• Obama’s Impossible Gordian Knot

Over 2300 years ago, birth was given to a myth which in time became a powerful metaphor that has served us well through the ages when addressing seemingly impossible or intricate challenges. Halfway through the current Obama Presidency we face a moment when reaching back for an ancient Greek analogy has become self evidently appropriate.

Legend tells us that Alexander The Great fulfilled a prophecy by bringing a creative solution to the Gordian Knot – he sliced the complex knot with his sword, thereby showing himself capable of thinking outside the box. Gordian, the mythological king of the Phrygians had tied his oxcart to a palace as an offering to Zeus, and an oracle had foretold that whoever untied the knot would conquer Asia. Although he died at the young age of 31, Alexander’s conquest of a continent started with a bold decision.

History has provided ample debate on the event of Alexander’s controversial “solution,” and whether it was actually any solution at all, however, Alexander’s omen, has remained a favorite metaphor.

The present moment in history finds a society struggling with overwhelming unemployment, as well as a worrisome personal and national level of debt. Productive employment is critical to sustenance of a vibrant society, and it is through that employment that the costs of all of society’s “structural and functioning” needs get paid. A majority of Americans also understand that it is business and industry, large and small, that create employment, and the basis for all other employment. Without such employment, government doesn’t get paid. While this should be abundantly obvious, the American taxpayer is being led by an Administration that seems not to understand.

America went to the poles during the midterm elections and emphatically voiced its displeasure with the way the Administration and Congress were treating its most serious and urgent concerns. America is looking for leadership capable of making bold decisions.

This week, Obama is facing his archetypal Gordian Knot, IMHO. The current debate over the maintenance of the Bush tax cut has been worthwhile, and pushes economic discussion to the fore, which serves to educate. The solution to America’s economic woes however, does not rest with an extension of the Bush tax cut. The solution rests in the aggressive stimulation of job creation, and leadership that will-not-sleep-until unemployment numbers have been halved.

On Wednesday we were treated to novel expressions from an American President such as this one uttered by Obama to 20 CEOs in a session held yesterday with the Administration, “I want to dispel any notion we want to inhibit your success.”

The fact that his grammar is questionable matters less than the fact that he would have to say anything remotely close to an attempt at denying he has and will continue to “inhibit” the success of all businesses. His actions precede him, so his words appear to come from a distant corner of the twilight zone. It is not in his DNA to either stimulate economic growth, or care what the fat cats (his own rhetoric) of corporate America need to see from their government in Washington. He does not understand, and cannot understand.

The MSM is even posting articles about “détente” between this Administration and business. Détente? As in, “he’s at war?” Who would have thought this concept remotely possible in twenty first century America? In the middle of an extended recession, who would have expected a question posed to a sitting President such as the one asked by CNBC’s John Harwood, “Mr. President, can you repair your relationship with business?”

Pretend all he wants at “dispelling,” Obama is incapable of providing a solution to his Gordian Knot, because he does not comprehend the most significant problem facing the country over which he presides.

.... Read more!

• Another Misstep On Obama’s New Battle Front

There is little argument that the concluding G-20 meeting has been an international beat-up slugfest on America. Effective and substantial Strategic Planning is critical in the success of any significant endeavor. It should be ever-present when addressing the country’s economic long-term health.

Obama and his advisors fumbled once again on the international scene. Unfortunately, this time the fumble was on an economically critical battlefront.

The Fed continued its artificial manipulation of the economy by announcing that at the stroke of a pen filled with dollar printing ink called the Quantitative Easement Quill, a tidy $600 billion will be added to the float. While there is urgency in taking decisive action to stimulate hiring across the country, The Fed’s bond purchase program could have waited announcement another few days, particularly since it will be implemented over a very extended period. The Fed may in fact decide to scale back on the total amount depending on how the economic activity trend reacts.

Currency fluctuations have not been the source of the current economic crisis, but have been the outcome of such things as the overwhelming export of never to return jobs to inexpensive-labor-gives-us-cheap-products countries, AND we can artificially inflate national wealth by enforcing the financing of a home-for-each-citizen program.

Announcing the easement (read: circumlocutive euphemism for Inflative) just prior to G-20 gave China a major pass at the meeting, and in fact, pushed it to stand shoulder-to-shoulder with America’s “friends” pounding on America. The G-20 meeting should have been more about China’s maintenance of a weak Renminbi, and protectionism, rather than about the U.S.’s wholesale weakening of King Dollar.

The Bernanke announcement resulted in a verbal assault on America by everyone from China to Germany. America’s defense was left to representation by a President not familiar with things economic. It isn’t even clear that China’s real relative exchange rate hasn’t appreciated recently given the rapidly rising prices within China. Just like The Fed, whose complete independence from Congressional control or real oversight enables it to go wherever it wishes to go, so too China will ignore all bended-knee implorations from Obama and Geithner.

