FedUpUSA

Archive for the ‘spending’ Category

On April 1st 2007 the very first Tickers were written.  In just a bit over two months, The Market Ticker will be five years of age.

And through that time The Market Ticker has pointed out one central fact behind everything published here: You cannot spend more than you take in on an indefinite basis.

This, of course, is anathema to a nation — and a world, really — that has done exactly that for more than three decades.  Many of the citizens of the world — those under about 35 (as your first few years of life have little direct connection in a cerebral sense to economics) have never known a world where overspending and ponzi economics was not practiced.

You can’t exactly flaw people for not understanding that a thing is broken when they’ve never experienced life in any other way.  And for those who are somewhat older, those of us who remember the 1970s, the oil shocks, gas lines and 5 gallon purchase limits along with grocery store prices that seemed to double every six months (it wasn’t quite that bad — but it was bad!) it is easy to get the mistaken impression that what we’ve had for the last 30 years “fixed” what was broken in the 1970s.

It didn’t, of course.

The world had run on it a simple fraud covered in various layers of complexity to hide it from the common man, just as has been done many times before.  The 1920s were the same thing, basically, minus the computers but also minus fast information sharing.  The land swindles of the day in Florida were almost identical to the condo-flipping schemes here in the Panhandle when you boiled them all down; tiny down payments on construction not yet initiated, the promise of ever-higher valuations, carnival-style barkers spinning rags-to-riches stories and you only needed $10,000 to get in “on the ground floor” of an elevator that would take you to the sky.  Sign right here mister, and your life of luxury and privilege will begin.

Uh huh.

Last night the yarn-spinning continued on Greece.  Bloomberg said:

Greece and its private creditors said early today they had made progress during talks in Athens on a debt-swap accord needed to lower the country’s borrowings and clear the way for a second round of international aid.

“The elements of an unprecedented voluntary private-sector involvement are coming into place,” according to an e-mailed statement from Charles Dallara, managing director of the Institute of International Finance, a Washington-based lobby group representing creditors negotiating with the government.

Sure they did.  Sure Greece is going to pay debts of more than 100% of its GDP — even after the “restructuring.”  And sure this is “voluntary” — in more-or-less the same way that it’s “voluntary” that you hand over your wallet when there’s a gun up your nose.

The real problem is that people — and governments — borrowed money they couldn’t pay back off their economic surplus.  For a private-sector entity (a person or company) economic surplus is easy to define — it’s what you have left after you spend on the bare necessities of life.  When those necessities (such as your house) become part of the overborrowing then the situation appears more complex but it really isn’t — you just “upscaled” your view of what was a “necessity.”

But let’s face facts — a trashy trailer on a 100×50′ piece of rented land with utility connections is more than the “bare necessities” when it comes to housing — by a lot!  I lived in a little 400sq/ft one-bedroom apartment for a good while when I was just getting started and that was more than “bare necessities” (by a lot) for even modern comforts.  A studio would have been sufficient, since I had no dependents and was single.

The same applies to transportation.  Most people today in the United States are driving around in vehicles that have values that are two, three, five or even ten times the cost of “basic necessities” for the required task (getting to work, the grocery store, etc.)  It was in fact in the recent-enough past that I owned said vehicles that the “basic car” had an AM radio with one speaker, a manual transmission, no air conditioning, no power door locks, no power windows, no power steering, no power seats and the seat coverings were vinyl.  You could also see (and work on) all sides of the engine and the road under it when you popped the hood.

In fact, one of the pieces of said “basic transportation” that I owned in my earlier years (and drove to work every day) was one of these:

Before that I had one of these in considerably worse condition than pictured (it was gray and had a smashed-in passenger side door from a collision prior to my acquiring it for a literal cost of $100.)

THOSE were “basic transportation” and not only where they cheap to buy they cost almost-nothing to insure because there was no reason to have collision or comprehensive coverage on them!  The Vega, incidentally, consumed a quart of oil per tank of gas on good days (and worse on bad ones) along with having a habit of slowly eating coolant.  Yeah.

I’m not saying you shouldn’t own this, incidentally:

IF you can afford it without debt, and without spending more than you make.  That is, if you can pay for it using your personal economic surplus.

But recognition of these facts is rather jarring for most people.  Some of us grew up understanding it; our parents owned one car that was much nicer than the other (and was used to get to work) while the other was, literally, “basic transportation” (with no power anything and no air conditioning) if we had a second car at all.  We rode bicycles to our friend’s home rather than being carted around by “soccer moms” in no small part because driving the car cost money; the bike cost only human power.  Nice bicycles (which most of us could not afford) had 10 speeds; the more-ordinary ones that nearly all of us actually owned had coaster brakes and one speed.

