Something's Rotten in Cambridge

In a recent issue of Harvard Magazine, Daniel Shore, Chief Financial Officer of Harvard, discussed with casual confidence and complacency the $130+ Million operating deficit of Harvard University.     As any viewer of political television can testify, casual confidence and complacency are the hallmarks of the culture inside the "Cambridge Bubble", particularly when it comes to debts and deficits. After all, hardly an election goes by without a Harvard economist  coming out on television to reassure the citizenry that the federal government's trillion dollar deficits are entirely manageable and that the Federal Reserve Bank can simply "print the difference," in order to save neo-liberal budget priorities, including (and especially) that $600+ Million per Year that goes directly to Harvard.

The stark reality of the situation, which has been swept under the rug continuously for more than 50 years, is that Harvard economists are leading the entire free world down a dangerous path of "self-destruction by debt."   Far from being top-notch examples of classical liberal economics, Harvard's economists and administrators have become freedom's greatest enemies. They promote exactly the kind of deficit spending, government dependency, and high taxation which have led to the ruin of modern Greece. Can anyone count on Greece to stand up for freedom against tyrants like Syria's Assad or Joseph Kony?  I think not. 

The culture of debt permeates every aspect of university life in Cambridge.     It can be seen in the office of Daniel Shore, CFO of Harvard.   It can be seen in the teachings of a large majority of the professors, especially those in the economics department, where they continuously promote and condone the use of federal debt outside the classroom, through publications, television appearances, and prominent roles in US government.     It also infects many Harvard students who, following the irresponsible example of their professors, graduate with excessive personal debt, leaving them financially hobbled and more likely to promote the use of debt in the organizations they later join, like Lehman Brothers, Bear Stearns, and American International Group.   Like a highly contagious disease, it has spread from Cambridge to Washington and infects many of the other institutions that lie inbetween the two.  

The culture of debt began with the misguided teachings of John Maynard Keynes in the 1950's, which have created a self-reinforcing long cycle of federal dependency.   Federal dependency weakens the broader economy and inflates the cost of living for those hard-working Americans who are not dependent on federal handouts.     It reduces both the number of private sector jobs and the living standards of those who work in them.  This self-destructive, multi-generational debt cycle is supported and reinforced by an administrative bureaucracy and a majority of professors, all of whom benefit personally from the deficits in the form of higher salaries and benefits at Harvard.

Also guilty of reinforcing the "culture of debt" and the "culture of federal dependency" are some of the most prominent media establishments.    Falsely labelled as an "independent media outlet", NPR is just like the Harvard professors it so often references in its programming.   It is dependent on the federal government.    How can a media outlet possibly be true to its constitutional role of providing a check against the power of government, when the government is paying a significant portion of its annual budget? That arrangement is more reminiscent of Soviet Communism, with its state-run media, than it is of the US Founders' intent for the important role of the Free Press in America.   And, look at US News and World Report.   It reinforces the culture of federal dependency in its widely watched rankings, where it counts professor pay as one of the key metrics.    

This culture of fiscal irresponsibility, excessive debt, and federal dependency must end; and the change must begin at Harvard.   The deficits, both at Harvard and at Treasury, are unsustainable; the macro-economic effects are erosive; and academic quality is adversely impacted by the corruption inherent in dependency on federal dollars.  

Harvard, and other institutions of higher education, would do well to follow the lead of so-called "work-study" colleges, like College of the Ozarks - an institution that shuns all federal aid and student scholarship money.   Students are required to work, during their studies, in order to pay for their tuition; and the vast majority of students (all of whom come from disadvantaged families) graduate without a penny of debt.   Even the small minority that do accumulate some debt for a car generally keep it well under $10,000.   


With federal dollars removed from the equation and students working reasonable hours, salaries and tuitions at Harvard should then be set according to free market principles.   This probably would result in salary cuts and tuition increases in the short term.  So be it.   The long term benefits in the character of the Harvard community, as well as the high profile example of fiscal discipline, would far outweigh any complaints that may arise in the short term. After all, what are the complaints of a few Harvard professors compared to saving the USA from a fate like that of Greece?

Election 2012: Obama's Little Big Horn

During the calendar year 2011, the  American GDP grew by 1.7%, leading the Obama adminstration, and its supporters, to claim partial victory in the war against economic stagnation.   Closer inspection of the numbers reveals, however, that Obama's claims of victory resonate about the same as Custer's claims of victory at the Battle of Little Big Horn. (1)

The fact that Obama's approval ratings remain above 40% has nothing to do with the decisiveness of his alleged victory against economic stagnation. Rather, it reflects the fact that at least 40% of the voting population simply do not take the time to analyze the numbers any deeper than the misleading headlines and optimistic expressions that come from the administration.   They cling to their hapless leader like lost sheep.

Ve-Ri-Tea readers, on the other hand, are more discerning.   We are proud of the depth of our research as well as the careful scholarship & sincerity with which we cast votes and express political opinions.    We see, beneath the headlines, that there are still 10's of Millions of Americans who are underemployed or unemployed.   We see, beneath the headlines, that there are still more than 40 Million Americans living in poverty.   We recognize that over-regulation is the cause of this economic stagnation, not its cure.   And, we attach a higher moral priority to full employment than we attach to a trumped up environmental agenda that will only makes things worse.    