Now to make matters doubly difficult, the Administration is shouting into the deaf ears of its trading partners and geopolitical friends. China will continue on its merry way, and it has firmly confirmed that it would completely ignore the Administration when it admonished Obama as he went out the door with a, “Don't make others take the medicine for your disease,” (Yu Jianhua, a director general of China's Ministry of Commerce). The opportunity presented by the G-20 meeting to coagulate forces to pressure China is now passed, and the situation has been made worse for America.

This Administration really must take some classes on Effective Negotiating.

.... Read more!

• More Erratic Economic Notions From Obama

After almost two years of demonizing corporate America, holding a “boot to its neck,” and doing nothing for small businesses, Obama suddenly pretends to reverse himself with a “corporate tax break.” This is political pandering, and at odds with what is required to set employment trends on an upward path.

In between teleprompter stopovers and golf games, Obama comes up with helter-skelter strategies aboard Air Force One that serve little but confuse the country he was elected to lead. Obama’s new one-year tax relief on capital investment looks like a stroke of genius in his mirror. Does he know that companies, from the local bakery to the coalmine, actually have plans - long term and mid term action plans? Evidently not. Your local dress shop spends more time on “planning” than this President. I also suspect that the owner of that dress shop spends less time holidaying, and more time struggling to keep the business afloat. The “I will not rest until . . .” incantations from the Oval Office not only ring hollow, they are overt lies.

This Administration’s disconnected actions assert that no cohesive economic plan is in the offing. Prolonged uncertainty will continue to limit hiring and minimize commitment to long-term capital expenditures. Only a very few large corporations with plans already on the books to expand capacity will take advantage of this temporarily accelerated tax break. This plan enables an acceleration of depreciation allowances which businesses would deduct over time, as such implementations fit into corporate long-term plans. It should be pointed out to this Administration that all companies develop and implement strategies which include capital expenditures constructed from outlooks on such elements as market expansion, market penetration, competition and product demand. Corporations set budgets that include major spending, years ahead of time.

Perhaps Obama has also not checked interest rates lately. If a successful company needs money to expand, its interest costs are minimal, and it will be able to deduct its capital expenditures over time. On the other hand if the company is feeling strain it won’t get the credit very easily. Either way, before getting a tax break, companies have to have decided on the expenditures, and acted on them – you have to spend before you can claim. This Obama tax credit will have little real impact on corporate America. When there is uncertainty, companies retrench, and hold tight. Only a fool of a CEO would run out and build a plant that wasn’t in the works just because of the sudden and temporary appearance of an accelerated tax break. Government should not insinuate itself into the efficiency with which corporations allocate their resources.

This stroke of genius will accomplish nothing for Middle America and the unemployment ranks. Evidently no one around this President has managed a large corporation, and he is ignoring any useful advice if he’s getting any. This announcement might be more palatable if it was one minor element in a broader strategy to inject confidence, stimulating businesses to action, particularly smaller businesses. Much like the Clunker For Cash program, this temporary manipulation of the tax code is a desperate political Hail Mary with no regenerative effect. It is also a manipulation that dares Republicans in Congress to react negatively to a “pro-business” pretense.

The President could announce something meaningful like restructuring the corporate tax code to drastically simplify the process for all businesses, thereby reducing their headaches and costs.

Obama’s other sudden stroke of brilliance, the Research Tax Credit, is a non-starter for the simple reason that the American economy will only get going again when small to medium sized businesses start hiring. If this sector of the economy isn’t with you, nothing is happening. As for the large corporations, they will not suddenly spend some “research” money that they aren’t already spending, just because there’s a tax break on the table. If that were true, any CEO making that decision should be fired for incompetence and poor planning. Small to medium sized businesses are the engines of a successful and stable Middle America. Those businesses don’t spend much on research. They find a need and they fill it. This $100 billion tax announcement panders to the education industry, and does little for the business environment where it counts. What it creates is a cash-bag whose contents will be dished out in allotments proportional to the political affiliation of the recipients. What a surprise.

Obama’s $50 billion stimulus package announced this week for roads and runways will be similarly designated in political vote-purchase-bundles which will create temporary employment, but create nothing for the long term. This could be momentarily seen in positive light, if it was capital invested from surplus funds. Such billions created out of intolerable debt is another toxic tin can being kicked down the road for our grandchildren to feed out of. This is not part of a cohesive long-term plan that will increase national productivity. It smells more like a haphazard “throw stuff at the wall,” and “make noise about how many jobs we’ve created,” deficit spending bill looking for Congressional approval. Obama may be deaf to his electorate, but Congress is getting the message, and we can predict this will not get passed even through the back door.

