7. January 2009 by David A. Peterson.

The 111th Congress was sworn in yesterday. Normally this event just comes along every two years and nobody notices. Not this year we have three great Senatorial conflicts happening at the same time.

1st we have a new junior Senator from Illinois that isn’t allowed to take his appointed seat. The issue is well known. We have an Illinois Governor that should have resigned by now, but he decided to stick it to the citizens of his state and hang around for a few more months. While he is still there he just figured he might as well keep working and it was his job, his duty to make the Senatorial appointment.

Since the Illinois Governor’s issue is so well known the Democrats have stood up and united together on this 1st issue. They are refusing to allow Illinois Attorney General Roland Burris to take his seat. As it turns out any of the current U.S. Senate members are allowed to object to a “tainted” individual from taking such an honorable position.

Personally I agree with the Democratic position on this topic. Even though Attorney General Burris is probably an honorable individual and he does appear to be qualified his appointment from a less than honorable Governor has cast a cloud of doubt.

The doubt leaves all Americans with the thought that the Senate itself is tainted. How can we trust our government when we can’t trust the ones doing the appointing?

What smells is not just the Illinois situation; the U.S. Senate has acted in this case, along with the Illinois government. There will be orderly outcome. Attorney General Burris may actually be seated in the Senate at the end of the day, but we need the day to be examined first.
 
What smells is the same Democratic leadership that is so quick to condemn the honorable Burris is completely silent on the 2nd Senatorial conflict. That is the Minnesota Senatorial election fiasco. Obama, Reid, Pelosi, and all of the Democratic leadership are united on the Burris conflict but we have not heard a word from them on the Minnesota conflict.

Is the Minnesota situation completely different? I agree it’s a little different we don’t have a Senate seat for sale but we do see a few more ballots being cast in heavily Democratic districts than we have voters. A few votes being counted twice, a few votes not being counted at all, oh and don’t forget about the votes found in the trunk.

What smells is that this really looks like an election that is being stolen. Why isn’t a Senate election that is being stolen not as important as a Senate election that is being sold to the highest bidder?

Where are President-elect Obama and Senate Majority Leader Reid on this conflict?

What Democrats don’t seem to understand is that you can’t be sort of trustworthy. Either your organization is trustworthy or it is not. There is no middle ground. If Burris is not honorable enough to serve then how in the world can Franken be allowed to serve?

President-elect Obama and Senator Reid need to rethink this issue. If they allow the comedian and talk show host Al Franken to take a seat in the next couple of weeks then they will immediately lose the little trust that they still have from the American public.

Again, even if Al Franken is the most honorable man in Minnesota you can’t seat him when the election outcome is so tainted. Your organization can’t be sort of trustworthy. It is or it is not, one or the other, never both. People either trust you or they don’t.

It just smells.

While I’m on my high horse would someone please, please tell Governor David Paterson of New York that Caroline Kennedy is not entitled to that Senate seat. This is the 3rd Senatorial conflict we are experiencing in the 111th Congress. The Kennedy family is trying to pass down another government post.

I’m sure she’s a great gal but a Senate seat is not a birthright. This just smells. Isn’t there anyone in New York that isn’t tainted? Where are President-elect Obama and Harry Reid on this appointment? You must be kidding. Don’t they both know just how bad this smells to the rest of us?

For government to work effectively it has to be trusted. The people are already reeling from Enron and Bernie Madoff. The people are reeling from the burst of the Internet bubble, and the burst of the housing bubble. Sub-prime lending and under-funded pension and health plans continue to fuel our fears.

Now on top of everything else the government trust bubble is about to burst. All of the Senatorial appointment situations just smell. You just have to wonder, we know about the Democratic problems with Burris, Franken, and Kennedy – what don’t we know?

President-elect Obama hasn’t even taken the oath of office and his party has some funky smell that is getting worse. I’m sure all of the Democratic leaders are very smart individuals. My question is why in the world would they wish this situation on themselves. They are literally trying to make it hard on themselves by not acting in a consistent honorable manner. 

At this rate, with this smell the 111th Congress may actually have a lower approval rating than the 110th – Unreal! Let me fix this problem for you… Do not seat Burris, Franken, and Kennedy in the Senate. Hold special elections in those states – the worst thing that can happen from these special elections is that the people will trust the Senate as an organization. Is that such a bad thing?

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22. December 2008 by David A. Peterson.

On Tuesday December 16, 2008 the Dow shot up over 350 points. The general thinking is that this gain was due to the Federal Reserve’s action of lowering the Fed Funds rate 0.75% points. We are told that the Fed is looking for a range between 0% to 0.25%.

A 0% to 0.25% rate means that the banks are getting money from the Federal Reserve for basically free. Hopefully they will pass these incredible / historical interest rates on to the consumers. Right now the Fed would be happy if the banks would just start lending.

