Debt Ceiling Comopromise?

Apparently, there has been a deal struck between Joe Biden and House Speaker, Kevin McCarthy on the debt ceiling. And as I’ve said many times, it is something neither side is going to like, but knows they must accept to avoid the US defaulting on it’s debt on June 5th (the new date Janet Yellin said was the drop dead date).

Now the question becomes, will there be enough votes to get the bill through Congress? It contains a Biden demand that the debt ceiling last for two years, not less than one that the House bill Republicans passed. It does not set a specific spending limit to the debt ceiling, more of a timeline. It freezes, or has small cuts in spending for 2024’s budget that starts October 1st, rolling back to the 2022 budget and will only increase by 1% for the following six years according to a one-page GOP memo.

For the GOP, they got a couple of things they wanted too that Democrats will hate. The agreement increases the age in which food stamp recipients must work. Currently you must seek employment if you’re on SNAP and 49 years of age or under. That has been increased to 54 years of age. However, homeless and Veterans are exempt from the age increase. The deal does not effect spending on Medicaid, which the White House said the “MAGA Republicans” wanted to do away with (not true). And it keeps in place Biden’s student loan program (for now…until the Supreme Court releases it’s decision on the matter next month).

In the long run, is the bill good for the country? I’m wondering. I know we don’t want to default on the debt, that would be a huge catastrophe. But it seemed to me like the GOP gave much more than it got in these negotiations. Initially, the spending cuts were to total three times the amount of the debt ceiling increase. That will stay in place with little reduction next year, and will limit increases in the budget to 1% a year for a total of six years. However, according to someone that has seen the actual proposed bill, there are no “non-enforceable appropriations targets” after 2025, so even though they say the 1% increases are going to last six years, that doesn’t mean it’s written in stone.

One thing that the GOP wanted and got was a cutting of the full $80 billion in IRS additional spending over 10 years. That means that the IRS probably won’t be hiring those 57,000 additional agents to come and audit you. And the White House caved on a major energy permitting reform, making it easier for oil companies to drill for oil in this country.

McCarthy said last night that there were no new government programs added to this bill, and there were no new taxes included in it either, both of which should make the GOP folks rather happy.

Now the question becomes, will this pass muster in the House and Senate? It most assuredly will have to be a bi-partisan piece of legislation because the Freedom Caucus is already saying that it’s dead on arrival. Democrats aren’t at all happy with the fact that the spending is frozen at current levels with a slight reduction in certain non-defense programs next year, and they only get a 1% increase in 2025 (inflation will be more than that!).

I think passing the Senate will be a lot easier than passing the House, but I’m sure there will be enough Democrats that will join the non-Freedom Caucus folks and vote for it. There will be some Democrat dissention. I can imagine the Whack Job group that AOC heads up is going to most likely vote no on the deal. But this should pass the House as well, with some lubricant to various lawmakers.

McCarthy will post this today so that the members can take a look at it, and a vote will be scheduled for Wednesday. Once again, the government runs right up to the last possible moment before making something happen. I’m just surprised they didn’t kick the can down the road again…of course, you can say that they did when you look at what each side got. Spending won’t decrease, and the debt ceiling did increase.

Carry on world…you’re dismissed!

T-Minus 10 And Counting…And Who Is To Blame?

If you’re watching anything to do with the debt ceiling debate, you know as well as I do that the negotiations aren’t going very well. Of course, that depends on who you are listening to. But in case you’ve been busy getting ready for Memorial Day weekend coming up, there are 10 days left before the debt ceiling issue causes a default of the government.

And who is to blame?

Well, again, that is going to depend on where you get your information. The White House is still blaming the House Republicans for passing a debt ceiling increase that included going back to the 2022 budget, and cutting $4.5 trillion dollars from the overall spending over the next 10 years. It would raise the debt ceiling $1.5 trillion or until March 31, 2023, whichever comes first. Democrats have poo-pooed that and said they want a “clean debt ceiling bill”, without any negotiations on cutting spending. That’s what Democrats do, after all.

So, as I sit here and look at this and figure out who’s to blame for this mess, there are three places to put the blame.

