Issues Politicians Need to Know

Here is a link to the Heritage Foundation research page. 

For those looking to brush up on all of the issues...hint to Carolyn Kennedy (or any person running for national office), these are the many policy issues affecting our nation.

Is it any wonder that our Congressional leaders don't have a clue as to how we got into the economic mess we find ourselves?

$7 Trillion Government Bailout

I have heard many commentators talk about "$7 trillion" of government bailouts. This is much different that the $700 billion TARP bailout that was voted on in Congress.

For more details, read this article by our friends at CNN.com.

You can see that our Federal Government has been busy guaranteeing debt in multiple industries. Many people think that we will get much of this "investment" back.

Government Role in Financial Crisis

Definitely watch this great video on the summary of the financial crisis by Peter Wallison of The American Enterprise Institute. Peter explains the regulations that directly led to an environment of excess money heading in the mortgage business. 

See it here.

If you want to know about the credibility of Peter, he predicted this problem in 1999. Read it here.

Cap and Trade

Al Gore is heavily investing in cap and trade carbon emission infrastructure. His movie, Earth in the Lurch, as Rush Limbaugh calls it, is a marketing effort for his business interests.

To see the real effects of cap and trade, see this video.

Fiscal and social conservative--article

This is a must read article about being a social and fiscal conservative. It is remarkable.

Best News Articles on Economic Crisis

People have asked me where the best information is located on the entire economic and housing crisis.

Although the Wall Street Journal has done a fine job, the New York Times has created a series of articles called "The Reckoning" that sums up the situation the best.

Lowering Lending Standards II

Further information on the lending standards side points to why and when did Wall Street investment banks get into the purchase of mortgages and creating their own mortgage backed securities. 

I have heard several reasons why Lehman Brothers, JP Morgan, etc. got into the mortgage buying business. First, it was easy money without perceived risk. Second, loans were purchased without the regulations that burdened banks such as Wells Fargo and Citibank, as they were heavily regulated by the OCC, Federal Reserve, SEC, FDIC and and a host of other regulators. Finally, there was huge competition with Fannie Mae and Freddie Mac because the Government Sponsored Entities were able to borrow money directly from the Treasury at a much cheaper rate, making interest spreads much more desirable to Freddie and Fannie than investment banks.

In the end, there were two groups that set lending standards to create conforming loan products, Freddie and Fannie were one group, and investment banks were the other. Blame lies with each of these groups.

Another issue is lenders such as Countrywide Financial that were not regulated. I will look into this further.

Lowering Lending Standards

Who is responsible for lowering lending standards for home mortgages? The answer is here.

The key to understanding the bursting of the housing bubble is to understand that the bubble was created by lowered lending standards which included 100% financing, adjustable rate mortgages, stated income loans, interest only loans, teaser rates and loans targeted at those with poor or no credit. 

It was Fannie Mae and Freddie Mac that set the lending standards as they purchased or guaranteed nearly 50% of the mortgages issued in the United States. 

Democrat Politics -Move On.org

Campaign finance reform was a major catastrophe.

If you want to know what President Bush, John McCain and Republicans were up against in this last election, it is important to understand the third party political organizations called 527's. If you have heard of MoveOn.org, you have only heard of one of dozens of other political organizations out there that raise unlimited amounts of money from unknown donors and targeted Republicans.

This is just one example of a political campaign organization that uses $20 million from unnamed sources. 

Ethanol Solutions

There are two issues that ethanol companies are pushing to become profitable in the near future, a blender pumps mandate, and an increase in the allowable ethanol blending standard from 10% to 15% ethanol blends.

Ethanol companies and corn lobbyists criticize large food producers such as Tyson Foods (corn is the largest input cost for chicken, pork and beef production) and oil companies such as Exxon for opposing any changes. The reasons for the opposition; ethanol creates higher food prices and lower oil profits.

In the crossfire between government subsidized industries, politicians must try to pick a winner between the three subsidized industries. Welcome to the future of government owned enterprises. For all intents and purposes, private investments in government subsidized industries are also subsidized by politicians.

