have to realize it is our own fault for not working harder at vetting such people before we vote for them. Too often we are faced with the "lesser of two evils" strategy. One enterprising person has come up with a plan - www.votethemouttoday.com or maybe www.voidnow.org. Short of term limits, a new idea gaining momentum is to simply not vote for the incumbent. It at least guarantees a turnover and, based on statistics, we might eventually find a good one!

Hoping our pols will listen is becoming a poor strategy, so please vet the candidates next time you vote!

----The big "W"----

Well, I am predicting a W recession. It seems inevitable. What I have come to understand about the economy is that it takes 6-9 months to turn most any system around, in the best of times with quality people. The second dip will be the inflationary period, similar to the Jimmy Carter era with 17% mortgages and 21% credit card interest. Obama will be the next Jimmy Carter.

We had a chance to moderate the bank crash, but GW messed it up by interfering with the ability of capitalism to work and banks to fail. Obama enhanced and accellerated the life saving efforts with TARP. Now we have the walking dead, true economic zombie firms. All they do is slow things down for everyone else. If AIG were a horse, we would shoot it, same for GM. The liberals would "socialize it", which is what we have, i.e. terminal care end-of-life support. Please AIG and GM, take the blue pill!

Today in the Wall St Journal, two Harvard scholars write that EVIDENCE, yes, real facts, show that the stimulus plan has no real multiplier, or additive value to our economy(Keynesian economics does not work), but more EVIDENCE shows that TAX CUTS will truly stimulate the economy. It does not take a genius to understand economics, I know all I need from third grade. Supply and demand is a universal law. If you tax something, you get less of it. Make it cheaper, you get more of it.

What this means to you and me-
Supplying cheap credit to failed firms....hmmm. get more of them? Making abortions government paid....hmmmmm, get more of them? Making health care available to illegal immigrants....hmmmm, get the idea?

The Fed is printing money with no audits or oversight, Ron Paul will become a national hero for his idea to eliminate the Fed. At the very least, I would like to know why we, the taxpayers, are not allowed to have an AUDIT of the Federal reserve. As a former SOX auditor, I know that many corporate execs would wind up in jail if they behaved like our government does. They are playing a money shuffling game by buying back debt after it goes thru the public markets; be very afraid. Enron taught them well.

Financially, this term is called "monetizing the debt". It sounds good, tries to fool you, but in reality , printing more money without any value has a DIRECT correlation to the first rule of economics - supply and demand. It will cause the dollar's true value to plummet. The only way to protect yourself is to have a lot of cash, and when the time is right, invest in CD's that will pay an ever increasing interest rate. I remember when my parents had CD's paying 15%, not uncommon under Jimmy Carter.

We had a chance in Q1 2009 to allow the markets to go through a "creative destruction" period which would have resulted in a V or U recession, but interfered with that process, so now we will need another 9 month or more period to try again to get it right with economic policy. Remember, corporations have to construct budgets yearly, usually by calendar year, and this time of year starts that cycle for most firms. This will lead to uncertainty for the next corporate budget cycle for 2010.

The Light at the end of the Tunnel-
A company I have been watching recently went public, they make nanotechnology energy systems. Their IPO was a huge success, their stock rose about 50% the first day. The deal flow rumor mills have started to indicate to me that there may be a new hope for IPOs and new small cap growth firms emerging within two years. Coincidentally, the timing will be soon (6-9 months) after the fall 2010 congressional elections. Vote in more conservative politicians who favor small business and let us keep more of our own money......hmmmmm, get more prosperity??

The job markets are still murky, but because of demographics, again, hard facts, more baby boomers will retire as time goes by. The job picture will start to get better, but very slowly because of the big W.

Who we elect in the next 2010 cycle will directly affect the prosperity of us all. Please vet the candidates and actively support any fiscally conservative candidate with integrity. This takes real work, but prosperity is not guaranteed by the Constitution; remember my prior post?