Keys To The Kingdom

Ah, so good to be given the keys to the kingdom. 

Even if only for a day. 

What to do:

– 1st key – Heal the sick, feed the hungry, raise the downtrodden.

– 2nd key – World peace, for sure. 

– 3rd key – Revitalize our ailing planet and make it sustainable.

– 4th key – Unleash innovation and give everyone a decent living wage to care for themselves and their families. 

– 5th key (the Capstone) – Bring the Messiah and everyone behaves righteously and worships the one true G-d of all.

Uh, and I need one more key to balance the budget and pay off the National Debt. 😉

(Source Photo: Andy Blumenthal)

Balancing The National Books

Bret Stephens had an interesting opinion piece in the Wall Street Journal (28 May 2013) called “The Retreat Doctrine.”

He argues that America’s retreat militarily from Iraq and Afghanistan may not mean revitalization for us by refocusing on domestic issues, but rather decline by prematurely ending a war with enemies that may not have ended their hatred and hostilities to us.

Interestingly enough, it is not just on the battlefield that we are retrenching, but on many other fronts as well, for example: economically, we are cutting federal budgets; monetarily, we are anticipating cutting the $85 billion per month bond buying by the Federal Reserve; social entitlements like Social Security and Medicare are on the butcher block, defense cuts are imperiling military programs, and employment cuts have resulted in a labor force participation the lowest in 30 years.

While many cuts are beneficial in terms of beginning to get our arms around the over $16 trillion deficit we’ve accumulated and in forestalling another rating downgrade by the big three credit rating firms, it is as Stephens implies, perhaps not a sign of health and renewal, but of national illness and a retrenchment of a global power.

I remember in Yeshiva learning (Exodus 34:7) about the sins of the fathers being visited on the children and grandchildren–3 and 4 generations–and I always wondered how could a just G-d hold future generations responsible, accountable for what the prior generations did?

But perhaps, the answer is evident here, where we cannot blame G-d for our own actions, where we live big, beyond our means, and cause future generations to pay the piper.

When the stock market is rallying–up almost 17% year to date and about 27% over the last year, while our GDP growth is only about 2.4% annually, something is very off-Kilter.

You can argue that retreat is renewal or you can see retrenchment as leading to decline, but either way we will be paying the national bill coming due and all our children will be on the hook for cleaning up after the party is over. 😉

Righting Our National Economy

We made it through he fiscal cliff–whew!  But the economic landscape remains a minefield. 

In terms of our national debt ceiling, we already passed the $16.4 trillion mark at the beginning of the year and are on borrowed time (no pun intended) until about mid-February when we exhaust accounting gimmicks and can no longer pay our national bills. 

Then there is the elusive government budget where we are on a “continuing resolution” that funds the government at the prior years spending levels until the beginning of March; there is no agreement on what the budget should be after that. 

Finally, there is the Sequestration that was delayed from the beginning of the year to March, which will produce across the board budget cuts to government–not surgically, but sweeping cuts that will hit almost all major government spending. 

All of these budgetary and debt issues are highly contentious and politicized and involve substantial policy decisions in terms of tax reform, spending cuts, and even income and wealth distribution. 

As difficult as it is to navigate a mine field, there is genuine fear that our national luck is running out and the sides are digging in such that even if we get over another one of these hurdles (likely by another delay) or even two of these, what are the odds that we get through all three unscathed economically and with our national image and strength intact?

Already in August 2011, S&P lowered the U.S. credit rating because of these unresolved issues and political stalemate around them, and Moody (in September 2012) and Fitch (this past week) threatened the same putting us at risk of higher borrowing costs, inflation, and even recession. 

Bloomberg BusinessWeek (3 August 2011) using game theory seemed to advocate for political compromise–that produces a “deal no one likes” but avoids pure political victory by one party over the other where one party gives in and the other holds out, and also avoids “financial Armageddon” where both sides hold out and can’t get any deal done at all. 