This is the very scary place we find ourselves in. We need to set up ground rules for private investments in government subsidized businesses.

Here is the framework of legislation that should be considered.

First, any industry that is subsidized, through the use of mandate, tax credit, or government favoritism, must be recognized and submit to the following rules.

1. All industries must submit to unionization of the labor force. A mandatory 60 hour work week will be required with overtime pay beginning at 60 hours.

2. All health care expenses must be run through the same health care plan as the US Congress. The US Congress shall change their health care into a high deductible catastrophic policy with medical savings accounts as a required component of 3/5 of the deductible level. This shall be the policy experiment for a national health care plan experiment.

3. All industries must pay executives and lobbyists no more than 4 times the hourly earnings of the lowest paid employee in the industry.  Lobbyists must place 25% of their earnings into the energy savings bonds as described below.

4. All capital investments and investor income must be recognized on a 5 year running average of forward earnings. Basically I am tired of people making large amounts of money on government subsidies.

5. No company will be allowed to trade publicly for 5 years, and no return on investment shall be paid for 5 years after initial public offering.

6. All investments will be conducted in the form of debt or direct ownership. No equities will be allowed.

In return for investing in alternative energy technology, the government should allow investors to receive up to a 10% tax discount on other federal tax liabilities. Whatever incentive you have for encouraging investments in alternative energy, it should be run by an energy policy blue ribbon commission with the power to disperse money in a very transparent way. These investments should be raised by offering tax incentives for energy independent bonds with all investments made in a very transparent process. An idea would be to have an online auction of bonds of pre-approved companies with willing buyers able to select the technology they would like to invest in. All financial and personnel information on firms receiving money must be published with the amounts of salaries being paid to each person receiving that money. These financial statements must be publicly analyzed in order to receive additional funding. 

Why the Dow goes up with bad news

The US economy is headed into a serious recession. The Dow Jones, meanwhile, has rebounded 1500 points from a low of 7400. Doesn't this seem strange?

It won't after you read this article about the Fed Reserve and the Dept. of Treasury intervening in the markets to prevent a market collapse.

I have been curious about why the Dow Jones has shown remarkable resilience (even though we have been down 40%) with continual bad economic news.

I have also been curious why Golman Sachs seems like they are the fourth branch of government. Nearly every major player in the US Government from Treasury Secretary Paulson to former Treasury Secretary Rubin all worked at Goldman. Does that seem strange? 

No, because the Federal Reserve and the Department of Treasury, through the creation of the "Plunge Protection Team" intervenes in the market to prevent collapse of the economic system we have. In essence, there is no such thing of free and open markets. Instead, the government "allows" the market to exist by propping up stock prices at government created floors. When the government calls Goldman Sachs to start buying stocks, they have just created a floor. This is not free markets, rather, government controlled markets.

And that should cause you concern. Maybe we should let the system collapse and have everyone lose their 401k plans. What an amazing insurance policy Wall Street has created by encouraging Americans to invest their savings in the Stock Market. 

I call this the "political default swap."

The rich get what they deserve

Unfortunately, all the good feelings I get from reading stories about rich, intellectually elite people losing all of their money in Ponzi schemes are tempered by the damage done to our economy, our free market system and our struggling democracy.

Today, Bernard Madoff just admitted to swindling the super wealthy out of $50 billion. Read about it here. 

The same feelings I have toward Bernard Madoff are the feelings I have with owners of credit card companies receiving adulation for the philanthropic investments in Sioux Falls that were usuriously taken from people that shouldn't have been spending money in the first place. Watching people blindly suck up to the super rich that have earned money by taking advantage of people makes me ill.

Reading a story about elite rich people getting taken advantage of seems like blind justice.

The same feelings I have toward Madoff are the same ones I have with allowing people to vote who are unable to show proper identification; allowing people to endlessly cross our border, then shipping 5% of those that are caught back, only to watch them do it again; allowing businesses to write off health care expenses while self employed people like me pay 100% of our medical bills; allowing unions to force businesses to pay indefinitely for "workers" who are no longer working for auto companies; allowing politicians to get off the hook for responsibility of this economic crisis and getting away with blaming everybody else but them; allowing people to think it is against the law to destroy an eagle egg, but not an unborn child; allowing a politician to claim there is a lock box for Social Security, but not telling people it is simply filled with IOU's. I am further annoyed that people say we are the richest country in the world, when, in truth, we are $60 trillion in debt and are adding trillions every month.