The first is squarely on Joe Biden. For a guy that said initially that he wouldn’t negotiate with Kevin McCarthy on anything that included a reduction in spending to go along with the debt ceiling increase, he once again, apparently has lied. Or changed his mind…or read the polls that said it would be his fault if we defaulted on the debt. Biden hasn’t come out publicly and said that he has negotiated anything, and neither necessarily has his team that’s meeting with the Republicans. We haven’t heard of him budging from his “clean bill” status. McCarthy has moved the needle some, saying that the GOP has come off of the 2022 budget and have increased spending somewhat more than that. He hasn’t said how much.

Most Americans blame the Democrats at this point because they don’t believe that Biden is negotiating in good faith. Usually, negotiations are a give and take. You aren’t going to get everything you want and neither is the other guy. And if Biden is sticking to his guns that there won’t be any spending reductions, he is at fault and there is no question there.

McCarthy is right that he isn’t going to be able to pass a clean bill through the House. And while most Americans will blame the Democrats on this one (until the media slams the GOP), you have to understand that the Republicans are also at fault here.

Yes, the debt ceiling and over-spending is traditionally a Democrat caused problem. After all, it was the Democrats that have increased the spending on the federal budget by 30% just through three programs, Social Security, Medicare, and Medicaid. That said, it was their programs that have put us in the position where all three of those programs are going to have to face draconian cuts up the road. But the Republicans have gone along with it. And if you look at who has raised the debt ceiling the most, it’s been the Republicans. Donald Trump raised it twice. George HW Bush raised it four times, George W. Bush raised it seven times for a total of 13 times. Bobo Obama raised it seven times, and Bill Clinton four for a total of 11 times.

The problem here isn’t which party raises it the most, or who wants the “clean bill” passed. It’s that neither party wants to do anything substantive about it. What they need to do is pass a balanced budget amendment to the Constitution that would not allow Congress to spend a nickel more than they have taken in from taxes and fees. As it stands now, the American people don’t have a clue how much Congress is really spending. If they saw it in the form of tax increases every time Congress spent more than they took in (kind of like an assessment given to members of clubs at the end of the year), there would be all sorts of hell to pay. A balanced budget amendment is the only way to go. States must balance their budgets. So must cities and municipalities. Why can’t the federal government do the same thing?

And it’s both parties that have balked at this. Neither has issued a strong effort to pass a balanced budget, even though they controlled both Houses of Congress. It needs to be done, and the sooner the better!

T-Minus 10 and counting…

Carry on world…you’re dismissed!

EXTRA! What ChatGPT Says About The Debt Ceiling Debate

The following wasn’t written by me. I asked ChatGPT to write an essay regarding the debt ceiling and spending cuts. The only restriction I placed on the chatbot was that the essay be about 500 words. Here’s what it came up with!

As the United States continues to grapple with the issue of its national debt, the concept of a debt ceiling has become a highly politicized and contentious topic. The debt ceiling, which limits the amount of debt the government can incur, has been raised numerous times over the years, but not without debate and controversy. One of the most persistent arguments in these debates is the need for spending cuts to be included in any debt ceiling increase. In this essay, I will argue that such cuts are essential to addressing the national debt crisis.

To understand why spending cuts are necessary, it’s important to first understand the root causes of the national debt. At its core, the debt is the result of government spending that outpaces its revenue. The government’s ability to borrow money has allowed it to continue operating despite these deficits, but that borrowing comes at a cost. Interest payments on the debt eat up an ever-increasing share of the federal budget, limiting the government’s ability to invest in other areas and increasing the likelihood of a fiscal crisis.

Given this context, it’s clear that the government needs to take action to address the national debt. While there are several approaches that could be taken, including raising revenue through taxes or reducing spending on certain programs, I believe that spending cuts are the most viable option for several reasons.

First and foremost, spending cuts are a direct way to address the root cause of the national debt. By reducing spending, the government can decrease its reliance on borrowing and begin to bring deficits under control. This is a more sustainable solution than simply continuing to borrow money to finance government operations, which only exacerbates the problem in the long run.