While the President is stomping and performing in the grand and absurd political theatre of the campaign trail, shouting about his opposition “talking about him like a dog,” or making strange comments about “blue skies,” and “fish in the sea,” (what audience does this appeal to?) Obama should ponder the structure of a firm policy statement to immediately table major cuts in government spending.

This, above any other announcement he might make, would inject renewed vigor, and confidence into the National landscape.

.... Read more!

• Pent-up Pressures Will Explode Into A New Age Of America

The Obama Administration nudges Treasury Secretary Timothy Geithner to the front of the class to present Pollyanna statements on subjects apparently not fully understood by the President or many of his advisors. Millions react with little more than frowns of confusion.

The skeptical population is exposed to too many scripts on the economy written in rose-colored ink, read through rose-colored lenses. Listening to Geithner, leads one to wonder if he’s read the news lately. Actually seeing him, leads one to doubt that he cares. Down the road, Bernanke does as he’s told by the bankers who have little concern for 17%+ unemployment. Their multi-billion dollar bonuses are thick insulation from the plight of Middle America. Ben Bernanke pontificates from The Fed, pretending that inflation is a curse, when in fact its advance would erode the assets of his bosses on The Street. Inflation’s impact would also be a reduction of the real debt currently burdening homeowners whose perceptions rendered home ownership a panacea.

Hypocrisy is one those more despicable black arts practiced by too many sitting in positions of influence. Self preservation and self interest too easily twists truth from the podiums of power, and confuses a population unfamiliar with the complexities pretended by economists. Today a whole middle class shudders at the long term prospects of its underwater mortgages further sliding into an abyss, as job continue to evaporate.

The public sustains abuse, particularly when the likes of Geithner, and Bernanke continue the reign of power and influence enjoyed by Greenspan, even after having proven complete and absolute incompetence during the creation of the mess. Of course in fairness to Bernanke and Greenspan, we should note that Geithner additionally demonstrated contaminated morals and meager principles in his tax filings. These three mousequeteers of finance and their friends, along with the misguided Congress of the past 20 years fuelled the indebtedness now burdening an anguished middle America. The crisis is the result of burst housing and debt bubbles, which many perceived correctly and some capitalized on. Bernanke, Geithner and Greenspan were not among them. Bernanke, however, was very capable when he effectively misled Congress on behalf of his boss in the White House and his bosses on The Street, to get the Troubled Asset Relief Program (TARP) passed.

Both businesses and consumers are ignoring Bernanke’s continuation of “cheap debt”. If you’re concerned with job security, you’re not running out borrowing for a bigger home. These days, no one wants more debt, it seems. No one, that is, except Washington.

The lamentable uncertainty afflicting every corner of the United States has permeated its business engines. In Board Rooms across the Nation, Accountants are telling their bosses, “hold tight.” CEOs aren’t economists, or fortunetellers. They gleam information from those they have hired, and those which they have confidence in and trust. From behind closed doors, senior executives sense the choking “uncertainty” and they fear it. The result? Corporate America sits on almost $9 trillion in cash and counting.

Another result? Investors purchase Johnson & Johnson 2.95% ten-year notes, preferred over company shares or even over Treasuries with downward sliding yields. Suddenly junk bonds are more delectable than Treasuries? This is a major shift in perceptions. It is also telling of concern for the economy’s future, mid to long term. It speaks volumes of investor confusion about the economic future. Corporate America and Main Street are uncertain, and Washington daily adds to the confusion.

Corporate America would normally look for any excuse to invest. American business is seeking signs from the country’s leadership that it can “get behind.” That is the biggest failure of the current leadership in Washington. No one in the Capital seems capable of leading the charge to the restoration of confidence, least of all the inexperienced President. Ineptitude, indecision, reckless spending and loading up the future with unfathomable debt, pulls the train of hope into reverse.

A panoply of hapless maladroits appear like balls bouncing down a pinball machine, reacting to daily events with little grasp of the most critical expectations of a tired public. Perceptions are powerful forces moving through the country’s social, economic and political fabrics. While stagnating over economic stimulus package decisions, Washington should give energy to psychological stimulus.

Assertive leadership should take forceful steps to reduce administrative bureaucracies, and streamline all levels of the structures providing services, including simplification of the taxation and the health-care systems. Other actions should include biting into the biggest lie of them all - the Social Security and health-care costs which almost 80 million Baby Boomers have been led to expect as they head into retirement. The expectations represent entitlements of $4 trillion which the U.S. economy will be incapable of supporting. There is even more important action for a leader to take. Inspiration.

It is not the nature of the average American to want coddling by big government. America has long demonstrated a propensity for innovation, hard work, creativity, and entrepreneurship. America has progressed through numerous transformations since its founding. The vast majority of jobs lost in the past five years have been in manufacturing, while the most stable corporate environments have been those in the high technology industries.