I am particularly annoyed at people who will be mad at Madoff for running a Ponzi scheme, but are perfectly willing to allow government to run the greatest Ponzi scheme around. The only difference between Madoff and the government is that he took money from new investors and gave it to old investors while government just prints money and gives it to other people.

My fear about this story is that it will open up opportunity to turn this country even more socialist--meaning that money will no longer be the property of the people that make it, but rather owned by government.

The underlying principle of democracy is that with freedom comes responsibility. This is a principle I will address in the next post.

Newt is Running for President

See it here.

Education Must Drastically Change

If learning by example is critical, what are children learning in our current education system?

1. Inefficiency is more important than learning.

The idea that thirty children learn at the same speed is an absolute disgrace and needs to be discredited immediately. Children are bored in school because the system is designed to waste time. A single teacher giving a lesson plan, and holding the attention of children for hours at a time is ludicrous. If the educational powers to be can't understand this principle, we need to destroy the educational system and start over.

I've heard that socialization is as important as learning. I can't tell you how ludicrous this is. First, who say you can't teach socialization and be efficient at learning? These people are protecting a system that is broken?

I've heard that we can't teach classes on personal finance because there aren't enough hours in the day. Home school children are able to learn curriculum in half days or even less. Public schools should be restructured to have children learning at their own pace, not in a group environment where the class moves on at the pace of the slowest child.

2. For as much as we brag about the quality of our teachers, I would like to take a random sample of the SAT or ACT scores of teachers. I would then like to compare them to the test scores of other professions. Teaching is a noble profession, but it is important to have a realistic dialogue who is going into the teaching profession.

3. Teachers are aligned with labor unions and socialist policies that destroy the economic vitality of America. Exactly how can our schools be successful if they see their teachers continually complain about being underpaid, and continually see the "injustice" of teachers wages? Backed up by the media, teachers and professors have created an indoctrination of children designed to make industry and business as bad, such as "Big Auto, Big Oil, Big Pharmaceutical, Big Tobacco, Big Agriculture." The only thing they like that is big is "Big Government." Additionally, the education system is pushing degrees in sociology, psychology, humanities. To teach a generation of black children and graduate them with a degree in "Black History" is doing what, exactly, for them economically? These degrees are doing nothing to compete in science and technology, the degrees we need in this country. And yes, it will be business that will employ them, so lay off the evil big business speeches.

4. Teachers better lay off the "not getting paid enough" tripe. Teachers have been underpaid in every generation, in every region of the country for as long as there has been teachers. You knew going into teaching that it was going to be like that, and it will always be like that. Get over it. I am tired of hearing about the "value of education." There is no value in education. There I said it. The value is in learning, and I don't think some teachers understand how to create a system where the greatest learning can take place. It is for this reason that I am such a huge supporter of home schooling. This is the greatest competition the educational system has seen. And frankly, home schooled children are embarrassing the public schools scholastically.

Don't miss this video by Newt Gingrich about education. It is spot on.

Let's list the USA on the NYSE

The United States of America should be added on the New York Stock Exchange soon. 

The United States is the largest hedge fund in the world. Let's quickly check the list of companies that USA owns or has agreed to bail out.

1. AIG--bailed out because of credit default swaps

2. JP Morgan--mortgage backed securities and CDS

3. Bear Sterns--mortgage backed securities and CDS

4. Citibank-mortgage loans, MBS and CDS

5. Freddie Mac--mortgage loans, MBS

6. Frannie Mae--mortgage loans, MBS

7. Indybank-

8. Wachovia

9. Washington Mutual

10. Chrysler

11. General Motors

12. Ford (not quite yet)

13. Lehman Brothers (just went bankrupt)

14. 64 banks have received TARP funds

15. 23 FDIC bank failures

Oh, and the Dow went up over 1,500 points in the last week. Hmmm. Wall Street must think these failures are a good thing. Wow...