Second, spending cuts are politically feasible in a way that tax increases are not. While tax increases may be necessary in the long term to address the debt, they are often met with significant resistance from both the public and elected officials. In contrast, spending cuts can be targeted at specific programs or agencies, making them more palatable to some politicians and voters.

Finally, spending cuts can be implemented in a way that minimizes harm to vulnerable populations. While some programs may need to be cut in order to reduce spending, there are many areas where the government could make reductions without negatively impacting those who rely on government assistance. For example, the government could cut spending on wasteful programs or reduce spending on military operations overseas, while maintaining support for critical social safety net programs.

Of course, there are those who argue that spending cuts are not necessary, or that they will do more harm than good. Some believe that increasing revenue through taxes is the best way to address the national debt, while others worry that spending cuts will lead to job losses and economic instability. While these concerns are valid, I believe that spending cuts are ultimately the most viable and effective solution to the national debt crisis.

In conclusion, the national debt is a complex and pressing issue that requires action from the government. While there are several approaches that could be taken, I believe that spending cuts are essential to addressing the root cause of the debt and putting the country on a sustainable fiscal path. By reducing spending in targeted areas and implementing cuts in a way that minimizes harm to vulnerable populations, the government can begin to rein in deficits and address the national debt crisis.

If only we could get Joe Biden to listen to a chatbot!

Carry on world…you’re dismissed!

McCarthy’s Next Battle

I think Speaker of the House, Kevin McCarthy has already taken a step to winning his next big battle, after passing the Republican side of the debt limit argument. He has now got Joe Biden to back off of the “I’ll never negotiate on anything but a clean debt limit increase bill”, to the point where now he almost HAS to sit down with the GOP. And it’s slated for the next week or so.

Biden can thank Janet Yellen for that.

Yellen announced to Congress this past week that yes, we will indeed need to increase the debt ceiling by June 1st, or we are possibly going to have to shut down the government, run out of money, and default on our loans (which no one wants to do). That has forced Biden’s hand to say he’ll sit down with the top four leaders in Congress (Mitch McConnell and Chuckles Schumer from the Senate, and McCarthy and Hakeem Jefferies from the House) and talk to them. Ah, but Biden is still demanding (at least for now) that the spending cuts be separate from a debt ceiling increase.

So, the next battle that Kevin McCarthy is going to have to wage is to convince Biden, Schumer, and Jefferies that if you don’t have spending cuts of some kind in the bill to increase the debt ceiling, it won’t pass the House, and it will cause a default. Just for the record, the United States has never defaulted on it’s debt payments…at least yet.

The question at this point is, will McCarthy be the one to cave, or will Biden? My initial feel is that it will be Biden. I will say this. While a lot of people thought it demonstrated weakness that McCarthy needed fifteen votes in the House to actually become Speaker, I take it as a badge of courage of sorts. If McCarthy were at all weak, he could very easily have backed down and let someone else take the job. He didn’t care how long it took, he stood his ground. When it was obvious that in order for the GOP to put it’s mouth where the money was in passing their own debt ceiling bill, McCarthy stood firm, and negotiated a deal that allowed a majority in the House to get on board. Even though that bill will never see the light of day in the Senate, and Biden will be long dead and buried before it gets signed, it shows the American people that McCarthy could indeed be the man for the job.

Now the next test is how well he stands up to Biden with these negotiations. We are all aware that Congress can’t pass gas without a deadline. They have to scream at each other and finger point until the last possible minute before they teeter on the brink of disaster before passing something controversial. That’s why we don’t have anything passed about immigration reform. There is no deadline. And McCarthy has to stand firm. It’s actually very easy to do.

All McCarthy has to do is tell the Dems that there is no way that a clean debt ceiling increase bill is going to pass the House. And if they want to default on the debt, they are headed in the right direction by not negotiating in good faith. Any deal must include at least a three times increase in the debt ceiling in spending reduction. Without that, there is no further discussion needed, and it will be sung from the highest rooftops that it was the Democrats who decided to balk at this. It has nothing to do with reduction in social spending. It has to do with the fact that we just plain can’t keep spending money this way.