To be fair if you have good credit then you are probably breezing right through this economic lending mess - at least in terms of getting a note or refinancing your home. Banks are lending to their very best credit risk customers. You can buy a car if you have a 750 credit score. However, if a person has a credit score around 600 then that person is probably experiencing  the credit problem first hand.

Now multiply that first hand problem by millions of people and businesses and you can see why the Feds thought they had to act by lowering the rates.

The Federal Reserve has played it’s last major card in our economic crisis. The interest rate cut is historic. The government in the waining days of the Bush administration is working overtime to make sure it does exactly the opposite of the Hoover administration in 1929.

The Bush administration is flooding the financial markets with money. The Obama administration is expected to continue most of these policies.

In the past few months Bush has allowed the Fed Funds rate to drop to 0.25%, he has created the $700 billion TARP, given the automakers $25 billion to retool, and is feeding the automakers $17 billion as a bridge loan.

The incoming Obama administration is expected to launch a trillion dollar (i.e. $1,000,000,000,000) economic stimulus package. Obama’s stimulus package is going to be nothing short of a “Newer Deal.” The object is to get people back to work using public work’s projects. No doubt the country needs to get people back to work and there are certainly no shortages of roads to be built and bridges to be fixed.

The original New Dealers tried to tax the wealthy and redistribute the wealth. The thinking was that the rich had all the money so tax the rich and give to the needed. Both Hoover and Roosevelt tried this strategy. The result was 10 solid years of depression.

We now know that Bush will not adopt that tax strategy and we are pretty sure that Obama has backed away from his campaign rhetoric on taxation. History tells us that taxing the rich will only prolong the problem.

On the other side of the coin, what about all of the new programs? What about all of this money that Bush and Obama have printed or will print to move the country forward? Isn’t there a chance that all of this meddling in the economy will have the opposite effect?

The opposite effect of a depression is inflation. If you want to know how bad life can be in an inflationary country just look at the countries of Zimbabwe (1,021%) or Argentina (unofficially 20%).

The Federal Reserve’s main mandate is to keep inflation in check not to stimulate lending. Our government is so preoccupied with the current economic mess that it may be actually creating a near-term problem. That problem is rampant inflation.

I agree it is hard to see any inflation at the moment. That is because the housing market, commodities market, and the stock market were all in a deflationary spiral this past year. It currently looks like all of the markets have stabilized at their new levels.

The pop in the Dow Jones of 365 points last week is just a pop. The current Dow Jones trading range is currently between 8,000 and 9,000. When the Obama administration takes over it may see a rally in all the markets. Just as the Roosevelt administration saw its own  post election rally. Don’t confuse the post election rally as a justification of fiscal policies. As an example: Roosevelt’s rally was short lived.

What President Obama must do and Republican must keep reinforcing is to keep the government from meddling too deeply in our economic issues. The government needs to stop the printing presses from creating money out of thin air -immediately.

 All of us over the age of 45 remember the late 70s and early 80s when a mortgage of 10% was considered good and a car loan at 16% was what a young person had to pay to get basic transportation.

Inflation is not hard to imagine. Our most recent instance was $4.00/gallon gasoline. That is inflation in its most basic form. Prices rising with impunity. We all saw this rampant inflation this past Fall with milk prices rising close to $4/gallon, and grocery stores were giving the impression of stable pricing by selling items with less product in the package for the same price.

Inflation is just as bad as deflation. If we see the Dow, S&P, and Commodities markets all stabilize in a narrow trading range then the government needs to back off and let businesses do what they do… that is let businesses hire new workers, produce more product, create innovative designs, and expand the economy naturally.

If the government keeps printing money and doesn’t recognize the stabilization then they have the opportunity to make the economic mess worse. If inflation kicks in (which it could with all of this government money sitting on the sidelines) then we may start begging for $4/gallon milk and gasoline.

Thankfully Bush and Obama have the past to look at to help navigate the current crisis. The lesson they need to take away from this point forward is that the New Dealers kept meddling in the economic issues. This meddling didn’t lessen their economic crisis it kept the country in the grips of the crisis for 10 years.

The Dow up 365, that doesn’t mean we are out of the woods that just means that we are still within the trading range. Trading ranges give investors confidence. They give business people the stability to move their businesses forward. If this does turn out to be a lengthy trading range then that is the signal for the government to back off and let business do business and government do government.

If government wants to meddle here’s an idea - how about using your current rules for regulations and go investigate the Enrons and Bernie Madoffs of the country instead of just printing money. Oh yea while you are at it… how about enforcing regulations and actually governing the Feddie Maes and Fannie Macs of the world instead of just spending their petty cash that they have laying around.

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