In games of “chicken” both sides “entertain the option of killing everyone” until they finally realize this results in mutually assured destruction (MAD). 

In Washington “everyone, however, is playing a game called ‘election'” and “the only possible goal in that game is to win the next one”–in this game, the real question–is there the leadership to rise above the politics, the short-term focus, and bring the two sides together in compromise to forge a path through a difficult economic road ahead. 

Truly, there is really only one way ahead and it is through national sacrifice that will spare no one, but may save the country and our ideals and make us stronger in the end. We are at a dead end for kicking the can further–next step must be to right the ship through cooperation and making the tough choices.

Just like the Washington Monument is one, we must become one. 😉

(Source Photo: Andy Blumenthal)

Getting Off The Debtor Highway

I.O.U.S.A. (2008) is the best explanation of our nation’s financial problems and the deep severity of these that I have ever seen.

This video is a 1/2 hour condensed version of the full almost 1 1 /2 hour award-winning documentary.

David Walker, the former Comptroller General of the U.S. (1998-2008) is the star of this movie.

The documentary, with Walker’s steadfast warnings, describes the 4 ominous deficits that are driving this country to Financial Armageddon:

1) Budget Deficit

2) Savings Deficit

3) Trade Deficit

4) Leadership Deficit

What is incredible is how rather than listening to Walker’s exhortation, when the National Deficit was $8.7 trillion in 2007, just 5 years later now, there is a deficit going on nearly double that of $15.7 trillion.

We are facing a financial ticking time bomb that could result in huge inflation, economic stagnation, and the undoing of our economic and national security.

Moreover, towards the end of this year, we are facing the economic one-two punch of rising taxes and reduced national spending that could easily send our economy spiraling into recession or even depression.

Add to that rising interest rates, a financial crisis in the  European Union, a continued housing crisis and high unemployment at home, and a true economic reckoning is at hand.

Watch I.O.U.S.A. and become proponents for financial discipline for ourselves and for the country.

Growing America’s Jobs

ABC News reported tonight of a home builder in Montana making a house entirely from American made products–as difficult as they are to find.

The home uses more than 120 products from 33 states and costs only 1 to 2% more than a foreign-sourced one.

The builder who is also an economist says that if builders around the country would just increase their use of made in the USA products by 5%, we could increase jobs by over 220,000 right now.

Multiple it by ten, if we actually produced these homes 50% or more here in the USA–that’s 2+ million jobs.

It makes you wonder if all the outsourcing is just another addiction where we feel good now–by saving a little today at the checkout line–but we pay the piper down the road, through the gutting of our own labor force and the future capacity for us to produce.

While, I don’t believe in circle-the-wagon protectionism out of fear of competing in the global marketplace, I do think we need to assess the deals we make to ensure that we are getting the best for our people and our future–and not just for the next quarter or two, but for the long-term!

Having started my career in business, I am well aware that this is “one big balance sheet” and things have to add up or else short-term profits today are made at the expense of long-term capabilities tomorrow.

If the strategy was that we would somehow give the blue collar work to others and keep the white collar work for ourselves, it seems like we have deluded ourselves into thinking that a one-size fits all economy will keep America running. 

We need broad based opportunities for our diverse workforce in all areas of work, and we need to remain strategically self-sufficient, so that we do not outsource ourselves to economic death, where we lose the know-how or capability to help ourselves.

Buy, build, and work America into an economic powerhouse that the world relies on, rather than one that is fed by others with economic loans and cheap goods made in wherever-land.

In my opinion, there is no real alternative to balancing the national budget as well our current account deficit–if we consistently spend more than we earn, and the ships keep unloading more stuff here and then going back overseas half empty, eventually the system has got to go kaput!

As the world’s superpower, our coffers can once again be full and our ships can brim proud with made in America wares–but this can happen only if we focus on products that outlast, outlook, and outperform.

Competition has never been more fierce and the stakes never higher for us individually and as a nation–we will need technology to keep us steadily improving and releasing the pressure from this enormous economic cooker.

(Source Photo: here)