Questions for Ethanol Industry

Thank you for taking the time to meet with me discuss my endless questions regarding ethanol. 

I am a large supporter of making agriculture less dependent on government subsidies and am an even larger supporter of ridding our dependence on tyrannical Islamic extremists for our energy needs. 

My efforts to understand the energy issue is an effort to develop a working knowledge of a self sustainable, long term energy plan that our country can rally around. It is important to be disinterested in the outcome only in that the energy plan meets the two overriding goals stated above. A third goal is to develop the most environmental friendly energy solution available, with the understanding that all energy will have limitations.

Our country needs a comprehensive energy policy, not a patchwork of policies that are geared at directly subsidizing multiple technologies. It is in this vein that I am gathering information.

The Western world is held hostage by our reliance on an oil-based economy. Indirectly, we fund the very war being waged against us in the form of radical Muslim extremism. In order to break the cycle of energy dependence, it is vital to have an comprehensive energy policy which includes all sources of energy.

We have just experienced the cataclysmic change we need to focus on a comprehensive energy solution with $150 per barrel oil and $4 gasoline. If this were the only portion of our economic crises, we would be well-suited to invest in the multitudinous alternative energies available such as wind, solar, photovoltaics, battery technology, hydrogen as well as technological advances in natural gas, coal, nuclear, and geothermal.

Unfortunately, the next decade will find us in a difficult time to invest in any energy alternative. With the housing bubble of the last decade, we have witnessed a bubble that has effected the entire Western financial and economic system. Over $7.5 trillion of inflated housing prices ($2.5 trillion have been financed with over 12.5 million homeowners upside down on their mortgages) must be absorbed in the economy. Additionally, trillions of dollars of Wall Street unfunded insurance policies, called credit default swaps, are about to bring our economy to our knees. Finally, government spending on the federal, state and local level is at pre bubble values, meaning every form of government is going to be deficit spending for years to come. Unfortunately, state and local governments do not have the ability to run deficits, so it will be the Federal Government that will be responsible for picking up the tab. 

All told, our government is bankrupt. This year alone, the Federal Government deficit will exceed $1 trillion. Next year, it will even be worse as the economy slides into a recession, millions of people are laid off, and our tax base takes a serious hit, and we try to spend ourselves out of recession. Every investment the Federal Government takes must show good return on investment as other crisis will need to be addressed such as the impending health care (government pays for half of all medical bills which are rising at 8% per annum in this country in the form of Medicare and Medicaid) and Social Security (the system is bankrupt by 2017) materializes.

The future of ethanol needs more of a long term vision. Ethanol must prove it's ability to be self sustaining to justify additional mandates .

In order to do that, ethanol must overcome several major drawbacks. First, it needs to have a plan to be consumer driven, without requiring a top down approach.  Currently, the business model requires the Federal Government to create the demand. The need for central planning is your greatest liability. 

It is inherent in your business model that your support come from politicians who believe in central planning.  An industry beholden to politicians is not sustainable long term. One need to look no further than the Detroit automakers and the union bargaining to see what top down companies look like after they have run their course. Further, relying on politicians and not consumers, to determine the success of the industry, leads to long term failure. Simply look at the cotton, tobacco, corn, wheat, soybean and sugar subsidies that are so prevalent in the agriculture bill. The ability to reduce subsidies once central planning has gotten involved has addictive political qualities that do not go away. The very reliance on political events is the single largest risk of your industry. As easy as it is for politicians to invest in your industry, they can remove their support. 

Secondly, the other major drawback of ethanol is the extensive investment in infrastructure required to operate a national ethanol program without knowing the eventual economic viability of the industry. Diverse standards of each of the states, the cost to implement ethanol blending and distribution facilities, the cost to research next generation technologies, current commodity pricing structures of the major inputs such as natural gas, electricity, corn and water, as well as the current sales structure of relying on commodity pricing for ethanol are all variable costs and significant investments that affect the profitability of the industry. As we have seen with the failure of Vera Sun, misallocation of funds is ripe with fraud, waste or abuse. The government can not protect against bad judgement.