Let’s put this in a slightly-different perspective.  The poverty level income for a single person in the United States today (as of 2011) is $10,890.  Many people reading this, perhaps most, spend more than 1/10th of that on their cellphone bills.  A further significant proportion of the population spends more than 1/10th of this on their cable or satellite TV bill and the overlap between the two is significant.

That is, a very significant percentage of the population spends more than a quarter of poverty level income on two luxury and entertainment items which are utterly unnecessary.

Again, none of this is a problem if you can afford it.

But what should you have paid for first?

Well, for one, a very significant financial reserve.  Your retirement, for example, never mind a cushion in case something goes wrong (like losing your job.)

With governments its equally-simple: Government gets all of its money by taxing it.

Yes, all of it.

I know, some people will say “they can print it!” or “they can borrow it!” but in fact on a long enough timeline all of that is taxed.

If the currency is debased the taxation happens immediately and hits everyone at once.  If it’s borrowed then the taxes fall on you tomorrow, assuming it’s ever paid back.  There’s no real difference, when you boil it all down, other than the immediacy of payment.

All of it, in the end, comes down to taxing you — taking your money and giving it to someone else.

That’s all government does.

This weekend dawned with the news that Greece’s creditors have walked out of their meeting.  That in and of itself is probably not all that important.  What is important, however, is the rising tide of speeches coming from various government officers in Europe recognizing that deficit spending has to end.

It’s not just there — Fed President Dennis Lockhart has said the same thing about the United States.  What was just a few lone bloggers in the wilderness a few years ago, myself included, has now turned to policy-makers inside and outside of the government itself.

At the core of this problem is the buying of votes with money that doesn’t exist.  It’s very popular to do things like that, as having the necessary adult conversation regarding the sustainable level of spending by government — and the adjustment that comes to GDP and thus overall consumption when overspending stops — tends to bring revolt at the ballot box.

But there comes a time when the political expedience of vote-buying and other chicanery simply cannot be sustained any more.  We’re within sight of that cliff, and if we do not act we will go over it.

If you remember the speeches from Bernanke in the 2008/09 time frame he counseled that we must get our budget deficit under control in the “intermediate term.”  But exactly what is “the intermediate term?”  This again leads back to the fundamental nature of exponential growth and how badly you’re screwed if you ignore it.

In 1980 the Federal Government spent $53 billion on health care all-in. Last year it was about $820 billion.  That’s a roughly 9% compounded rate of increase.

The rule of 72 says that this means the spending will double again in roughly 8 more years (2019) to $1.64 trillion, then in 8 more (2027) to $3.28 trillion, which is approximately the size of the entire federal budget today.

Obviously that won’t happen as you can’t raise that much money, but that’s exactly what our politicians are promising people over the age of 50 when they say “Medicare will not change for those over 50” as that rate of expansion simply gets you to where you qualify at age 65!  There will be two more doublings required to get you to 80 years of age, which (if it was possible) would rack that number to over $13 trillion dollars — close to the size of the entire economy today.

Bluntly: Such claims are a lie.

What’s worse is the curve when you look at government debt.  Let’s chart it:

Pick a point on that graph.  Even at the most-optimistic number — 2006 or 2007, when we were creating massive amounts of private credit to prop up an about-to-explode housing bubble — federal debt was still growing at over 6% a year.  That means it was doubling every 12 years!

In 2008 and 2009 we grew it at 15% or more a year.  That means it was doubling every 4.8 years.

Does anyone really think we’ll get away with either of those statistics given what we now know is happening in Greece and elsewhere in Europe?  Remember, Japan, which is the common poster child for this, came into their government debt binge with massive private savings — savings that have been essentially all consumed by that binge.  We never had the private savings in the first place, which means we have nothing to consume in previously-earned economic surplus!

Folks, there is not one year in the last decade during which we can point to a sustainable level of debt.  If you go back into the 1990s there were a few years during which federal debt expanded at a much-more-modest rate, but those were years during which private credit creation was expanding exponentially in place of the government (through the Internet bubble.)

There isn’t any way out of this through more government debt.  It has to stop, and stop now, because the nature of exponential growth is that the rate of damage accelerates.

