I have said numerous times in political conversations with friends that I will give Barack Obama the benefit of the doubt and give him some space at the beginning of his administration. I realize that both sides of the political spectrum campaign to their fringe and for the most part govern towards the middle. Whether this is good or bad is up for debate and not the subject of this post. There is a laundry list of policies that he campaigned on, which I fundamentally disagree with, but as a realist, I know that very few of the items will come to fruition, even with a Democratically controlled congress (which will try to govern left of Obama). While its only the second week of a four year term, a one thing is perfectively clear, the Obama administration will be able to get away with anything without much objection from anyone. No one has called him out on the few policies he has proposed and enacted or that a few controversial cabinet nominees were passed with little questioning.

It feels like we are witnessing a “Teflon president” where nothing will stick to him. Look at this list:

*Reverend Wright

*Tony Resco

*Governor Blagojevich conversations

*The birth certificate issue- never releasing an original certificate from Hawaii

*Promising to take public campaign financing and then backing out

*Tim Geithner, his Treasury secretary who forgot to pay his taxes for years

*Secretary of State Hilary Clinton who was never grilled about the source of millions of dollars of donations to President Clinton foundations

*Not a lot of questioning about putting TRILLIONS of stimulus dollars with little oversight.

*What are we going to do with the prisoners of Guantanamo Bay when it closes, their home country wants nothing to do with them.

*Joe Biden stating that we should expect more military casualties because of an increased presence in Afghanistan.

*Campaigning against wasteful spending, wanting to spend trillions of dollars to stimulate the economy. He is doing this by putting money into banks, the auto industry and the states in a veiled attempt at socialism.

We all know that if anyone of these happen to a conservative president or candidate would be raked over the coals until the cows come home.

I believe that the Obama honeymoon will last throughout his four years and if the opposition doesn't get their act together a total of eight years. Of course its easy to say now with Obama's high approval rating after his decisive victory in November. He has mezorized a large majority of Americans, who believes tat he can't do no wrong. It's almost cult like. I haven't seen this kind of buzz for a public figure since Ronald Reagan. In Reagan's case he didn't touch the hearts of America until well into his first term, then it grew to what it is today. The only issue that could derail Obama's popularity is if the economy stays stagnant for a prolong period of time, like two or three years, which is definitely in the realm of possibility. We live in an impatient society and a large segment of the population would like to see their retirement to at least get to the point where it was at its peak last year asap. The stock market, if lucky might get back ½ of their loss from its peak in four years. I believe that if the market doesn't get back to the previous high in four years, Obama he might have a battle for re-election in 2012. To diffuse this, the administration and Democratic leaders has already stated that the economy will take a long time to recover and we should be patient. The administration is already trying to hedge their bets and covering their butts if the economy is not running at full steam in 2-3 years.

I guess time will tell when Obama will do or say something that will rub people the wrong way and will be called out. Who will do this, the mainstream media, his fellow Democrats, the Republican minority who was their own identity issues to deal with? The answer is no. The only people that has questioned Obama's actions throughout the campaign and into his Presidency is talk radio which Obama dismisses as not speaking for mainstream Americans. The only group that might stand up against Obama is the Democratically controlled congress if he doesn't govern as as left as they want, and that's a scary thought.

Speaking in front of the nation during his inaugural address January 20, 1961, John Fitzgerald Kennedy uttered his famous quote “Ask not what your country can do for you, ask what you can do for your country.” My my, how things have changed in the last 45 years. JFK was asking Americans to step up and put aside time to serve their country like their parents did during WWII, albeit without the sacrifices they had made. For the most part the call was successful in the numbers that signed up for volunteer organizations like the Peace Corps. Now, its seems like the tables have shifted with everyone having their hands out asking what their country can do for them. I have noticed that in society that there are a lot people out there that feel that they are entitled to everything from jobs, health care, food on the table, child care etc without having to making sacrifices on their end. They believe that its the government's responsibility. During the election, one video clip that was shown, it was one of an African-American girl, I believe during the Democratic National Convention or a huge rally that thought Obama will put fuel in her car, pay for her home and overall take care of her. I know that this is one example out of the 300 million Americans out there but I am an observer of society and culture and you have to admit that we are trending away of the things that made the United States what it is today. What ever happened to rugged individualism, personal responsibility and earning what you have by the sweat of your brow?

I do put some of the blame on politicians of both sides. Every year leading up to an election, they promise us the moon, from better health care, better education, money for various programs bribing certain voting groups just to get elected. As humans, we all love free stuff, but most of us don't look at the big picture and the hidden costs that comes with it or who is really paying for it. We let our emotional side dictate, while it should be the rational side taking charge stepping back and questioning everything our government wants to do for us.