We may not know what new chemicals or revolutionary algorithms will trigger new industry sectors, but as the future unfolds, America’s destiny will rest on the stimulation of interaction between people and the stimulation of thinking which will galvanize toward new discoveries. Avenues of communication, through the Internet, as well as physical corridors such as high-speed trains between major urban centers will further stimulate connections and energize creativity. Each of these discoveries, large or small, will then need encouragement on risk taking, and entrepreneurship.

Companies, nascent and mature, will require the opposite of the noise which is today effusing from Washington. Leadership means pointing to clear defined goals and energizing Main Street. It means stating confidence in the bearing – clear heading and clear direction. Once such leadership leaps onto the stage, there is pent-up pressure from the cash stockpiles corporations are sitting on. Just as significant is the pent-up creativity and innovation waiting to commercialize the next technological revolution. The psychological stimulus America hungers for, is inspiration.

.... Read more!

• Gang Receives Succor From Federal Judge In Gang-Haven Vancouver

Canada’s Federal Court brings new meaning to coddling criminality. A Federal Judge has handed down a decision that will heretofore ensure that Canadian authorities will address criminal gangs with proper decorum and “quiet” respect.

Federal Court Judge The Honourable Mr. Justice Michael L. Phelan has, in one simple judgment, backhanded Revenue Canada, and the Gang Task Force. Justice Phelan has stymied and impeded any future approach government officers and officials might make on gangs and their members.

Here is the heart of his decision on behalf of all Canadians (Docket: T-555-08, Citation: 2110 FC 448): “THIS COURT ORDERS that the Applicants are awarded fees of $200,000 plus disbursements of $13,986.92. The Applicants are to have their costs of this motion of $3,000 plus disbursements of $500.”

The applicants are Ryan Murphy et al, . . . et al being his UN gang member associates, and the respondent is the Minister of National Revenue, which is in effect the Canadian taxpayer. Canadian taxpayers, . . . the gang thanks you.

Why would a judge of the Federal Court hand down such an astounding decision? Why would the Court in one bang of the gavel render ineffective any future investigations into the countless billions of dollars that are being made illegally and purchasing businesses and estates from Victoria to Halifax? Why would the Federal Court have a problem with Revenue Canada digging into the non-existent sources of income which materialize so readily into so much material and visible wealth? Why would a Federal Judge decree that the Revenue Canada Agency (CRA) should in effect care little about its own personal safety when serving Requests for Information on very well known and dangerous criminals? Why would a Federal Judge have a problem with the CRA investigators teaming up with Gang Task Force members to deliver request letters to gang members?

Justice Phelan’s stated reasoning was that “Police presence was clear and visible and highly obtrusive. The service of the documents was generally carried out late at night, with multiple police cruisers present, lights on and with all the paraphernalia of a police raid.”

So? Are all Canadians now suddenly in fear of being similarly served? Is this what this judge thinks is, . . . protecting Canadians from overt and visible harassment from the police?

Shouldn’t the authorities have some room for common sense? Shouldn’t Revenue Canada be used to launch investigations into illicit earnings? Don’t most Canadians know that the neighbor just down the road with NO visible income, but with the mansion and fleet of cars in the driveway, might be, just might be, in the drug business, for example?

If the authorities have evidence of such, let them have at it, and if they break the law in the process, then charge them, or fire them, or both. It flies in the face of common sense to think that if what occurred in this case is allowed by the judicial system, then we would all see multiple police cars at our doors delivering requests for itemized income sources. Canadians should beware of those pretending to defend them against the beginnings of “slippery slopes.” Canadians should beware of this judge.

A judge pandering to an ephemeral notion that his decision, right off the scale of common sense, protects the public, is a twisted percept rooted in self importance. The police admits that the gang problem in Canada, particularly Vancouver, is out-of-control. Isn’t the Canadian public getting tired of witnessing its police force stifled by the courts?

This judge’s sanctimonious decision panders to some righteous percept that the judiciary grasps elements pertaining to the social order that society at large cannot possibly comprehend. For too many years, the Canadian courts have been ensconced in the belief that they have unique abilities to perceive realities that their broader community is incapable of considering. These former lawyers are wrong.

Their many incomprehensible decisions are not so difficult to fathom. It is not the nature and complexity of the cases that society cannot understand. Canadian society cannot and should not accede to decisions which negatively affect the social setting. Decisions such as the one handed down by Justice Phelan add to the government’s failure to accomplish its most critical purpose – preserving the safety of citizens and their property. When our public schools have pushers selling drugs to 7 and 10 year olds, the system is broken. The courts have much blame to shoulder for this calamity, along with Canada's Parliament.

This court order was not about the prevention of entry onto slippery slopes, but was the result of incompetence on the Federal bench. The decision should be reversed.

.... Read more!