All actions have consequences. Consumers living beyond their means, taking out loans for homes they couldn't possibly afford, resulted in the sub-prime crisis, Fanny and Freddie mess, and meltdown of the US economy.

The TARP bailout for $700-some billion has opened the door to every Tom, Dick and Harry industry standing in line for a bailout handout: the auto industry, rental car companies, ethanol industry, and credit card companies to name a few. States such as California and even Wisconsin might put their hands out as well. President elect Obama is talking about another bigger and better stimulus package too, asap.  

Our government acts like they can give out billions of bailout and stimulus money with no consequences.

But history tells us no economy can thrive by printing up and passing out dollars. It did not work for Germany, where you practically needed a wheelbarrow to hold your Marks to buy a loaf of bread. "In 1914 one egg cost less than one mark. Nine years later an egg was 80,000,000,000 (eighty billion marks)."*

To finance the new spending during Carter years, the joke was, Hey, Jimmy, just print up another roll of $20s! We know how well that worked.

So why do we think we can do what no other government could do in the past, by printing up new money to finance and shore up failing industries with no consequences? Arrogance maybe?

Money Morning sounded another warning today: With Billions in Bailout Funds Flowing, the "Peso-fication" of the Dollar Continues:  

The plethora of bank and corporate bailouts, stimulus plans and interest-rate cuts that the U.S. government has produced over the last three months can only lead to one outcome: The U.S. dollar has to decline.

During the crisis so far, the dollar in general, and U.S. Treasury bonds in particular, have been regarded as a “safe haven,” making the dollar strong and pushing long-term U.S. Treasury rates downward. In the New Year, however, this is likely to change – the weight of the added supply of dollars in circulation will be too great for the greenback to shrug off.

Much of that report makes my head spin, but I do understand the basic principle that you cannot increase the money supply so dramatically without inflationary consequences. The amount of deficit spending we have committed to so far is unprecedented.

Usually I check the stock market every day and look at how the dollar is trading too. Today, the US dollar was down in all trading: against the Canadian dollar - $1.23 vs $1.28 a few days ago, against the Euro, the dollar had fallen 4 cents to .76.  

If this trend continues, the dollar loses value, therefore, you need more of them to pay for purchases. Hence, the wheelbarrow will be needed to carry your cash to the store! On second thought, people will just use a credit card instead of cash, so no need for the wheelbarrows.

What we need is to tighten our belts and live within our means, be it at the local, state, or federal level of government. It is time to act like grownups and say NO to frivolous spending and bailouts. If we don't, the Carter years will look like the good old days for the dollar and us.

Did you contact Senators Kohl and Feingold about the auto bailout? Senator Kohl (Phone: (414) 297-4451, (202) 224-5653) and Senator  Feingold (Office of Senator Russ Feingold (202) 224-5323)

*From Richard Maybury's Whatever Happened to Penny Candy, Wallpaper, Wheelbarrows, and Recession, pp 52. 

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Remember when John McCain suspended his campaign and went to Washington to work on the economic crisis?

Obama just said, if you need me, call me. 

Turns out, Obama was making a few calls during that time--at least according to former president Bill Clinton.

In a Fox News piece yesterday, Bill Clinton: Obama Got Lots of Help on Economic Crisis Response, Bill Clinton says at a rally that Barack Obama called a round of advisers during the height of the economic crisis and said, "tell me what...to do." In it, Clinton tells a few tales out of school on Barack Obama: (My emphasis)

"I haven't cleared this with him and he may even be mad at me for saying this so close to the election, but I know what else he said to his economic advisers (during the crisis)," Clinton told the crowd at a Wednesday night rally with Obama in Florida. "He said, 'Tell me what the right thing to do is. What's the right thing for America? Don't tell me what's popular. You tell me what's right -- I'll figure out how to sell it.'" 

Clinton said when the crisis broke, Obama called his own advisers as well as those of the former two-term president, Hillary Clinton, Warren Buffet and others.

Clinton's comments might give some insight into why Obama didn't want to go to Washington--he didn't know what to do. Who does? We still don't know what the right thing to do was.

The disturbing part of Clinton's insights is the idea that Obama doesn't know what the right thing to do is, but if he is told, he believes he can "sell it."

And I think selling it is what Obama has been doing this entire campaign. He is packaging up his socialist ideas of spreading the wealth around and selling them as something that will help the middle class.

Obama is a master salesman. Some people are buying the idea that 95% of workers can get a tax break. They are buying the idea that Obama can take his scalpel and cut from our existing budget enough extra money to fund his billions of dollars worth of promises. Never mind there isn't enough surplus to fund even part of his wish list. 

Like most sales pitches, once the contract is signed, there is no opportunity for buyer's remorse. You get the chance to buy in or pass on November 4th. Let's hope most aren't buying.

H/T  Fairly Conservative

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The world must not have gotten Al Gore's memo that the earth is warming. Yesterday Record cold swept over the region Wednesday in Ocala, Florida. (My emphasis throughout)

Twice the temperature dipped to freezing at the Ocala International Airport early Wednesday before it began making a gradual climb to the mid-60s.

Though there was a reading of freezing or below throughout northwest Marion County, Wednesday morning's official low temperature was 33 degrees.

It was a record for Oct. 29 and the second lowest temperature ever recorded in October since 1850...

...In almost every area of the county at daybreak Wednesday, frost - which came six weeks early - glistened on grass and rooftops.

On the other side of the pond, the Gore Effect has gone into full swing even without Mr. Gore's presence. Just discussing Global Warming legislation prompted the earliest snowfall in 86 years:  Snow blankets London for Global Warming debate, How Parliament passed the Climate Bill:

Snow fell as the House of Commons debated Global Warming yesterday - the first October fall in the metropolis since 1922. The Mother of Parliaments was discussing the Mother of All Bills for the last time, in a marathon six hour session.