There are two examples making news that proves my point. First, on a national scale, all of the bailouts that are planned and Obama's promise of more taxpayer stimulus. Up until now I was a proponent of the government stepping in certain situations, because some companies are “too big to fail”. That if we let these businesses go under that it will cause a ripple effect in our economy making a small problem into a much larger one. Now that we have to bail out the banks, what next. Are we to bail out the auto industry, credit card companies, retailers, airlines, the housing market, insurance companies, financial services companies etc? The first problem with this is that we will be setting a bad precedent, where if we bailout one industry, what makes them more important than another that is going through the same crisis. Secondly, we don't know that these bailouts will work or are we just delaying the inevitable. If we bailout GM, who is hemorrhaging billions of dollars a month, the solution isn't giving them more money just to hemorrhage it, but we need to tackle what is causing the problem. We should let them go into bankruptcy to get them from underneath the legacy costs that is killing them. Thirdly, by giving them bailout loans to survive, are these companies learning a lesson or are we going to have the same problem when another general economic crisis arises. Before we give out dollar one, we need to look at what caused these companies to go to the brink of disaster and set up regulations and set terms of any bailout that the individual companies and industries have to adhere too.

Personally, I think that the only way the government should stimulate the economy except for monetary policy is government works projects. I am a constitutionalist, I believe that the federal government's primary job is national defense, general welfare of its citizens and INFRASTRUCTURE. We have thousands of bridges and miles and miles of road that is in desperate need of repair and this would be a good time to tackle them. All the money spent will go directly into the construction people's hands that will trickle down through the economy. We are a consumer driven economy.

The second example is a local story from Milwaukee, where the voters overwhelmingly approved a referendum giving them all sick days based on the amount they work. Who wouldn't vote for free sick days. We all know they will all be taken for legitimate reasons. (just a little bit of sarcasm) When voters are standing in the booths they have $$$ in their eyes not seeing how giving every worker in Milwaukee sick days will cripple a lot of businesses especially smaller ones that doesn't currently offer many benefits. Also, no one is saying who is going to pay to administer the enforcement of this rule.

While JFK wanted us to do something for our country, paying higher taxes to bail out mismanaged companies wasn't what he had in mind. Plus he didn't mean that we ask the country for free stuff. Also, we shouldn't be bailing out homeowners that bought houses they know they couldn't afford in the long run. Individuals and businesses need to take responsibility for their own actions and that the government needs to really look at all industries across the economy to find loopholes in regulations that caused this crisis.

 

I am not like the pundits in the mainstream media who are all acting like Chicken Little and the sky is falling because of all the issues surrounding the financial markets and the upcoming debate on bailing out financial institutions and homeowners. My first question is when watching the news accounts is, “what do these talking heads know about finance.” I have a B.B.A in Finance and Management from the University of Wisconsin-Whitewater, while most of these so called “reporters” went to east coast schools, receiving liberal arts degrees or journalism schools, while there, being indoctrinated with liberalism, knowing nothing on how the economy and the real world really works. We have heard several reasons why we are in this so called “crisis”, from crooked CEOs, Republican policies of deregulation,corporate greed etc. While I do believe there has been crooked CEOs when it comes to Freddie Mac and Fannie Mae and a little bit of corporate greed, its not the type of greed that is being reported by the mainstream media.

I know that this situation has been going on for a few months now and some of you are probably wondering why I am writing about this now, “hindsight is 20/20” but this isn't the case when it comes to my analysis. I am not a reactionary, I like to process the information and filter out what is true and what is liberal propaganda. My analysis is as follows. The investment community, especially the stock market runs on two things; larger than average growth and beating analyst's projections. If neither of these things happens for a particular company, there stock isn't “sexy” and doesn't appreciate the way management would like. I equate it to the story of “The Tortoise and the Hare. The “hare” being the sexy stocks, securities that everyone wants to own and there price shoots up and investors making a quick albeit risky buck. These are company's with high rate of growth especially in industries that are mature, where growth is hard to come by. We are not talking about Google, who's maturity hasn't been reached yet but the Enrons and WorldComs of the world, where management would do anything (legal and illegal) to keep their share price growing. The Tortoises are the Proctor and Gambles who's growth is slow but steady and they eventually will win the race, just ask my dad who is enjoying a nice retirement on P&G stock while the employees at Enron have to start over. Taking this example to the mature financial services sector, the housing market was slowing down and the banks and other financial institution are under pressure from their shareholders and partners to keep their growth going at the rate they have been enjoying, started taking on riskier loans. They were giving out sub-prime loans to people to buy homes and capital needs that they couldn't afford under normal economic conditions. They banks knew that in the long term a lot of these people couldn't ever pay them back but they were looking at the short term and will handle this problem in the future. Well the future is NOW.. They need to show their shareholders and partners that they are growing the company and they are earning their large salaries. To make more loans (because they need to keep the loan to cash ratio set by Federal and State regulators),they would sell off these loans to Freddie Mac and Fannie Mae and they would bundle these loans up and sell them as securities in the open market. This circle kept on going and going until.... guess what, the housing market bubble burst and the underlying assets of these loans are not worth as much as they once were. This along with an increasing rate of defaults put the banks in a precarious position that we are now in.