For an industry to be largely reliant on government mandate without knowing the long term viability of the industry, places government in a very difficult position. If a better technology comes along, too much investment will already have been made in ethanol infrastructure, and long term subsidization will occur, similar to subsidizing transportation, finance, insurance, health care and all other businesses our Federal Government most recently have been forced to support.

Finally, the idea of creating a 30 billion gallon demand, then creating an industry should make you very nervous. If your profitability requires exponential growth to survive, I would indicate your business is going to fail. The current growth levels need to be maintained. Businesses losing money is a part of a growth market. The goal of your company should be to invest over the long term, predicting that undercapitalized companies will fail. At this time, it is my belief this is the best way to avoid making larger and larger mistakes. A rush to invest more in technology should be avoided unless you are able to acquire additional investors in that new technology. Currently, there is a wealth of money idle in this economy. Any research in cellulosic ethanolk should tap into these investments as opposed to going after market share or market penetration. There is ample growth in ethanol. To accelerate ethanol growth would only create disastrous negative effects.

Your analysis of continually increasing corn yields is untenable. Regardless of the prognostications, there is no clear way to know what part of the growth curve we are on for additional yields. The increases in technology required to produce greater and greater yields assumes greater yields without very difficult drought years such as those experienced in the late 1970's, the ability of technology to outpace pestilence and resistance hybrid seed corn.

The idea that gas production is more energy dependent than ethanol production should be dropped. This is a ludicrous argument and should be dropped for one simple reason. Oil can exist in a closed loop. Ethanol can not exist in a closed loop--meaning carbon energy needs to be used to create ethanol. So it really doesn't matter how much oil it takes to produce gasoline.

In summary, massive amounts of infrastructure will need to be added in order to change our energy usage. If electricity is to be used to power automobiles in the next several years, trillions of dollars of investments will need to be made in the electricity generation and delivery mechanisms. Regardless of General Motors belief in ethanol, they are betting their company on the Chevrolet Volt-such a drastic change that it will have it's own revolutionary effects. First, their are no working parts such as transmission, drive train, etc. This will effect the way people look at servicing vehicles and will have an effect on gas stations, repair facilities, and parts suppliers. A massive shift of energy will be transferred to the grid, requiring trillions of dollars of additional infrastructure.

All in all, before we go too far down the road of any new technology, we need to be able to removed from the success of any one particular technology--including ethanol. The government has done enough, and maybe even too much, to encourage rapid growth in an unproven technology.

But I keep my eyes affixed to the great opportunity ethanol holds.

The collapse of the US economy and a prolonged depression will result in drastically higher spending from the Federal Government. Every industry receiving federal money and subsidies need to prove their worthiness. 

Alternative energy initiatives are going to run in the trillions of dollars over the next five years. Ethanol must, once again, prove it's worth. 

1. Can the ethanol industry survive economically without subsidies to corn farmers?

Direct payments of $.28 per bushel.

6.7 billion gallons of ethanol produced in 2007

2.5 billion bushels of corn

$750 million of direct subsidy per year

Marketing credits

Counter cyclical payments

Blending credits of $.51/gallon or $3.41 billion. 

Crop Insurance/Disaster payments

State tax incentives and producer incentives equivalent of $500 million/year.

What is the total value of subsidies for ethanal/corn production?

With the market volatility of corn prices, how can the industry be profitable for the long term?

How much does it cost to produce a gallon of ethanol?

Variable Costs?

Price of corn, transportation costs

Fixed Costs?

Operations, Marketing

2. Ethanol needs to produce more than a 1:1 ratio to be sustainable. If that would be the return, it would be better to not have an ethanol industry. What is the maximum energy return on ethanol?

What is the greatest energy return on energy input for row crops such as corn? Has any ethanol plant conducted any of these studies? How much energy return is attributable to DDG, WDGor other side product sales?