If you read (again) my Ticker from 10-18 of last year, you should understand what’s going on — and what we face.  This is simply not about what I want, what I’d like, what pundits would like to do or anything of the sort.

It is about mathematical reality.

Think about exactly how much further we can expand government spending in this regard and not have the entire economy collapse around us.  Then reduce that percentage of increase to “doubling times” and you know where the wall is, in your best estimate.  Nobody who does this exercise can come up with a number that is larger than the number of fingers you have on one hand.

Look, I don’t like what taking our medicine means, and the reason I wrote Leverage was because I had gotten very tired of people saying “nobody could have seen this coming.“  In addition, there are a whole host of people who have sounded the warning horns for a while, yet they have no cogent plan to resolve the problem or help buffer the inevitable (and severe) pain that must be endured.  Some of them, including some political candidates for President this time around, understand the problem and even propose massive budget changes (e.g. $1 trillion a year in spending cuts) yet have no plan to buffer the economy and the people from what will, left alone, be a contraction in overall GDP of up to 25% and the Depression that will inevitably come with it — a Depression worse than the 1930s!  That is outrageously irresponsible and worse it will never get passed because without those buffers it is not only unnecessarily harsh but could lead to the collapse of both civil order and our government.

But irrespective of what I would like to see, or what politicians promise, this adjustment — the necessary adjustment — is coming.  It cannot be stopped.  It is mathematically certain, whether people like Bernanke, Obama, Romney and others wish to face it or not.

Your choice is whether to face these facts in your personal and economic life, preparing to the extent you’re able, or whether you will be one of those who claim that you were “blindsided” by the inevitable that you were simply unwilling to face.

The Market-Ticker

Discussion (registration required to post)

Nice editorial……

At some point in every negotiation over fiscal policy, once the high-minded speeches and other pleasantries have been delivered, the disagreeable details poison the atmosphere. Everyone is in favor of tax and entitlement reform, after all, until they see the specifics.

The reaction to the cost-cutting strategy that Defense Secretary Leon Panetta revealed last week suggests this is about to happen with regard to Pentagon spending.

Let me be very clear: Substantial efficiencies can and should be wrung from the defense budget, and Panetta’s approach has many attractive features. But the strategy he sketched out — most of the details have yet to be provided — reveals the underlying tensions that arise whenever significant defense cuts are promised.

Bah.  Like so many before him and in fact like Pete before, he’s willing to lay markers that he knows are false — just like the so-called “Tea Party”, just like Democrats, and just like so-called “mainstream” Republicans.

The truth is much uglier: Our government is fully 50% larger than we can afford.

This means we must either double tax revenues (not rates, revenues, cut the size of government in half, or some combination of the two.

Let’s take defense.  To have defense pay its “fair share” of these reductions our roughly $750 billion in expenditures would have to be slashed by $350 billion per year, or $3.5 trillion over a decade.  This is nearly four times the amount that people are screaming about now.

To do the same thing with Medicare not only must we stop adding 9% a year to expenditures we must cut the $800 billion that medical expenses are consuming in half, that is, by $400 billion a year, or $4 trillion over ten years — and we must do it now.

What’s also interesting is that the budget cuts needed in areas outside defense are, if anything, even steeper and thus even less realistic. As Richard Kogan of the Center on Budget and Policy Priorities has noted, if the cuts are actually made, by the end of this decade, non-defense discretionary spending would wind up at its lowest share of gross domestic product since 1930. I wouldn’t bet on that, either.

All of which suggests that both political parties have locked into inadequate revenue levels for the next decade. As a result, they are forced to count on spending cuts much larger than what, in the end, they are likely to implement — in some cases, much larger than what they should implement.

Nonsense.

What’s clear is that we have been, and are, continuing to write checks we cannot cash.  We’ve been doing it for a long time too — it’s not new.  In fact, it goes back thirty years or more, and it’s not just in Washington DC — it’s everywhere.

Look around you.  The vast majority of Americans, were they to lose their jobs and their credit card access would literally starve and/or freeze to death within two weeks as they have zero savings and once the food in their pantry was exhausted (what little there is) they’d be utterly hosed.  With not one dime in savings they could not put gasoline in their cars or pay the electric bill either.

In the last month of 2011 the Federal Government borrowed $112.4 billion in new funds.  That’s $3.63 billion every single day, or about $11 per person in America, per day, every day for a total of $340.61 for each man, woman and child in America in the month of December alone.

This is new debt and does not include the interest on existing debt — just new obligations.  You sunk that far further into the hole.

