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Europe Awakens while U.S. Leaders Snore Away

By Roger O'Daniel

Laurence D. Fink, CEO  & Chair of the Board of New York-based BlackRock, the world’s largest asset manager, was a guest of Bloomberg Television’s “Market Makers” recently.  The following talking points caught my attention:

 

 

 

  1. U.S. lawmakers are not just lawmakers.  They also are guardians and they are not behaving as guardians should.
  2. U.S. lawmakers need to provide more certainty about spending and tax policy as European leaders grapple with deficits.
  3. The U.S. faces a fiscal cliff at year-end when automatic spending cuts begin and tax cuts expire without action by a U.S. Congress mired in political disputes.
  4. Private sector employers, including defense contractors, are not inclined to invest in their operations until lawmakers signal how they will proceed.

Mr. Fink concluded with this statement.  “Europe is a great wake-up call and they’re [US Lawmakers] still snoring away.  We need more clarity, and that is my message to every politician I see.  It’s all about confidence. No one is investing for tomorrow.”

This is a link to the published story: BlackRock's Fink: US Leaders ‘Snoring Away’ Amid European Wake-Up Call

My own observations

Politicians think short-term, not long-term.  If the long-term solution conflicts with the short-term solution, the short-term solution wins.  Politicians know they have to face a re-election.  A win requires votes, activists and campaign money.  Politicians also know that their constituents think short-term and support candidates that support their own interests.  Their more liberal constituents also support long-term solutions for the so-called “common good” if they believe that someone else will pay for it.

If the electorates are polarized, the politicians cannot please or satisfy everyone.  Non-controversial projects trump controversial projects, even when the controversial projects are critically important.  If pragmatic solutions conflict with moral solutions, pragmatism wins.  This conundrum creates an irresistible urge to spend political energy on the wrong things.

The Ship of State is like a ship at sea.  The bigger and heavier it is, the longer it takes to change course.  The faster it moves, the longer it takes to come to a complete stop.  It takes a lot of energy and time to get it moving in the right direction, with sluggish steering control until it regains measurable speed.  Private-sector management knows this.  Government regulations require up to 60-day notice for a layoff.  Reference talking point 4 above.

Those government contractors invested in tooling, specialized infrastructure, and subcontracted for long lead-time components.  They also invested in research and development (R&D), design, prototyping and test facilities for military equipment that the Department of Defense (DOD) is forced to cancel or reduce the buy quantity under sequestration.  That action creates contract termination costs.  Contract renegotiation and termination creates cost overruns of astronomical proportions with more dead-end expense to come.  Ironically, it costs money instead of saves money, short-term.  Worse, the money spent to terminate is money wasted.

For example, the last lot of F-22 fighter aircraft had a fly-away cost of $135 million. Economists call this the incremental cost of building one more unit.  The average total cost of each F-22 was about $500 million because fixed costs invested to build the first unit were allocated over a lot fewer units.

The people these contractors hired and trained to build this new stuff are no longer needed.  All of the sunk costs required to build the first product are spread more thickly over fewer units.  These contractors are going to get big bucks for renegotiation and cancellation of prior DOD commitments.  The employees are going to become unemployed seeking work and drawing unemployment compensation.  These same employees will be under tremendous financial pressure.  That puts home mortgages at risk and forces reduced spending.  Together, these consequences cause our economic engine to cough and sputter at the worst possible time.

Our government is struggling over two highly-opposed ideologies.  This ideological warfare has no exit strategy or plan for reconciliation.

One ideology is led by the Administration with support of a US Senate majority and liberal US Court system.  They want to convert the United States into a modern version of a Socialist Federal Republic with provincial State and Local government.  These people see no problem with debauching the US currency to “rebalance the economy.”

The other ideology, led by the US House of Representatives and US Senate minority, advocates Constitutional, Fiscal and Social Conservatism with disputed dosage of social moderation.  Issues include a balanced budget, FED reform, border protection, right to work, repeal “ObamaCare”, and strong national defense.

