Is the budget “crisis” an exercise in self promotion?

One side effect of the so called “budget criss” is that everyone who never heard of congressman John Boehner, speaker of the house of representatives and representative of Ohio’s 8th congressional district, has now heard of him.

Here’s Google trends showing the rise of Boehner:

Google Trends showing Boehner's popularity

The longer this spectacle continues, the more famous Boehner and everyone else involved in the process becomes. One wonders if this is self promotion at the cost of massive market uncertainty.

It’s hard to believe that Boehner and everyone else in the process doesn’t dream of a scenario where they get maximum publicity until the very last moment and then pull a “solution to this criss” out of the bag on 11:59pm on August 1st.

I doubt he’s crying now.

Obama Campaign comes a calling

Got another call from the Obama campaign today who I spent a lot of time and energy supporting last election. I don’t support either party currently because I’ve evolved into an economic conservative but still socially liberal which leaves me stuck with no party to support.

So just for the hell of it I tried to convert the volunteer into a Hayekian liberal. After 5 minutes he still wouldn’t bite.

He did mention he’s had a rough day. Surprised, I am not.

What will happen if we default on August 2nd?

With Greece defaulting – not a “technical default” or “restructuring” as it’s being branded but a real live default – the stage has been well set for August Second if the USA does in fact default on it’s own debt.

I tend to percieve the sky as falling earlier than most because I grew up in an environment of political instability. That said, I worry that we have underestimated the incompetence of our legislators. They may not realize how serious the consequences are if we don’t do something – anything – to solve the issue coming up on August second. They rarely have to solve a problem that is truly time critical because – well hell we’re the United States of America and we set the damn clocks the way we see fit.

The rare instances of time critical decisions required from our lawmakers are usually related to war. Sad and cynical as it sounds, wartime is an incredible opportunity for any government to push through ideological agendas  – like the patriot act – that are enthusiastically adopted by opposing lawmakers and the populace while emotions run high and we’re willing to trade some liberty for some safety and another excuse to wave the flag.

But this isn’t one of those times.

Ideological forces are strongly opposed in our government and any decision is going to leave a bitter taste in everyone’s mouth. So no one wants to make the decision. Which is why I’m worried there may be no decision by August 2nd and we will be well and truly fookered.

What will the consequences of a default on August 2nd be? Here are my bullets and they’re all pure speculation:

  • Interest rates in this country will start to rise and continue for some time. Remember, the Federal Funds rate was over 20% in June 1981.
  • The housing market will start a double collapse due to a rapid rise in mortgage interest rates.
  • In the uncertain environment, housing sales will stall and the terrifying housing data in September, October and November 2011 will have a knock on effect i.e. home sales will completely stall.
  • This will precipitate what should have occurred in 2008 and 2009 had the banks not been bailed out. The assets underlying many of their creative financial products will drop massively in value causing many banks to fail, this time without a bailout.
  • Because the dollar is the world’s reserve currency and many countries are holding Dollars, US debt and dollar denominated debt, a world financial crisis of epic proportions will begin to unfold.
  • If ratings agencies actually downgrade US debt, the effect will be catastrophic. Many banks, countries and other organizations are required to keep a specific mix of risk on their balance sheets. This will force world-wide balance sheet restructuring as countries and companies move away from the US dollar or dollar denominated debt – specifically US government debt.
  • The dollar will increase the rate of it’s current slide.
  • Gold prices will hit $1800 in September/October and $2200 or more by year end.
  • Credit will once again dry up wreaking havoc among businesses and banks.
  • Expect massive layoffs world wide as businesses deal with lack of access to credit and batten down the hatches preparing to weather the storm.
So what good will come of this?
  • With a declining dollar, US exports will earn more money.
  • There will be a massive power restructuring in corporate America as incumbents fail by the hundreds, opening up opportunities for young, innovative businesses.
  • Some wealth will be transferred back from the wealthy holding US dollars to the true innovators in this country as the dollar declines and the value of exports increase.
  • Manufacturing jobs will return to the USA as it becomes cost effective for other countries to use our labor force and base operations in the USA.
  • Our politicians will be exposed as incompetent and old power bases and old boy networks will crumble giving way to new blood, new ideology and possibly a new political party in the United States.
I’d love to hear your  prognostications in the comments, good and bad, of what will happen if we don’t raise the debt ceiling by August 2nd…

How a job is created

This morning I called in to C-SPAN’s Washington Journal to answer the question “Is it fair that the Obama administration has been called anti-business”. To give you some context, I consider myself a democrat and I voted for Obama (and attended the rallies, etc)

I’ve been ruminating over the issue for most of the day. Here are a few more thoughts.

At the front of every American’s mind right now is the awful job market. America has lost more than 8 million jobs since 2007. Both parties have hitched their idiological wagons to this talking point and are trying to appear to be more capable of solving the issue than the other guy.