This will stop.  It will either stop voluntarily or it will stop as it is ending in Greece.  Those are the choices — the only choices.

Yeah, Pete is right to bring this up in the context of the Pentagon, but the biggest issues are not with military spending.  They lie in the medical realm where roughly 8% compounded growth over the last 30 years has taken the US Federal on-budget spending on medical care from $53 billion in 1980 to over $800 billion today, with fully half of that borrowed instead of taxed.

Get ready folks — it’s coming.

It’s amazing, really, to read an article like this…

Greece and some other euro-area economies face years of financial struggle even if they manage to restructure their debts. Their prospects are so bleak that, according to one school of thought, they would be better off outside the euro system, despite the immediate costs of leaving.

We disagree, and not just because the immediate costs of an exit would be enormous. Even after that penalty was paid, resurrecting national currencies and regaining control of monetary policy would create as many problems as they solved.

….

On balance, debt restructuring plus “internal” or “fiscal” devaluation — difficult as it may be — looks preferable. Explicit wage cuts, and the recession needed to induce them, don’t have to carry the whole burden of cost adjustment. A combination of increased value-added tax and lower payroll tax (Greece could easily do both) mimics a currency devaluation by raising the price of imports relative to the price of exports, lowering real wage costs by stealth. They should be part of the mix.

…

Inside the system, the peripheral countries have learned a harsh lesson: They must hold growth in wages to the euro area’s rate of inflation plus any increase in national productivity. In countries such as Greece, this demands a new approach to wage bargaining by employers and unions. Overall, though, it should be no more difficult than managing a floating currency. And on this path the reward for success is greater: lower inflation rates and, with luck, faster economic growth.

Notice what’s missing from this article?

No discussion of how Greece wound up with all this debt in the first place.

A national government only winds up in debt when it promises to spend money it does not have and refuses to acquire through taxation.  It therefore chooses to borrow, which implicitly (for anyone but a psychotic entity) is a temporary statement of intent to both spend more now and then either spend less or tax more later.

The underlying problem is that this statement of intent was a lie.  The government never intended to actually spend less and/or tax more later on.  It simply intended to buy votes with a fraudulent promise to pay later on.  It never intended to actually cover the debt.

Yet Bloomberg’s editorial desk never points this out, nor do they point out the mathematically-inevitable outcome of these decisions.  Debt may never grow faster than output on a sustainable basis.  Not for you as a person, not for a company, and not for a nation.

The correct solution to such a problem as Greece has is to refuse to pay.  Period.  Default. 

On all of it.

Pay zero.

This, of course, will immediately cut off all non-tax-revenue funds from the government. It will not be able to borrow at any commercially-reasonable rate of interest for quite some time.  Perhaps a very, very long time.

This is good, not bad.

It will force fiscal prudence, not “austerity.”

Prudence is quite-simply defined — a government must have an honest conversation with the people it governs, and come to a decision on the amount of money that the people are willing to pay in taxes.  From these funds the government provides services, and only from those funds.

That’s it.

That’s how simple it is, and yet this is never, ever mentioned by Bloomberg — or The Journal for that matter, along with the other members of the “mainstream media”, even though it is both the obvious answer and the only one that is mathematically defensible.

Why not?

Because if such a premise gains currency — gains acceptance among the people — and they wise up, then the game here, in America, along with the rest of the western world, is immediately over.

Instead of ever-increasing leverage capital formation will come from economic surplus.  Instead of ponzi schemes government will exist on its ability to convince the public to pay taxes, allocating that revenue to services, and its reach will end there — for good or bad.

The power to commit fraud — by banks, by governments, by hucksters of all stripes — will be severely curtailed.  And with the curtain of obfuscation torn down the ponzi schemes of bogus asset valuations, intentional false claims of “solvency” and political promises that cannot possibly be kept as they amount to several times the gross output of the entire nation — will be forced to end.

Well here’s Boehner’s “compromise”; what it does is:

• Lie once again about “cutting spending.” It does no such thing.  It increases spending – every year.  Bogus and outright-fraudulent “baseline budgeting” means that if they intended to boost spending $300 billion but only increase it $200, that’s a $100 billion “cut.”  If you ran your household like this you’d be broke in a week.  For the US, it will take a bit longer.
• No tax increases. That’s nice, but let’s not forget that while the Democrats scream about the “Bush Tax Cuts” the FICA tax cut was theirs.  Obama signed it.  You cannot keep reducing income and increasing spending forever.
• The cuts, fraudulent though they are, aren’t even real anyway – and not binding either. There’s nothing before 2013, which means a downgrade is almost certain.  Further, raising the debt ceiling now for the whole among but allegedly finding the “cuts” over 10 years is an outright fraud by a ratio of 10:1.
• A 2013 timeline for actual changes means nothing, since the next Congress is not bound by what this one does. Period.
• Sequesterization didn’t work in 1997. It won’t work in 2011 either.
• We failed to get to $4 trillion. That’s what S&P said they needed, and they said they needed to see that within the next three years. Now we find out if S&P has any balls.