Views: 1944

Tags: deficit, economics, military, sequestration, unemployment

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Comment by Andrew Barbieri on July 7, 2012 at 6:34pm

France has not re-awoken !


Admin
Comment by Bill Bissell, Admin on July 7, 2012 at 6:29pm

The One World Gov people may think that at any time all their plans could cave in at anytime.It was almost destroyed when JFK was in office,I believe that he was turning on those that put him in office.Obama with his arrogant stupidity is shining the light on our nation's disease .We are seeing somethings heat up real fast now but watch and pray how the LORD begins to harass the libs if they never repent.

Comment by Henry M. Stumpf Jr on July 7, 2012 at 5:29pm

Term limits would weed out those politians who only do things to keep themselves in office NOT what is best for America !!

Comment by S. Phillip Stein on July 7, 2012 at 5:09pm

The elected politicians wouldn't need to be so concerned for their elected positions if there were definite term limits. I think term limits would also serve to sort out those with ideals to serve the country, as opposed to those who're angling for lifetime federal benefits that career politicians now receive.

The government could build a reduced benefit plan that wouldn't break the bank for those who've served the maximum elective term. When the term limit expires, I'm sure the ex-elected politicians could have made enough private connections to continue earning handsome incomes as long as they're legal. 

Their limitations in term-limit retirement? That would need to be drawn up in Congress. First, the concept of term limits must be sold. I think "the people" would gladly accept it.

Comment by helen roberts spingola on July 7, 2012 at 4:12pm

Just DO IT on NOVEMBER 6th. Get all the vermin out. Just DO IT!!!

Comment by Ed Watts on July 7, 2012 at 4:01pm

Damn, Marc Jeric!  We need to go out for a beer!  Within an hour, we, sitting in a booth in a rear corner, could have the whole place thinking like we do.

Comment by DR Rowe on July 7, 2012 at 3:52pm

The "American" government is an oxymoron!

Being a "true American" is deeper than just being born in America or having US citizenship!

Most of those in Congress with a "D" after their names are NOT Americans! They are socialist/facist/commie NWO puppets run by Soros who seem to think they will get in on "ruling the world." 

Comment by Buck Crosby on July 7, 2012 at 3:48pm

We not only need a complete turnover in Washington ,  we need to get the H --- out of the world order of communism called the United Nations .   

Comment by Marc Jeric on July 7, 2012 at 3:46pm

Nurtured by his far-left grandparents, by the Communist Party USA Politburo member Davis, by the raving racist-communist Reverend Wright, and by the criminal communists Alynski, Dohrn, and Ayers, this former citizen of Indonesia and Kenya Obama is implementing a rapid program of communization of America. All the former refugees from various communist hells can easily recognize the signs:

1)                  Obama is acting as the Secretary General of the Party;

2)                  Democrat Party has been taken over by the communists under various guises such as social justice movements and environmentalism;

3)                  Congressional Democrat leaders are in fact the Central Committee;

4)                  Obama’s White House advisers are his commissars (so-called czars) in charge of all federal departments – all unelected;

5)                  His Attorney General, a fervent racist and communist, is in charge of legal enforcement of Obama’s dictates, and in executive role of assuring Obama’s re-election, by fraud if necessary;

6)                  Obama’s program of massive nationalizations of private companies is under way – automobile companies, mortgage companies, many banks, several insurance companies, and pretty soon hospitals, doctor offices, and health insurance companies under Obamacare; then with the help of the global warming hoax will come the nationalization of oil & gas companies, coal mines, electricity companies, transportation companies;

7)                  Newly established Consumers Protection Agency will dictate business rules for banks, credit unions, mortgage companies – thus putting those under close government control; the newly appointed members of the National Labor Relations Board will favor unions by force of rules and regulations;

8)                  Obama’s Agit-Prop Office, as that organization in communist regimes was known, charged with communist agitation and propaganda, consists of our Main Stream Media: ABC, CBS, NBC, MSNBC, NPR, CNN, MTV, NY Times, Washington Post, LA of the far-left Institute of Policy Studies that used to be directed by the KGB of the defunct USSR.