This problem didn't affect banks and other financial institution that didn't get in this business of risky loans but it did hurt banks like Citi, AIG, Lehman, Merrill Lynch, Freddie Mac and Fannie Mae that did practice making and buying up risky loans. Now the banks and people who bought homes and properties they couldn't afford, expect the federal government to bail them out. Shame on the banks and shame on these Americans, its greed on both sides. While I disagree in principal with the bailout of Freddie Mac and Fannie Mae, it had to be done because of the massive amount of loans they own and them being quasi-governmental agencies. What I don't want to see is the government get into bailing out these companies and individuals because of their greed. There are thousands of banks and millions of Americans who lived within their means and now have to pay for stupidity with taxpayer dollars. Instead of being shortsighted all the time like we have been with immigration, Social Security, Medicare etc we need to have the foresight to see these problem before they become too big to handle. The only politician I have read about speaking out years ago has been John McCain, who had the foresight, but was rebuffed from the likes of Chris Dodd, Barney Frank and Barack Obama who were in the pocket of Freddie Mac and Fannie Mae. What ever happen to corporate and governmental responsibility to keep the markets running smoothly. Where was Bernake, Paulson (who has a lot of private sector experience) and others? They were all caught up with the sexiness of growth or being political and the need to get elected or keep their government job. Obama shouldn't say a word about this situation because of all the dollars he accepted from Fannie Mae and Freddie Mac and having their former CEOs as financial policy advisors. Instead of bailing out people and business out of situations they should have known better not to get into, we should be looking at the rules so this wouldn't ever happen again.

I don't think the economy is as bad as the pundits in the media says it is, but we do need some tough love. We do need to strengthen the dollar to reduce oil prices and the way we do it is by raising interest rates and taking money out of the economy, politically a non-winner. We might go into a recession next year, but we are overdue for one (if you look at economic history they happen around every ten years) and it should be mild. Right now I can't stand is the contempt from the media to those out there ,like John McCain who says the economy isn't bad who are they to judge the economy. NBC, CNN,ABC,CBS, New York Times must have opened up a MBA program when we weren't looking.

 

With energy and food prices on the rise and showing no signs of going down (at least to a point where we are used to), where are all the advocates of the poor and minorities who are being hit by this the hardest. On a grand scale they are silent, no Michael Moore (who would just blame big oil), Jesse Jackson, Al Sharpton or any prominent Democrats, who would rather pander to their environmental wacko supporters than a huge majority of the electorate They would rather talk about technology that doesn't exist today, or very short sighted solutions like taking oil from the strategic reserves or having a gas tax holiday. Its always about the demand for oil not the supply. Hey, oil prices went down $10 a barrel on just the announcement of President Bush lifting the Federal ban on offshore drilling which still doesn't even get us a step closer to drilling. What would happen to oil prices if we ever laid out a plan with a timetable on increasing our domestic production of oil while finding ways to conserve our energy. Hey, I am all for hybrid cars and finding alternate sources of energy ,but they are not practical on a grand scale at this time. We should be opening up HUNDREDS of nuclear and coal fired plants, shut down all natural gas powered plants (natural gas should only be used for home heating), while creating more fuel efficient practical cars, trucks and SUVs. Just the mere announcement of a plan (which would only take a year if congress ever gets their head out of their a**) would bring down oil prices under $100. While we may never see gas prices of .99 or even 1.99 we would knock it down to $2.25 or so.

So, it seems like the Democratic led congress has abandoned one of their constituencies and sided with the environmentalists, risking their political future. As I said before, there are certain groups Democrats will never cross; the elderly, environmentalists, trial lawyers and teachers. I hate to say it, the poor and minorities don't go out in droves to vote, still falling for the same rhetoric year after year from the Democratic party. They claim that they are the only ones looking out for them while the Republicans only look out for the rich, which couldn't be further from the truth. It is safe to assume that the Democrats in congress are safe and probably will pick up seats in both houses this election year because of the unpopularity of President Bush, but in 2010 and beyond, it will be a crap shoot. If energy prices continue to rise or even stays the same, the election of 2010 could be a very interesting election especially if Obama wins the Presidency. If this happens the Democrats would have no one else to blame, but themselves. Democrats have made this bed and will have to live in it if they continue to side with a small minority of hard core environmentalists who fight every new power plant in this country, than the people who don't have a voice in Washington. We could see a mass exodus from the Democratic party comparable to the likes of southerners becoming Reagan Democrats when the Democratic party became too far left on social causes for their taste.

How are the Democrats will handle this situation? Again they will try to curb Demand and will probably will try to raise the minimum wage a few dollars an hour (which surprises me that no one has written a bill on this). Anyone who has an ounce on economic knowledge (not one Democratic congressman on capital hill that I know of) knows that business will just raise prices when faced with higher labor costs. All of this will raise the price of goods and services for all of us to help a few that are making the minimum wage. Employees that make more than the minimum wage won't get a wage increase, so their buying power decreases. This would hurt the economy no help it.

Again, this issue might not be a major problem for the Democrats this election but in two years I am going to pull up a chair, crack open a beer and see all of this unfold in front of my eyes. Man this is great.