We also get to find out if the so-called “Tea Party” is worthy of the name.  Yeah, I posted that my opinions change when facts do, and they appeared to.

Boehner needs to be ejected from Congress in the next election, and the remaining “mainstream” Republicans must go with him, along with any claiming to be “Tea Partiers” who vote for this abortion.

All of them.

In the meantime, kill this bill and by doing so balance the budget in three days.

Remember folks, these are draconian cuts according to the Democrats, and yet they’re also substantial spending reductions according to Republicans.

Just a couple of quick questions.

• Is there any year in which the spending in either discretionary or Social Security goes down?  No.  Therefore, in my view any such claim of “cuts” is an act of public corruption for which Boehner should be indicted and imprisoned.
• Is the alleged “spending reduction” backloaded?  Yes.  Social Security spending increases an average of 10% (compounded) in the first three years, thereby guaranteeing that two House elections and two Senatorial Class elections will have been held before any decrease in entitlement spending rate occurs. This too is a fraud upon the public, albeit entirely expected from the Goebbels Ministry of Truth, otherwise known as Boehner’s office.
• Is the cumulative spending increase anything approaching reasonable?  NO.  Social Security spending over the 10 years will approximately double and the size of government as measured by discretionary and Social Security spending (combined) will increase by 53% over the ten years.  Where’s the cut, Boehner?

In short this is yet another Goebbels Media Lie Parade out of the Speaker’s office, and not one mainstream media outlet, to the best of my knowledge, has pointed these facts out.

What’s worse is that the Democrat’s “ideas” for “cutting spending” and “closing the budget gap” actually add even more spending!

Oh yeah, one more thing: Medicare and Medicaid are not included.  Yet they’re growing faster than any other category.  Gee, I wonder why they were excluded?

If you’re wondering why I am absolutely certain that whatever comes out of this process will garner an immediate downgrade from S&P (and perhaps Moody’s), this is the reason.  They can do the math too, and it’s clear, convincing, obvious and inescapable.

This entire plan, along with the Democrats “plan”, are in fact bald, pernicious lies.

Can we cut with the tax cuts for private jets bullcrap?

We heard it again yesterday in Obama’s “twitterfest news event”, and it’s getting both old and is manifestly dishonest.

The same holds true for the so-called “racehorse exemption.”

Both claims come from the fact that business expenses are deductible.  So if you’re running a company and have a private jet, and the jet is used in some manner that furthers the business interest, you can deduct the cost of owning and operating it from gross revenues.  The same with the racehorse – if you raise horses to race with the intent of making money by doing so - that is, as a business – you can deduct the cost of raising the horses from your gross revenues (winnings.)

Are there reasonable debates to be had on where the line is between “business” and “pleasure”?  Sure.  The business jet issue is one that resonates well with middle-class America and its propensity for class warfare: “Those evil fat cats are flying around and not paying a damn dime in taxes on that ridiculously expensive jet!”

But if as an executive the jet costs $20,000 for the day’s operation, and as a consequence of flying in it I can do a business deal for $1 million that I would not otherwise complete since I would otherwise be spending my time being assaulted by the TSA and sitting in an airport lounge, then the argument is truly specious since the $1 million deal generates a taxable profit in the company and in turn the amount of tax revenue paid grossly exceeds that which would be collected were the $20 large to be taxed instead.

Of course the mantra from the other side is that “but we’ll get taxes from both the business deal and the plane if we cut out the loophole!“  My riposte to that is “Welcome to fantasy island“; this is the same claim that was run when the luxury tax on yachts was passed, and what actually happened was the destruction of the sport-fishing yacht industry in the United States putting hundreds of people out of work while almost zero tax was in fact collected.

At the root of these games and lies that are being run by both sides of the aisle is that the math is simple and quite-compelling: There is no way to get rid of the monstrous budget deficits without doing two things – (1) dealing with entitlements and (2) dealing with the fundamental problems with taxation, trade and demanded services.