In order to combat a projected two degree centigrade rise in global temperature, the Climate Change Bill pledges the UK to reduce its carbon dioxide emissions by 80 per cent by 2050. The bill was receiving a third reading, which means both the last chance for both democratic scrutiny and consent.

The bill creates an enormous bureaucratic apparatus for monitoring and reporting, which was expanded at the last minute...

Recently the American media has begun to notice the odd incongruity of saturation media coverage here which insists that global warming is both man-made and urgent, and a British public which increasingly doubts either to be true. 60 per cent of the British population now doubt the influence of humans on climate change, and more people than not think Global Warming won't be as bad "as people say".

Both figures are higher than a year ago - and the poll was taken before the non-summer of 2008, and the (latest) credit crisis.

No need to worry about American jobs being outsourced to the UK after that bill!

Will our congress follow suit? Blindly following Al Gore, our Pied Piper of Global Warming, marching down the road through early freezes and snow storms to Carbon Capping economic ruin? 

Guess it depends on who is in charge: The Triumvirate of Obama,  Pelosi, and Reid or McCain balancing that Democrat controlled Congress?

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Both parties' candidates just had a foreign policy briefing--a standard practice used to bring the next president up to speed. What isn't standard is a candidate shooting his mouth off after the briefing. Biden's warning: (My emphasis throughout.)

"Mark my words," Biden said in San Francisco last Saturday. "With the next, first six months of this administration, if we win, they're going to — we're going to face a major international challenge. Because they're going to want to test him, just like they did young John Kennedy. They're going to want to test him."

Was that just Biden being Biden? But then, he said it again! This time Biden piped up at a Seattle fundraiser: 

"Mark my words," the Democratic vice presidential nominee warned at the second of his two Seattle fundraisers Sunday. "It will not be six months before the world tests Barack Obama like they did John Kennedy. The world is looking. We're about to elect a brilliant 47-year-old senator president of the United States of America. Remember I said it standing here if you don't remember anything else I said. Watch, we're gonna have an international crisis, a generated crisis, to test the mettle of this guy." 

This part of his chat was really strange:

"I can give you at least four or five scenarios from where it might originate," Biden said to Emerald City supporters, mentioning the Middle East and Russia as possibilities. "And he's gonna need help. And the kind of help he's gonna need is, he's gonna need you - not financially to help him - we're gonna need you to use your influence, your influence within the community, to stand with him. Because it's not gonna be apparent initially, it's not gonna be apparent that we're right." 

And this was the guy who was supposed to lend gravitas to the Obama ticket? He went on to give more cautions and warnings--both about the economy and international problems:

"Because I promise you, you all are gonna be sitting here a year from now going, 'Oh my ... why are they there in the polls? Why is the polling so down? Why is this thing so tough?' We're gonna have to make some incredibly tough decisions in the first two years..."

Biden emphasized that the mountainous Afghanistan-Pakistan border is of particular concern, with Osama bin Laden "alive and well" and Pakistan "bristling with nuclear weapons."

"You literally can see what these kids are up against, our kids in that region," Biden said in recalling when his helicopter was forced down due to a snowstorm there. "The place is crawling with al Qaeda. And it's real."

"We do not have the military capacity, nor have we ever, quite frankly, in the last 20 years, to dictate outcomes," he cautioned. "It's so much more important than that. It's so much more complicated than that. And Barack gets it."

When I first heard about Biden's remarks, I immediately thought about Iran blasting Israel off the face of the earth--after all, Iran has talked about it and Obama was vague about his response. 

If you were Iran, would you be more apt to attack Israel with McCain as president or Obama?

But after looking at the last section of quotes, I'm wondering was Biden hinting about needing a military draft? Bombing Pakistan? Who knows.

Speak softly and carry a big stick is usually thought to be a deterrent to foreign aggression. The big stick being military might and cutting edge military technology. It has served us well in the past.

Biden began his warnings by comparing Obama to JFK, but Joe forgot one very important thing about his running mate: Unlike JFK, Obama has stated he wants to put a end to that military technology.

The complete IBD Editorial is worth the read or listen--the link is on this page. It is very sobering.

I'm digging out some photos you might find interesting for a future blog: Obama, JFK, technology, and the Cuban Missile Crisis...chilling

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Tuesday I got a tank full of gas for $2.69 a gallon. Sure wish gas prices were that low in August when we went to Yellowstone! Our trip cost us $549 in gasoline for 3,188 miles. If we made that trip now, we would have saved about $200. (Of course, Old Faithful Lodge is now closed for the winter season.)

The U.S dollar ended stronger than usual. One US dollar will now purchase $1.26 in Canada, .62 Pounds, and .78 Euros.  

Oil sunk to the $63 to $69 / barrel range this week. Less than half of what it was priced at its high. Since oil is priced in dollars, the stronger dollar makes the price/barrel go down. OPEC is likely to try tightening the supply in an effort to boost the price.

Wouldn't it be great if OPEC's decrease in production didn't matter?

The Congressional Democrats do not favor domestic drilling. Remember the Trojan Drilling Bill? Obama doesn't either. Republicans and McCain are in favor of drilling more offshore, utilizing oil shale, and "All of the above." Think about that when you hit the voting booth.

Post Script: Right on schedule, OPEC agrees sharp output cut  "An emergency OPEC meeting on Friday reached swift agreement to chop production by 1.5 million barrels per day (bpd) in an effort to halt a deep oil price slide." Well, oil priced in the $60s was nice while it lasted.

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