9)                  Obama’s system of local soviets, as the community organizations were known in the defunct Soviet Union, consisting of brown shirts and thugs supplied by ACORN, SEIU, AFL-CIO, AFSCME, NEA, AFT, Teamsters, Steel workers, municipal unions, ACLU  lawyers, environmentalists, and other local government employees unions, is in charge of assuring the acceptable election results by illegal alien votes, by felon votes, by repeated voting of same people under manufactured names, by transporting illegal voters across voting districts, and by stuffing the voting machines with phony votes – all exactly as in those communist hells well known by us the refugees. These Obama’s striking forces will be financed in 2012 by the still unspent $8.7 billion from his original stimulus bill. AG Holder will make sure that no ID is required for voting. According to the statement by Obama – “We need a domestic military with a budget as large as that of the Pentagon” – these local soviets will soon be equipped with guns and bullets.

10)              Fight against individual achievement by the application of new laws such as affirmative action, diversity, multiculturalism, inclusion, hate speech, anti-marriage, etc. – all are aimed at leveling the society at the lowest possible mark. After 40 years of rule by teachers unions we have now 3 generations of unemployable illiterate nincompoops and bottom feeders manning “Occupy Wall Street” protests and voting for our “Democrats” and for “social justice”.

11)              Expansion of old and new welfare programs in order to ensnare the majority of population in the net of government dependence, such as food stamps, AFDC, apartment subsidies, WIC, SSI, school lunches, handicap payments, unemployment benefits, home mortgage subsidies, health insurance subsidies, etc.

12)              Massive amnesty for illegal aliens by executive orders, thus creating a pool of about 15 million new citizens expanding government-dependent classes and voting for a new socialist order.

Comment by Marc Jeric on July 7, 2012 at 3:42pm

Under the guise of environmental protection, social justice, sustainable development, and several UN-sponsored initiatives, our government is actively promoting a world socialist government under the direction of enlightened leadership of our intellectual classes; in that effort various domestic organizations such as Greenpeace, Friends of the Earth, Sierra Club, Union of Concerned Scientists, Institute of Policy Studies, ACLU, etc. are actively engaged, in collaboration with our EPA and DOE progressives. Our Secretary of Defense Leon Panetta is a former member  At the age of 24 I had escaped from a communist hell and received a political asylum in France, where I worked 5 years while waiting for a US immigrant visa. Having finally obtained a 2-year conditional visa I arrived to this country in 1962 and in 1967 became a citizen. In the years since I have voted both for Democrats and Republicans, although after 1976 mainly for Republicans. Given a series of bloviating gasbags and functional morons with strong leftist tendencies such as McGovern, Carter, Mondale, Dukakis, Gore, Kerry, or that impeached and disbarred felon Clinton, it was impossible for me to do otherwise. I enjoyed the presidency of Ronald Reagan which put an end to the deadly communist regimes all across Europe; those Marxist dictatorships produced invariably utter poverty, terror, and mass murder, and are still doing it in places like North Korea and Cuba, with Venezuela, Ecuador, Byelorussia and Bolivia close behind.

 

However, we have now a completely different and much more dangerous situation here in America. The criminal political Chicago machine gave us a far-left revolutionary Marxist of doubtful origins as our President – Barack Hussein Obama; a son of a Kenyan communist and a flower-child leftist mother, with obscured past lacking any documentation of his university accomplishments before that Chicago criminal political machine sent him to the US Senate. His accomplishments so far have been an arousing speech to the Democrat Convention, and two ghost-written books of his father’s and his own aspirations. I think I am justified by calling that machine criminal – after all two Democrat governors are serving time presently in prison; and in the elections of 1960 the machine elected Kennedy by some 150,000 votes of dead people.



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