How much does an ethanol plant effect the cost of natural gas, electricity, water costs and food prices in the surrounding area it serves?

In the most effective plant..

1. How many bushels of corn used

2. How much ethanol is produced

3. How much energy is used?

Natural Gas

Diesel

Gasoline

What is the break even point on the number of bushels per acre?

Facts...

One bushel of corn generates 2.7 gallons of ethanol

One gallon of ethanol = .67 gallons of gasoline
One bushel of corn generates (2.7 *.67) = 1.8 gallons of gasoline (equiv)

If gas is $2.50 per gallon, one bushel of processed corn would produce $4.50 worth of gasoline (equiv).

My first question is what price does a bushel of corn need to cost in order to make ethanol cost effective on the open market without subsidies (ethanol is not taxed at the same rate as petroleum to the consumer and large corporations are paid to blend ethanol.)

It may be cost effective to produce ethanol in Iowa where they average 180 bushels per acre, but is it worthwhile to produce ethanol in South Dakota?

South Dakota averages 104 bushels per acre
One acre of corn in South Dakota can produce 280 gallons of ethanol
One acre of corn in South Dakota can produce 187 gallons of gas equivalent
One acre of corn can make $672 of ethanol (as of today ethanol trades for $2.44/gallon)
One acre of corn sells on the open market (as of today corn trades for $5.84/bushel--down from a high of $7.25) for $607/acre as an unprocessed commodity.

Iowa averages 160 bushels per acre

One acre of corn in Iowa can produce 427 gallons of ethanol

One acre of corn in Iowa can produce 286 gallons of gas equivalent

One acre of corn can make $640 of ethanol (as of today ethanol trades for $1.50/gallon)

One acre of corn sells on the market (as of today corn trades for $3.05 per bushel) for $488 for the unprocessed commodity.

How much does it cost to make 427 gallons of ethanol?

How are ethanol companies making money???

How much does it cost to transport, produce and ship ethanol??

Is it less than $65 for every acre of corn or 280 gallons of ethanol?

Economic Opportunity

People are telling me I am too negative because I believe the Dow will hit 6000. But I really believe there is huge opportunity in this transitional economy. Let me explain.

Before we get started, let me remind you why the Dow is going to hit 6000. The true value of stocks are reflective of how much money a company will make over the next 7 to 10 years--no more and no less. The price per share is reflected in the Price to Earnings ratio (P/E). 

The rational P/E ratio of a mature company (growth is relatively stable) is 7:1 because an investment of capital in this environment gives a sustainable return on investment over 7 years. Lower ratios would indicate the earnings were expected to decrease. Higher ratios would indicate earnings were expected to increase.

Over the last 30 years, P/E ratios became inflated (from 30-100:1) for several reasons. First, the "potential" of these companies was great indicating high levels of growth was expected. Second, with more money in the stock market, supply and demand issues affected stock prices. Some people call this the speculative component of the market. Finally, more people looked at stocks as an investment in their portfolios versus investments in a company. In other words, shareholders were no longer owners of a company, just holders of a piece of paper. As long as there were people willing to buy the piece of paper, it didn't matter how much income the underlying company was actually generating.

Today, this has all changed. If you look at P/E ratios, companies are trading for 7-10 times earnings. This is a positive thing. But why would stocks head for 6000?

Conservative share price valuations are based on earnings and future earnings. 

Earnings forecasts have a hard time placing a P/E ratio on companies that are losing money and are structurally incapable of making money in the future. Today, the many industries in crisis, from banks and autos, to airlines and housing, are all in a structural free fall. The amount of debt and obligations they incurred over the last several years eliminate the ability to make a profit in the future. Until the tens of trillions of dollars of losses filter through the economy, we are going to be saddled with bad news. 

The economic crisis we are in shows no way to get out for many years to come.

1. Unemployment is expected to rise to 8%. Consumer debt and bankruptcies will skyrocket.

2. The Federal Government deficit is expected to reach $1 trillion per year and rising.

3. State and City Government deficits are expected to reach $300 - $1 trillion.

4. Entire industries are bracing for structural failure. These include: Automobile, Airline, Financial, Housing, (Anything related to consumer credit such as credit cards, consumer electronics such as big screen tv's, home improvements such as hot tubs).