Remember back in the Obama Administration, it was Biden that went up to Capitol Hill and negotiated a bill that neither side liked, but both sides accepted. And if Biden could negotiate that back in 2011, he can certainly do it again. McCarthy and McConnell just have to be very firm. After all, nothing passes either chamber of Congress without the Republicans on this issue.

If McCarthy holds fast, and I really pray he does, he can change the course of Biden’s drunken spending spree. It’s something the country needs. We can’t afford another two years like the last two years!

Carry on world…you’re dismissed!

Giving McCarthy Some Credit!

Kevin McCarthy’s job is something I certainly wouldn’t envy. The guy has to heard a bunch of whining, screaming cats every single day he shows up at work. He has to get cohesiveness out of Jello, and make it look like caviar. And he actually did it with what has to be his biggest coup of his short career as Speaker of the Houe or Representatives.

He passed a bill showing the Democrats what the Republicans actually want in order to raise the debt ceiling.

I have to give the California Republican (yes, Virginia, there ARE some Republicans in Cali!) credit. Not only did he craft a bill that got all but four Republicans on his side, but he did so and stayed true to his prinicples. Yes, he raised the debt ceiling by $1.5 trillion or until March 31st of next year, whichever comes first. But in return, he got cuts to the eight billion new IRS agents, slashed Green New Deal spending in the infrastructure bill, and basically lowered the federal debt by some $4.5 trillion over the next decade. That’s not a bad start.

Now, you and I both know that McCarthy’s work is lost. It won’t go anywhere. It’s dead on arrival in the US Senate, and Chuckles Schumer probably won’t even entertain it, much less get people to vote for it. And even if he did, and if miracles happened and it passed, Joe Biden would pull out the veto pen faster than he trips going up the steps to Air Force One.

So, we can begin by saying the bill isn’t going anywhere. It was never meant to become law or to get Democrats on board. Biden had basically said, “Show us your bill if you don’t like mine!” And he did just that. So he took Biden’s shot, and slammed back across the net. Now it’s the president’s turn to do something with it. We saw what Biden wanted. We see what McCarthy wants, and let’s see if Biden is man enough to actually do what he said he was going to do all along…work across the aisle to get things done. My guess is he’s not going to.

Traditionally, Republicans are the ones that always seem to get the heat when it comes to shutting down the government, or threatening to not increase the debt ceiling. Democrats don’t seem to mind however large the debt ceiling is. They just want to keep spending. Because that’s what liberals do. They spend until they run out of other people’s money. Then they blame the Republicans (in this case) for not getting them more money. But in this case, McCarthy has made the case that Democrats need to come to the table and at the very least talk about getting a debt ceiling increase. It’s not going to happen automatically. And that’s what should happen.

Biden is going to have to back down from his wish for a clean debt ceiling bill. And McCarthy is going to have to back down from erasing the eight billion IRS agents, and cutting all of Biden’s cherished Green New Deal money that he hid in his inflation relief bill, and his infrastructure bill. Neither will get what they want. That’s called politics.

So, where does it go from here? Well, it is going to be a long hot, humid summer in Washington. And we’re going to see exactly what Kevin McCarthy is made of. Is he going to do what the Republicans typically do and cave on everything in his bill? Or his he going to stand firm, even at the thought of the US defaulting on it’s debt? It’s probably going to be one way or another. And IF he decides to back down, what does that say for his credibility? He will basically lose everything he has built up to this point.

McCarthy is in a very tough spot if you think about it. And I think he has only one play. Get as much of his bill through, but he has to get something additional besides a “clean debt ceiling bill”. If he doesn’t do that, he may as well resign as Speaker now, and save the country the trouble of watching him twist in the wind for the next year and a half or so.

I will give Nancy Pelosi this…she was very tough when it came to getting her people in line, and holding that line against whatever the opposition had to say. I’m just wondering if McCarthy was cut from the same cloth, or if that’s just a San Francisco thing?

Carry on world…you’re dismissed!

