Wandering Minds...

... Okay ... I'm a putz. I had a nice long ramble typed out and went to copy it so that I could run it through the spell checker and ... I erased it completely. Turns out that had I thought about it at the time I could have used ctrl+z and recovered it ... but well we're back to that 'I'm a putz' thing. Ah well I'm sure it was needlessly boring and wordy anyway probably better that the random whims of the Internet have spared you all the torture of reading it....

And so I'll have to rewrite it all and as a result you'll get the shortened version ... maybe...

Taxes suck ... 'nuff said. Pass ... Fair ... Tax ... NOW!

Actually I didn't talk about taxes in the original ... but I haven't hit you all with a 'Pass the Fair Tax now.' in a while so I figured now ... as we approach tax month ... was as good a time as any.

In listening to news talk radio on Friday morning, I heard a caller call in that had been doing some research about the deficit and the Clinton and Bush administrations.(keep in mind that I don't have the research and am too lazy to look it up ... as such any numbers are from memory from the caller and should be taken with a grain of salt and researched for accuracy) His question in particular was about the last 3 years of the Clinton administration ... the administration (and media) had reported budget surpluses all three years, however, despite this fact the federal deficit grew during those three years by between 1 and 2 trillion dollars; how could that be?

The answer seems to be that the amount of the surplus did not cover the interest due on the already existing deficit. This, however, would seem to indicate a fundamental flaw in the federal budgeting process ... namely that they aren't budgeting to pay the interest on their existing debt. Gee ... wish I could do that and get away with it....

But then again that is completely in matching the thinking of congress and the government in general ... wait long enough and it will be someone else's problem. If a private citizen or business tried to get by without accounting for the interest on the debt that they had they'd soon go bankrupt and/or out of business completely. The government, however, just keeps on trucking ... just roll that interest into the debt ... and someone else will have to deal with that note later.

I bring this up because I am sick of hearing people parroting that Clinton paid down the deficit ... no ... he slowed it's growth but he didn't pay down a dime.

Not to say that "W" hasn't been bad or even worse than Clinton in that respect ... he's nearly doubled the 5.4 Trillion dollar deficit he inherited in his 8 years (iirc at last report the deficit was just under 10 trillion at this point ... much of which is accumulated interest) and as a result the annual interest on that debt is just shy of 500 billion a year ... even in terms of the federal budget that's not an amount to sneeze at.

The deficit is one of, if not THE biggest drag on the American economy ... and speaking of the economy the government just needs to butt the heck out and let it correct. The only thing that they are doing in propping up and bailing out these businesses and investment firms that made high risk choices and are now paying the price of those choices is 1-rewarding bad behavior and decision making, and 2-prolonging the situation giving us farther to fall once it does ...

The economy itself is not in terrible shape ... the market is unstable ... yes ... largely due to several factors resolving around the uncertainty in a couple of markets due to bad investment and loan choices by some very big players. This (combined with constant reporting on how bad the market and economy are doing) has the effect of making both lenders and borrowers very leery of things as they stand and employers and small businesses get antsy about increasing their expenditures in such times (meaning a slowing of growth, lack of raises, lowered spending on the business front) ... which directly translates to a lowering of consumer confidence and spending.

Other factors in the economy are, on the other hand, showing good numbers. Un-employment (while much hyped as being a 'horrible' 5%) is actually not bad, and though it did go up that % is actually considered pretty good by a lot of economists. There is a point of 'minimum unemployment' (and that may not be the correct term it's been a long time since my basic econ classes) ... the point at which an economy will start to suffer from unemployment being too low, and this is, if I recall correctly, in the 3-5% unemployment range. The reason being that once an economy starts to get much below that it becomes significantly more difficult for employers to find qualified employees that are not already employed (leading to wage inflation which stifles expansion and growth of businesses).

So basically it would likely be a lot better in the long run for us to just go ahead and let this correction happen and get it behind us rather than trying to keep it at bay only to have it hit us harder down the road.

Of course the fact that we are in a Presidential election cycle doesn't help the uncertainty in the economy. The fact of the matter is that investors, both domestic and foreign, get twitchy during Presidential elections due to the uncertainty of the future leadership and direction of the country. This year's election is likely worse than normal as a result of the fact that we do not have an incumbent President or Vice-President running for the office .... essentially we don't have a 'devil you know' candidate...

Okay you could argue that Hillary is a 'devil you know' candidate ... but then again, at this point it is still far from certain who will get the Democratic nomination ... or a Vice Presidential offer from Obama if he should manage to get the 'nod'. In fact I'd say the democratic nomination uncertainty in general is probably adding a whole new layer of waves and unease to the market....

And since it's a quarter to one in the morning ... I'll leave it at that for now....