#1 has been political suicide.  While everyone talks about Social Security the real nightmare is found in Medicare and Medicaid.  These two programs are mathematically impossible to fix without either massive tax increases in the hundreds of percent or fundamental reform of the medical system in this country.  Neither is being seriously discussed, yet the fact of the matter is that we spend twice what the rest of the developed world does on health care.  This is not fraud, waste and abuse, it is structural and intentional financial rape perpetrated on the people by the medical industry with the glad-handed and intentional assistance of Congress.

The second part of the issue is worse.  The government has basically doubled in size in the last decade.  This has outstripped the growth in the economy by essentially a double.  Government largesse and bloat is never willingly surrendered – these “jobs” are the worst sort of “McJob” in that they generate no real wealth improvement for the common man but are tremendously good for the government employee and they extend the tentacles of the government further into your life.

Witness, for example, the “War on Drugs.”  This has turned into a tens of billions of dollars industry in the United States employing literal tens of thousands of people, from DEA agents to local cops to prosecutors, attorneys and prison guards.  Yet these laws are, at their core, about punishing consensual adult behavior and as a consequence in order to do so it is necessary to intrude into people’s private homes and lives, effectively destroying the 4th Amendment. 

What “public good” and “benefit to GDP” has come from these policies?  None.  The person busted for doing drugs may well have an addiction, but giving them a permanent felony record isn’t good for GDP at all!  The temporary “lift” you get from employing the people to arrest, prosecute and jail him is offset with the permanent destruction in that individual’s earnings capacity within the marketplace which persists even if he quits using the drugs!

Or look at the TSA.  Beyond the civil liberties issue there’s the simple economic problem: The airlines have been relieved of financial responsibility for monitoring and protecting against terrorist acts.  The TSA is bloated, it has a documented history of employing people who commit crimes including both robbery and sexual assault and has become a self-justifying federal agency that has simply siphoned off tens of billions of dollars that would otherwise be spent in the private sector.  Never mind the daily commission of acts that, were you or I to perform a similar act, would land us on the wrong end of a (justified) felony indictment.  Are we safer?  I argue no: There are damn few people willing to die to commit an act of terrorism – those who argue otherwise need to explain away the fact that anyone with such murderous intent could get in a common Suburban and kill dozens by simply driving it down a busy sidewalk, or commit mass-murder with a common gasoline can intended for their lawnmower.  Where are all these murderous bastards? 

There’s also the other possibility, of course: The TSA has had nothing to do with air safety at all.  That is, the “use by” date of turning planes into flying bombs actually expired on 9/11 itself at 9:57 that morning when the passengers on Flight 93 revolted.  Since it is a fact that no “prohibited items” were ever brought on board airliners on 9/11, we are left with the uncomfortable conclusion that the TSA is nothing other than a liability shield for the airlines and a monstrous “make work” program sapping both the rights of Americans and our economic treasure.

Let’s face reality: By and large elementary logic makes clear that the alleged grand threat that the TSA uses to self-justify its existence, both as a matter of spending and intrusion into our lives, simply doesn’t exist.

The reality of our fiscal situation is found in these two charts:

and

That is, government deficits exist due to (1) overspending and (2) workforce deterioration.

#1 we’ve talked about.  But fixing #2 means making it unprofitable for corporations to offshore their labor.  When most of the “attraction” of offshoring production comes from the ability to pay and treat people like slaves (e.g. Foxconn) while at the same time exploiting the ability to dump environmental poisons into the air and water (which is not permissible in the United States) it is clear that absent constraints imposed by law a profit-seeking corporation will do exactly that.

Yet nobody – absolutely nobody – will talk about these fundamental realities.  Instead we hear about “free trade” while all that “free trade” has done is trash our trade balance, making clear that there’s nothing “free” about it.   This is not an accident – China routinely requires local sourcing, labor, and even transfer or joint ownership of intellectual property in exchange for access to their markets.  We, in turn, never require the same conditions on access to our markets.

The idiocy of the left and right in these “negotiations” is predictable and yet augers poorly for actual fixes.  We must address the structural factors – there’s no other way.  Producing products where the funds used in production do not circulate back into the national economy is suicidal; we’ve tried to bridge that gap with more and more debt and in fact have done so for 30 years but the end of that rope has been reached and we’re still 200′ above the floor of the cavern.

Our choices are simple: Climb back up, despite the required effort and short-term pain that must be accepted in order to do so, or rappel right off the end of the rope and die.

Choose wisely America.