GOP Debt Ceiling Bill “A Good Start”

Kevin McCarthy took a while to get it done, but the Democrats have been clamoring for the Speaker of the House to stop whining about negotiations on the debt ceiling, and come up with a solution that would show what the GOP position was.

Well, he did it.

Now, McCarthy has to at least try to get it through the House. It’s obviously going to be dead on arrival in the Senate, where I doubt Chuckles Schumer will even give it the time of day. And to be honest, it’s a decent start. It’s not going to help our economy. It’s not going to put the US on better footing in terms of our debt, but it’s a starting point. And hopefully, McCarthy has learned during his time in DC, that the Democrats always play the long-game. They do things incrementally, and that’s I think what this does.

If you haven’t seen what’s in the bill, it’s pretty simple. Basically, it raises the debt ceiling by $1.5 trillion or until March 31st of next year whichever comes first. And to do that, it basically reverts all spending back to this year’s levels which will nix the automatic increases that spending programs always get. That will save about $4.5 billion.

Well Democrats…you wanted it. You got it.

This isn’t the overall solution to our money problem. This is a band aid. What really needs to happen is to not allow Congress to spend more money than it takes in, and to be able to focus on paying down the federal debt to reasonable levels. And no, $32 trillion is not considered a reasonable level.

What the end game for the Republicans should be is to introduce and get through Congress a Constitutional amendment for a balanced budget. This would require all bills, and all expenditures to be less than the amount of money the government takes in throughout the year in taxes and fees. And, if they were smart, they’d fix the amount that could be spent at say, 85% of the amount they take in so the other 15% could go to the debt. That is the way to fix this problem. Yes, it would be incredibly painful for the social spending side of things. And it would be painful if all of a sudden China decides to invade Taiwan and we’re stuck with no money in the pot because we’ve spent it all. But that’s what budgets are for actually, and it’s time our federal government steps up and actually follows it’s federal budget for once.

There are so many carve outs and additions to what belongs on the budget and what is spending that goes above and beyond the budget that it’s not funny. And this would have to be addressed in any amendment. Do you think, for instance, that the money we’re sending to Ukraine is being budgeted? Nope. There’s no where in the federal budget that the money we’re spending on Ukraine shows up.

And of course, if the Constitutional Balanced Budget amendment is tried, you’re going to hear how Republicans are trying to take money away from the indigent and the elderly. They have told us that 70% of all spending goes to either Medicare or Social Security. That’s true. What they aren’t saying is that they got away from what each of those two programs were initially designed to do. You aren’t supposed to be able to actually live on Social Security. And Medicare isn’t supposed to be a free pass at the doctor’s office and at the hospital.

Instead, now anyone that loses a parent, gets injured and can’t work, or is destitute can get hold of extra money that wasn’t ever supposed to go to them through the federal government programs. But Democrats have fought to get those programs expanded to the point that they’ve created a monster that they can’t tame. It continues to go belly up as more and more baby boomers are retiring and getting on the government’s money train. And there aren’t enough Millennials and Gen-X’ers out there to make up the difference. That and the fact that early on, the government saw fit to not give you an individual account with the money you and your employer paid into Social Security and Medicare. Instead they robbed that fund over and over again to pay for other socialist programs, most of which haven’t worked. And, here we are, once again proving by example that liberalism doesn’t work. It’s works fine until you run out of money. And this crop of liberals are going to have to come up with some sort of solution to get out of the jam their former members put them in.

And the ones that get hurt? We The People.

Carry on world…you’re dismissed!

The China Problem

Joe Biden has a rather large problem. It’s called China. And it’s not going to go away on it’s own. The mere fact that Xi Jinping traveled to Russia to meet with Vladimir Putin is certainly cause for alarm. But the whole thing goes much deeper than that. And I really don’t think anyone in the Biden administration has a clue on what to do about it. Except that Joe has made so much money from China, he doesn’t want to upset them any further.

Let’s look at some (not all…just a few) of the problems.