The issue is simple: How do we create more jobs.

The answer is simple: You help grow existing businesses and you help create new businesses. That is how a job is created.

Let me say that again in case your ideological lense distorted that last sentence [or in case that blue hurts your eyes too].

You create jobs by helping grow existing businesses and helping create new businesses.

I’m a business owner in Seattle. I own a funded Technology startup. My goal is to grow my business into something the size of Google that employs 25,000 people. I’M THE GUY TRYING TO CREATE JOBS.

I’m trying to create jobs so hard that I work without a salary. Not only that but I invest my life savings into the cause of creating jobs. I also work harder at my job of creating jobs than most people work at their normal job. I regularly pull 80+ hour weeks. [I’m sure you medical interns are laughing at me, but you’re the exception and are clearly insane.]

Three friends of mine in Silicon Valley have taken some of their life savings and given it to me in the hope that they might help me create 25,000 jobs the way Google did.

But what is very very strange is that with all this Democrat and Republican talk of creating jobs, not a single democrat or republican has actually done anything to help my friends and I create jobs.

Nothing.

They haven’t helped startups get access to credit.

They haven’t helped startups spend less on taxes so they can spend more on growth.

They haven’t helped the people who fund startups. In fact there’s talk of putting them out of business because they’re “BANKERS“!

So really the message is that the American government does not care about creating jobs. The Obama administration doesn’t care. The Democratic party doesn’t care and the Republicans don’t care either.

The only job security every senator and congressman cares about is their own. So call or write your senator or congressman today and let them know that if they don’t do something that helps create new businesses and grow existing ones, you’re going to fire them.

While the jockeying and posturing continues in Washington D.C., my friends and I here in Seattle and people like us all over America will continue to work our tails off to help create jobs for you. We’ll continue to burn our savings. We’ll keep working without pay. Our friends will continue to risk their savings to try and help us.

China’s influence in Africa

CHINA IN AFRICAAs an African American, or rather, an American African (I’m white and African born), I hear a constant flow of stories about China’s increasing influence in Africa. They’ve clearly taken a long term view on Africa, perhaps motivated by their projected energy and natural resources needs. If you subscribe to the US view that free trade is good, then this is a good thing. [You can’t have it both ways folks!]

Whether or not you think it’s good for the continent, the data is surprising:

  • The China National Petroleum Corporation (CNPC) is the single largest shareholder (40 percent) in the Greater Nile Petroleum Operating Company, which controls Sudan’s oil fields and has invested $3 billion in refinery and pipeline con­struction in Sudan since 1999. Sudan now supplies 7% of China’s total oil.
  • In March 2004, Beijing extended a $2 billion loan to Angola in exchange for a contract to supply 10,000 barrels of crude oil per day.
  • In July 2005, PetroChina concluded an $800 million deal with the Nigerian National Petro­leum Corporation to purchase 30,000 barrels of oil per day for one year.
  • In January 2006, China National Offshore Oil Corporation (CNOOC), after failing to acquire American-owned Unocal, purchased a 45 per­cent stake in a Nigerian offshore oil and gas field for $2.27 billion and promised to invest an addi­tional $2.25 billion in field development.
  • In April 2003, approximately 175 People’s Liber­ation Army (PLA) soldiers and a 42-man medical team were deployed to the Democratic Republic of Congo on a peacekeeping mission.
  • In December 2003, 550 peacekeeping troops, equipped with nearly 200 military vehicles and water-supply trucks, were sent to Liberia.
  • China has also deployed about 4,000 PLA troops to southern Sudan to guard an oil pipeline and reaffirmed its intention to strengthen military collaboration and exchanges with Ethi­opia, Liberia, Nigeria, and Sudan.

The Kennedy’s and the Obamas

Caroline Kennedy, JFK’s daughter, has an excellent op-ed piece in the NY Times tomorrow titled “A president like my father” about why she supports Barack Obama. Here’s a quote:

I have never had a president who inspired me the way people tell me that my father inspired them. But for the first time, I believe I have found the man who could be that president — not just for me, but for a new generation of Americans.

If you saw Barack’s victory speech in SC this evening (transcript) and it didn’t give you goosebumps then you’re probably dead. [The video is on cspan’s website but you have to have realplayer installed]

If you haven’t already donated, here’s the link.

Oh Wesley!

Even if Wesley Snipes is right about not having to pay his taxes, he’s missing the point. If you’re enjoying the fruits of government infrastructure then you’re morally obligated to pay your taxes. My guess is he’s really not that naive. He’s just fell in with the wrong crowd and dug himself a hole so deep that he has no choice but to go to court.

Of course if he wins and we’re all not obligated to pay income tax… now that would make for interesting times what with a recession looming and all that.