5. Government spending on corporate, state and municipal bailouts will continue to rise.

6. Government spending on individuals affected by the economy will skyrocket

7. Manufacturers will continue to fail because American labor costs 10 to 100 times foreign labor.

8. Democrats control Congress and the Presidency, increasing the likelihood of increased government payments to individuals.

9. The value of the dollar will be affected on what it can buy (inflation).

These 9 problems are simply dealing with the bad economy. We have a structural problem with government, without the increased deficit spending...

1. Half of the health care dollars is spent by the Federal and State Governments on Medicare and Medicaid. Health Care costs are increasing at 9% or more per year.

2. Social Security will be insolvent in 2017, regardless of the Al Gore Lock Box filled with IOU's from the Federal Government.

3. The Clinton welfare reform bill has never been tested by a recession. The chances of that being repealed will be nearly 100%, costing billions.

4. The war on terror is one attack away from shutting down the entire Western world. Meanwhile, we are spending nearly $1 trillion per year in national defense and the wars in Iraq and Afghanistan.

5. Iran with a nuclear capacity may well entice Israel into a war of attrition.

The stock market will be able shrug off some bad news right now, but prolonged bad news, like a prolonged war, will destroy the confidence in the market for many years to come. It is for this reason I predict a Dow 6000.

I was, however, writing about the amazing economic opportunity ahead for our country, so here it goes. 

We have a remarkable opportunity to get back to investing that makes sense. Gone are the days of making 30% return on your investment, at least for a while. This leaves billions of dollars of investment money looking for larger returns on their investment. They will look at "growth markets" overseas in third world countries, but this comes with great risk. Cheap consumer goods fueled the growth of the last 30 years. The new economy will be growth associated with energy independence.

The better investment for people with money is to invest in industries that are structurally broken. These industries are energy, health care and transportation. Reliance on foreign sources of oil has turned the world into a powder keg, and has turned our economy into a firestorm. Money-rich Islamic Terrorists and a Western Governments reliance on foreign oil will encourage investment in the following areas.

1. Coal

2. Nuclear

3. Geothermal 

4. Electric Smart Grids

5. Wind

6. Solar

7. Battery Technology

These technologies will alter the direction of the transportation industry, such as public transit, personal transportation and airline industries.

Further investment in these areas will allow America to lead the world in these technologies, creating markets world wide.

The next bubble will be companies that are investing in these technologies. Be careful, because with any bubble, billions of dollars will be made, and billions of dollars will be lost, as business models fail.

Welcome to the turbulent times of free market capitalism. Businesses must be allowed to fail before new businesses will be created.

So even though I see the glass fully empty, I do think that the glass still has the potential of holding water...I just don't know how billions of dollars of investment will be able to returned. But that is why we get up in the morning...

We will see...

Fiscal and social conservative--defined

By Rev. William J. H. Boetcker, who lectured around the United States about industrial relations at the turn of the twentieth century. 

You cannot bring prosperity by discouraging thrift.
You cannot help small men by tearing down big men.
You cannot strengthen the weak by weakening the strong.
You cannot lift the wage earner by pulling down the wage payer.
You cannot help the poor man by destroying the rich.
You cannot keep out of trouble by spending more than your income.
You cannot further brotherhood of men by inciting class hatred.
You cannot establish security on borrowed money.
You cannot build character and courage by taking away man's initiative and independence.
You cannot help men permanently by doing for them what they could and should do for themselves.

Unions destroy Competitiveness: Part 1

With the Big Three Automakers losing billions of dollars, people are finally seeing why unions are anti-business.

Can you imagine if you decided to lay off an employee and you were required to pay 95% of their salary indefinitely?

That is exactly what the United Auto Workers forced upon the Big Three Automakers in defense of their union members with the threats of strike. Now we know why it costs $1500 more per vehicle than their non-union competitors. 

Read about this atrocity here.

Do we bail these unions out with a $28 billion "loan?" 

Not a chance...