First off, you’ve got the total trade imbalance. The US currently exports about $120 billion in goods to China. We import $539 billion. That’s a deficit of $419 billion. And that’s a problem because China controls a lot of what we need in order to survive. Have you gone to the pharmacy to have a prescription filled and been told that they are “out” of the medication? There is a huge shortage right now of medicine in this country, and a lot of the medications we depend on come from China. There is a small move a foot to get some of those jobs sent back to the United States, but it’s years away from becoming commonplace. Then you’ve got the whole computer chip industry that’s taking place in the “second China”, Taiwain. We are starting to make inroads there, but that takes years. China currently makes 12% of the world’s chips. Taiwan makes 54%. The US? We currently add about 12% to the total. Between China and Taiwan, they make two-thirds of the world’s chips.

Let’s look at another area…education. China is sending their students here to get educated. Harvard, Yale, Stanford, Cal-Berkeley, they all are full of Chinese students. Currently, over 369,000 students studying at American universities are Chinese. And the rumor is that an awful lot of them are sending information back to the Communist Party in China. Yes, we are being spied on by Chinese students. What the Chinese can’t learn through our education system, they steal.

What about espionage. Do you think those balloons that floated over the US (and continue to by the way) a few weeks back were just on vacation? Of course not. And we allowed them to fly over military installations. China knows much more about us than we know about them.

China has infiltrated our youth through TikTok. And though TikTok CEO, Shou Zi Chew testified yesterday in Congress that his company isn’t doing anything untoward, they continue to track everything our kids are doing. There are over 150 million users in the United States alone on that social media platform. That’s about half the country! And they can listen in to what you’re saying, they can watch what you do and where you go, and they can send videos to you that THEY decide you should watch, regardless of whether it’s something you want your kids seeing or not.

While the US is mired in debates over stupid stuff like transgenderism, and liberal pronoun usage, the Chinese are beating us in every category out there. They have bought and paid for our president many times over, and continue to do so.

So, what’s the answer?

What needs to happen is the United States first needs to realize what is happening here. Second, we need to do something about it, and that will take time to unspool ourselves from China. They are so ingrained in our way of life today, that is not going to be an easy task. There will be pain, trust me. But we need to pull the plug on China. We can start by stopping all of those container ships coming over here and not do business with them. We can stop sending them stuff too. We can expel the 369,000 students here and send them back. And we need to develop a way to create medicines here, and if we don’t have the rare earth materials we need, we need to develop them artificially in the lab. And that all takes time.

Second thing we need to do is bring back our businesses from China. We need to stop sending them our best and brightest ideas to manufacture. We need to take Coca Cola, and Nike, and the millions of other businesses that are over there producing wares, and shipping them back here. We need to bring those jobs and those businesses back to the US. In order to do so, we need to make it so expensive for those companies to do business there. If you make it unprofitable for them to be there, they will return. Congress can certainly do that.

China has become more than a nuisance. They have become a millstone around our necks. And if we don’t do something about it, you’re going to be having ducks feet for dinner real soon!

Carry on world…you’re dismissed!

Not Big Enough To “B”

Silicon Valley Bank has collapsed under the weight of a terrible technology market. The California based bank had about $200 billion in assets, but shut it’s doors and is now under the auspices of the Federal Deposit Insurance Corp. And for those of you that remember back in 2008, the collapse of the banking system due to the Democrat inspired sub-prime loan debacle, you’ll probably harken back to George W. Bush’s time in office, when Ben Bernacke convinced him that banks like Citi, and Bank of America, and Capital One, and Wells Fargo were “too big to fail”, and needed to be bailed out.

Nothing like that is going to happen to Silicon Valley Bank.

Janet Yellen isn’t someone I normally give kudo’s to. She’s as liberal as the day is long, but she has made the right call on this one. Silicon Valley isn’t too big to fail. And it’s not big enough for a federal bailout. You’ll remember, that caused a massive recession (dubbed the Great Recession) back in 2009. It led to the federal government taking over companies like General Motors, and giving others like Chrysler a huge influx of cash. Airlines needed bailouts. Pretty soon, everyone had their hand out. And we sat back and watched the newly installed Obama regime gladly pass out money like they were passing out candy to a four year old.

