Friday, March 18, 2011
Random ruminations from your resident curmudgeon...
In our federal budget, there are some items for which our government has to spend money- the "mandatory" spending items. Most of these items are for entitlement programs: Social Security, Medicare, Medicaid, and other entitlement programs. These are expenditures for which the federal government has made a promise to pay to the beneficiaries and has no "wiggle room"; they MUST make these payments. In 2007, our federal revenues (read: tax collections) exceeded mandatory payments by $1.17 trillion dollars. This excess was spent on items such as defense, interstate highways, and national parks, to name a few. In 2008, the Bush Administration released a report that stated that if unchanged, mandatory spending would consume the entire federal budget within approximately 50 years, meaning no funds would be available for discretionary items like those I just mentioned. Well, guess what? According to the White House Office of Management and Budget (OMB), mandatory spending will exceed the federal budget revenues in 2011. How did that happen? Two factors are at play here. First, with the slumping economy, federal tax receipts have fallen significantly. Secondly, there has been a massive expansion of entitlement programs (think: ObamaCare) and payments on our exponentially growing debt. The fiscal crisis this country faces is very real, yet there is no serious discussion on entitlement reform coming out of Washington. Entitlements must be reformed, debt must be reined in, and we have to get our economy back on track so it can grow. As it is, Washington has not been serious about doing any of these critical things. Look for the "solutions" that come out of Washington to entail primarily taxing more of your hard earned income.
I'm very worried about Egypt's financial situation. It appears to be a pyramid scheme.
Although the Bureau of Labor Statistics (BLS), which tracks inflation, will tell us that inflation is benign, consumers know differently. BLS does not count the cost of food and energy in their core inflation calculations, but costs in those areas has been rising dramatically. A more accurate measure of the cost of living comes from the Labor Department, which calculates inflation on a "chain weighted index" which takes into account food and energy costs and more accurately tracks consumer costs. Last month, the chain weighted index hit a 40 year high. We all know that our food and energy costs have gone up- we feel it in our wallets every month. We are paying more for our basic necessities. Part of the responsibility for this condition rests with our Federal Reserve, who through their printing of massive amounts of new dollars have debased the value of our currency. Simply put, our dollar doesn't buy as much as it used to and we consequently are paying more for a gallon of milk and a tank of gas. The effects of this situation are going to continue for some time, as the Federal Reserve shows no inclination of strengthening our dollar. And you and I will pay for this strategy by paying more for our basic necessities.
In the words of Big Bird, this day is brought to you by the letters "W", "T", and "F".
Oil is hovering around $100 a barrel, partly because of fears of a supply disruption from the turmoil in the Middle East. We are close to having demand outstrip the supply of new oil coming on the market. The last time we got into a situation such as this- in 2007- oil spiked to $148 per barrel and created a global economic slump. Conventional wisdom says that the U.S. has only 2% of the worlds oil reserves, and no matter how much we drill, we cannot produce enough oil to meet our demands. Really? It may shock you to learn that the U.S. sits on nearly three times as much recoverable oil as the entire Middle East. New technology has unlocked the potential of oil producing shale, and the U.S. holds vast reserves of these oil resources. In a 35 square mile area of the Green River Basin, there are at least 800 million barrels of oil that can be recovered from shale. It is estimated that with the new drilling technology, there could actually be 1.4 TRILLION barrels of oil in this one region. That is enough oil to meet our demands in this country for the next 200 years. Couple that with the fact that there are proven reserves off our coastlines, and one can see that we have ample reserves in this country. Yet we have an incoherent energy policy that promotes windmills and solar panels. I am all for renewable energy, but the fact remains that our nation's energy policy as presently constructed is ridiculous. It constrains our economy and costs us more money to function. It is time for all our elected leaders to realize we need to develop our own resources for the betterment of our economy and to the benefit of you and me.
It is scientifically proven that a woman can be satisfied with only three inches. And it doesn't matter if it is a Visa or a MasterCard.
And that, my friends, is my view.