Friday, May 20, 2011

My View

Random ruminations from your resident curmudgeon...

According to the Federal Reserve Economic Database, the United States spent $42.5 billion dollars in the month of April to import oil to meet our needs. Annualize that number, and you can see that our country sends nearly a half trillion dollars to places like Saudi Arabia, Venezuela, Iraq, and Nigeria. That's a group of countries that are not exactly friendly toward our nation, and one can see that with our energy policy, or lack of one, that this transfer of wealth is only going to get worse. Here is what you should know: the pain at the pump we all feel is a direct result of our energy policies that have curtailed exploration and have thrown numerous roadblocks in the way of making our nation energy independent. We are taking your money, my money, and the financial resources of our nation and transferring them to governments that at best dislike us and at worst would like to see our nation destroyed.  The incoherence and ineptitude of our nation's energy policies are painful right now for us, and could result in even greater pain for our nation in the future.

I thought I had found my groove. Turns out it was a rut.

The federal government has acknowledged that funds in both the Medicare and Social Security programs will run out sooner than previously expected. Medicare will not be able to pay full benefits starting in 2024, which is five years sooner than expected; and Social Security will lose the ability to pay full benefits in 2036, according to the latest projections. Medicare will have to cut payments to doctors and hospitals by 10% and Social Security will cut payments to retirees by 23% in order to continue making payments. Here are the facts: both programs are broke by any legitimate accounting standards, and our economic condition will limit our ability to get these programs on solid footing. If we choose to continue these programs, and I think we should, then we are going to have to re-think our approach. Whether it is vouchers that allow individuals to purchase insurance in place of Medicare coverage or privatized Social Security accounts, innovative new solutions are going to have to be put in place. Fundamental to this is a change of mindset in Washington. Recognition that Congress and the bureaucrats there are not the seat of all knowledge and in fact are a great majority of the problem is the first step to correcting this dire situation.

My wife said she wanted to renew our vows. I told her I try not to make the same mistake twice.

In the next few weeks, the U.S government plans to sell most if not all of the shares that it, uh, we, own in General Motors. If you haven't kept track of GM stock, the price performance has been somewhat disappointing. How disappointing? For the government to break even, and for you and I as taxpayers to be made whole, the stock would need to be sold for $53 per share. As of this post, GM is trading for $31.25. The stock was offered to the public at $33 per share. At these prices, the taxpayer would be saddled with a loss of over $10 billion. Why has the stock underperformed, you ask? For the same reasons that it underperformed before you and I bailed them out: poor strategic decisions and product mix; management turnover and inconsistency; and a union that has not given the kind of concessions that would be necessary to make the company competitive with its products. Face it, folks, the bailout of GM has produced no change in behavior that would indicate the company has long term viability. This bailout was a sop to the UAW and the votes they deliver to Democrats. My prediction: you will see GM in need of another bailout within 10 years.

I really like birthdays, but too many can kill you.

And that, my friends, is my view.

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