So, I congratulate Yellen on her financial ability to say no. She does get the credit for this one. And while it was the correct decision this time, it should have been the correct decision back in 2008. No company in America should be too big to fail. And since that time, I personally have refused to do business with any of those banks that took bailout money. In fact, when my mortgage was sold to Wells Fargo, I immediately paid it off. They were a little surprised that they were basically going to lose money on the deal and asked why I would do that. I told them I don’t do business with banks that should be out of business…and yours should be out of business and your CEO jailed for robbing the American people. They didn’t like my response.

My view on business is simple. There are no guarantees. I don’t care if you’re a mom and pop store down on a busy street corner selling carrots, or if you’re Microsoft. It doesn’t matter. You have a duty to those people that rely on you staying in business, whether it be your family, or shareholders, to do what’s right. In the banking industry, they got screwed over when Congress decided that it would be a neat thing for everyone in America to own their own home. The banks didn’t fight it because they were now able to make loans to people at a much higher rate. What they didn’t count on was the fact that these people couldn’t afford the loans in the first place, and would end up defaulting on their obligations.

Seeing how the FDIC and the state of California has stepped in to oversee both Silicon Valley Bank, and Signature Bank which also collapsed in the mess, there will obviously be those that have been crying for a bailout that will be disappointed. The problem is that if you start bailing out these banks that fail, rather than give the customers their money bank that was insured by FDIC, then you’re doing exactly what conservatives are fighting the Biden administration over with the student loan debt.

Silicon Valley Bank took a risk in getting so heavily involved with the technology sector. They didn’t diversify into other areas that could have stopped their collapse, had technology been only one area of investment. But they went whole-hog to the tech sector, and it ended up costing them everything. That’s the nature of business. It IS survival of the fittest. Maybe this time, banks will learn that lesson once and for all!

Carry on world…you’re dismissed!

Jobs Numbers Don’t Tell The Picture

In case you missed it on Friday, the Department of Labor announced that there had been 311,000 jobs added to the economy in February. That was about 85,000 more jobs than the “experts” expected. However, even though there were more jobs than expected, and the “experts” thought the unemployment rate would be steady at 3.4%, it ticked up to 3.6%.

Shows that the “experts” really don’t have a handle on what’s happening.

What it does mean is that it looks as if the jobs are still plentiful. It also means there is something screwy afoot with the way the unemployment figure is concocted. If you have more jobs than expected, and the unemployment rate is expected to remain steady, how in the world does it go UP two-tenths of a percent? The answer is easy.

It doesn’t.

Mathematically, there is only one way that can happen. Yes, 311,000 jobs were added to the economy, but it doesn’t say how many people that were already working were either fired, laid off, or quit. And how economists deal with the numbers going forward are going to get more confusing.

First of all, there was a 0.4% increase to the average worker’s wage in February. That translates into wages going up 4.8% for the year. And that would signal that there were signs that workers wages are starting to not go up quite as fast as inflation (which remained steady at 6.4% for the third month in a row). Where is the additional increase in prices coming from then? Is it profit for the companies? Is it going to the federal government by means of higher taxes? It’s not going into my bank account, that I can attest to.

And while Joe Biden is all happy that “he” is adding new jobs to the economy, he’s not doing squat. It’s the economy stupid, as James Carville once pointed out. Yes, there are more jobs being added, but the unemployment rate is going up which means that more people are looking for work and not finding it. Or more people are getting laid off.

And here’s the sneaky little fact that may shock some of you…the Fed is going to be meeting this week to determine the next interest rate increase. That never has a positive effect on the stock markets. In fact, if you’re a borrower of any type, whether it’s a mortgage, a new car loan, or something else, you’re going to be paying more regardless. The only people that are happy about this are Senior Citizens who buy CD’s (though they haven’t gone up at all during the inflation craze of this administration), and people that are investing in bonds (bonds typically go in the opposite direction of stocks, and stock markets hate interest rate hikes!)

Overall, some may say that Jerome Powell and the rest of the Fed may be close to their “soft landing” with interest rate hikes, as they are only projecting a .25% increase instead of the usual .50% hike. But that doesn’t mean much. Inflation is still at 6.4% and hasn’t budged for the last three months or so. That tells me that prices are still rising. And if it’s not coming at the hands of the workers demanding more money, it’s gotta be coming from somewhere, right?

