The Government Shutdown Part 2, Where do we go from here?

OK, so many have asked the question; What will it take to solve this debate and how do we get out of this mess?  I will attempt to answer this question in Part 2 of my blog on the current Government shutdown.

I won’t tell you which political party I am “associated” with, but suffice it to say there are parts of the Republican “Agenda” that I agree with and parts that I do not.  And the same for the Democratic agenda, I don’t know why we have to fall into these two parties and go along with everything they stand for.  Can’t we choose what we believe in?  I do agree that our politicians should have to balance a budget and must do whatever is necessary to achieve that.  I also believe that many philosophys that work on a small scale do not necessarily work on a large scale.

In my last article I mentioned that I’ve seen very little change in the last five years and the economy has grown by an anemic 2.0% during this time.  What is the current administration doing to rebuild the economy and create jobs other than throw money at it and hope?  You’ve no doubt heard the saying; “The definition of Insanity is doing the same thing over and over hoping for a different result.”  Well by this definition our politicians are insane.  When will it end?  Maybe the next election?

Yes, I think it will take until the next Presidential election before we see any major changes.  This is based on a few factors which I will elaborate upon.  It amazes me that the power of charisma can have such an affect.   Charisma is defined as a compelling attractiveness or charm that can inspire devotion in others.  Basically this means we will blindly follow someone with charisma pretty much without question.  Kennedy, Reagan, Clinton had it, and now Obama.   This is the only rational explanation I can come up with because the current presidential administration has been so hypocritical from day 1 (see Part 1), saying one thing and acting another.  And they are not questioned, and got re-elected.  Are you better off than you were FIVE years ago?  Are we as an economy better off that we were five years ago (other than the Stock Market but more on this later).  I’ve been writing an economic commentary during this time and I haven’t seen any changes.  Oh, my mistake, we have a nationalized “affordable” health care plan (that’s another rant).

In the first four years of his presidency the president said he keeps a check list of promises he made during the campaign in his pocket. He must have very large pockets.  Obama said his administration had accomplished 70% of the things he said he was going to do.  The watchdog organization Politifact.com has been keeping track and puts Obama’s list of promises at a staggering 506, of those they say the president has kept 122, or 24 %. Coincidentally, of the 25 selected as the most significant promises, politifact.com says Obama has followed through on six, for a ‘promise-kept percentage’ of 24%.

I realize that each politician is out to get a little “something” for their donors, I mean voters.  But we have to stop spending more than we’re bringing in.  It IS really that simple.  If we borrow money as a nation we should have a direct plan for how it will be paid back.  In the last 12 years we have almost tripled the national debt through deficit spending or spending more than you bring in in revenue.  Something that took over 250 years to build, we tripled in just 12 years.  So how long are we going to let this go on?  My prediction is that our current politicians will continue to exhibit the same behavior and let’s face it, if we haven’t questioned it over the last five years (actually much longer that that) why would we question it now.  That will put the national debt, or what our children will be faced with, at over 20 Trillion dollars.  Oh, how did Mr. Obama put it in 2009, “That is ‘trillion’ with a ‘T”?  And THIS is what the next President will inherit.

We also have an aging population and the biggest percent of spenders, or the drivers of growth in the economy are the baby boomers and they are way past their peak earning/spending years.  In fact they are entering retirement age and spending less.  I say age because many (most) cannot retire when they planned because they do not have the income to overcome their expenses.  So where is the growth going to come from?  And what happens when the Stock Market wakes up from its dream and realizes that is has nearly doubled on false pretenses and we don’t have the growth to sustain values at current levels?  I’m not trying to be a doomsayer here but this bothers me.  One thing that should save interest rates from rising will be the correction in the stock market.  When money flows out of stocks it typically flows into bonds raising prices and lowering yields.

OK so, it’s Oct. 17, the government is still shut down and now Congress is about to default on its loans because Republicans and Democrats are still playing chicken with the country’s money. Now what?  We’re at the point that everything’s connected, government funding, the debt ceiling and spending, and so the best way out, I believe, and the only way for everybody to find an acceptable long-term solution is to lock all politicians in a conference room at say a Holiday Inn (nothing fancy after all they work for the people right) until they can balance the Country’s budget.  Now THAT would be sequestering!  And if there is a deficit, a plan will be in place to bring it in balance.  If you don’t have the money… you can’t purchase anything.  How difficult is that?

But of course this won’t happen and they will raise the debt ceiling and open/fund the government and continue raising the debt because that’s what they’ve done for the last five years and it doesn’t seem to bother anyone enough to do anything about it.  And they can’t come to an agreement on how to get us out of the predicament we’re in.  Unless… we elect different politicians in the next election.  And Hope…

Sincerely,

Bill Bartok

Mortgage Advisor MLO# 445991

The nicest compliment I can receive is the referral of your family, friends and co-workers.

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