The economy is going to do what the economy does. There is really very little any president can do to influence what happens to the economy in a positive way. Oh, they can have Congress raise taxes, as Biden is proposing for next year, and when your economy is weak, that’s the worst thing you can do. Our economy isn’t that strong, contrary to what the folks in the Biden administration suggest. And if they were to get a tax increase (not likely), it would dampen any growth at the expense of higher government spending. And that’s something NO one should want to see happen!

Carry on world…you’re dismissed!

The Worst Is Yet To Come

Whatever you do, and I know you won’t…don’t believe Joe Biden when he says that we’ve turned the corner and everything in the economy is great. I know this won’t come as a surprise to many of you…but he’s lying.

Again.

In case you wondered why the stock market tanked on Tuesday by some 570 points, it was because Jerome Powell, the guy that’s the chairman at the Federal Reserve was testifying before Congress. It didn’t go very well. Powell said that the central bank may need to raise interest rates still higher because he expects inflation to stay around longer than he first expected. Or as he put it…”The Fed still has work to do”.

Cue the bucket of cold water aimed at Joe Biden.

The reason you raise interest rates is to cool off an overheated economy. That’s basically the only reason you do it. So, in the Fed’s mind, the economy is overheated. And when that happens, there needs to be an adjustment. That’s usually referred to as a “soft landing”. Basically what they are trying to do is gently slow down the economy without causing a recession. That’s a rare occurrence when they are able to do that. It’s a very tricky tactic.

An overheated economy can be caused by any number of things. This one, however is caused by a lot of jobs still available, so work is plentiful. Wages are high because employers can’t find enough people to do the jobs, so they need to increase the pay to entice people to fill them. Biden spent like a drunken sailor over the course of the first two years, upping the federal deficit by some $4 trillion, higher than anyone has ever done (even Trump!). And that caused inflation to soar to 40 year highs of 8.6% last year. They’re still high, at 6.4%. And with the government spending like that, and the jobs market so lucrative to employees, it causes the prices on everything to go up. Now add to that the fact that we have a Transportation Secretary that isn’t qualified for his job, and that causes a supply chain shortage, which causes more price increases, and it’s a never-ending cycle.

Powell was testifying before Congress on Tuesday and said that while the unemployment rate of 3.4% is the lowest i some 54 years, he’s hoping that the jobless rate increases to 4.5% this year. That’s right. The guy in charge of the nation’s money supply is hoping that some of you lose your job this year. Last year the Fed raised interest rates from around 0% to 4.5%. That’s the fastest increase since the recession of 1980/1981.

What I found interesting about Powell’s testimony is that he said that the jobs situation wasn’t the driving factor for inflation. He was indicating that Joe Biden is the real reason for the inflation, which we all know was the case. I’ve been saying that for the last two years, and it’s interesting how all of a sudden, everything conservatives have been saying about a lot of things seem to be coming true.

Think about that for a minute. You’ve got the Wuhan lab being talked about now as the source for the COVID outbreak. A year or so ago, you couldn’t even say that without being banned on places like Twitter and YouTube. Facebook would put you in jail if you even mentioned COVID, even if you were working for a guy named Fauci! And now, we’ve got the chairman of the Fed basically telling us that yes, employment does contribute to the inflation rate, but that’s not the leading cause. The doctor is the one that’s getting us sick. And the stock markets listened and died. The Dow lost about 1.5% in one day. Not good for the old 401k!

What Republicans have been saying all along seems to hold true. The country is indeed headed for a recession. The worst is yet to come, and that the Fed is just merely hoping they can do something about it. But I can tell you this about recessions. They are the big dinner check that comes after a sumptuous meal. Everyone has eaten, we’re all bloated from the desserts and the fine meat and fish we’ve consumed. And now, here comes the bill. We still have to pay it. Actually, we never even got to eat the dinner. Joe Biden and Democrats got to eat the dinner. We just got stuck with the bill, as usual.

Carry on world…you’re dismissed!