Sadly, it get worse.     Even the fully employed, who have not experienced a single day of unemployment are seeing a decline in the value of their wages, due to high oil prices and inflation, leaving them with less disposable income and putting the squeeze on their retirement funds.    This, in turn, puts the squeeze onto businesses that provide non-essential goods and services.   The providers of newspapers & magazines, travel vacations, sporting goods and events, higher education, and entertainment of all kinds must compete for a smaller pie of disposable income.    When aggregated across millions of consumers, the negative impacts of rising gas prices multiply exponentially throughout the economy. The result?   Entire segments of the economy are forced to downsize and belt-tighten.   Meanwhile, the government statistics show "Growth in Real GDP," and Obama proudly touts his 'great success' to anyone who will listen.

If you aren't already convinced that Obama is losing the battle against economic stagnation every bit as much as General Custer lost the Battle of Little Big Horn, then take this analysis one step further.   Making matters even worse for the Obameconomy is the fact that most of the torrent of US Dollars spent each year on transportation fuels ends up leaving our shores and flowing to governments that do not share our unique set of political values.     Like a leaky dike in Holland, our dependency on foreign oil weakens the US economy every year and could eventually lead to a devastating collapse, complete with a Greek-style debt debacle, a scenario that should be avoided at all costs.   

These are the inevitable economic outcomes of Obama's set of alternative energy policies, a set of policies  that artificially elevates the global price of oil by restricting the output of U.S. oil and gas resources.   Unfortunately, this is the course we are on; but there is hope.   Recent technological developments in the oil drilling industry have made accessible a new U.S. oil supply that is reported to be 25 times larger than the oil reserves of Saudi Arabia.    Located in North Dokota, this new U.S. oil supply is large enough to free us entirely from dependency on foreign oil and reduce the pump price of gasoline to $2.50, or less, according to the Gingrich campaign.   

The benefits to the U.S. economy of wholesale exploitation of that resource are almost beyond words.   All of the negative economic effects of the aforementioned increase in gasoline pump prices would be reversed. A virtuous cycle of positively reinforcing economic forces, including a complete reversal of the nation's trade deficit in oil, would set in, creating one of the greatest economic booms in US history. Furthermore, the federal tax royalties generated by exploitation of US oil resources, estimated at more than $20 Trillion by the Gingrich campaign, could go a long way towards healing the US Government's declining fiscal health.

The greatest impediments to wholesale exploitation of US conventional oil resources are the Obama Administration, its Democratic allies in Congress, and their unwavering commitment to artificially high transportation fuel prices at the expense of the American economy.    For the sake of the 40+ Million Americans living in poverty and the tens of Millions of unemployed and underemployed Americans, we should all pray to Almighty God that the analogy to the Battle of Little Big Horn holds true and that by Thanksgiving of this year, the election of 2012 will be remembered as "Obama's Last Stand."

    

(1) Those needing a refresher in U.S. Military History will take note that General George Armstrong Custer not only lost the Battle of Little Big Horn in one of the greatest fiascos in US history, but he was also killed there at the young age of 36.   To learn more about "Custer's Last Stand" and the "Battle of Little Big Horn", buy one of these specially selected Instant Videos from Amazon!

A Rare Supernova in the Gold Market

Speaking of learning the lessons of history, those who are interested in business & investing might want to take a look at the history of the Gold Market.      Today's Gold market is very similar to the Gold Market of 1979.

1979 was the 3rd year of the Jimmy Carter administration in America, just as 2011 is the third year of the Obama administration.   Like Obama, Carter also pursued big federal policies, with lots of central planning and spending from Washington.    And, like the Obama years, the Carter years also saw a dramatic bull market in Gold prices.

Right now, in early September 2011, many market pundits are saying the the Gold market has peaked.   They say that the rally from $1,400 - $1,800 was the final "blowoff" that marks the top in Gold.    While it is true that bull markets tend to end with a bang, called a "blowoff", the move from $1,400 to $1,800 was not large enough to mark the final blowoff of this bull market.

The move from $1,400 to $1,800 was a move of 29%.     Compared to the final blowoff of the 1970's Gold market, that move is not large enough to constitute a top in the market.   The 1970's Gold market ended with a much larger BANG than that.     It peaked in January 1980, after a 200% move during the last months of 1979.   That's right, even investors who missed the move in Gold prices between 1970 and September of 1979 still could've participated in the final 200% move, which marked the real "blowoff top" and final peak of that long bull market.

As a matter of fact, a closer look at the Gold market of 1979 reveals that there was a move of nearly 30%, ending in a brief pause during early September 1979, almost exactly the same as what has happened during the past four months of this year's Gold market.  As the chart shows, Gold went from about $250 to $320 between April 1979 and September 1979.   That is roughly a 28% move, almost identical to the move from $1,400 to $1,800 between April 2011 and September 2011, which clocks in at 29%.  And, as the chart reveals, there was also a brief correction, a pause in the bull market, during early September 1979.  Sound familiar?

In 1979, Gold proceeded to go from $300 almost all the way to $900 during the period from September 1979 to January 1980, the year that Reagan beat Carter for the White House.   History has a way of repeating itself, and if history is any guide, then we are about to see a rare site in the capital markets.   Like a distant supernova that is a rare treat to astronomers, the next few months could provide a unique opportunity for investors ... the real "blowoff top" of a decade long bull market in Gold prices!

Thanks to www.chartsrus.com for publishing this great, free chart of the 1979-1980 peak in the Gold market!

http://www.chartsrus.com/chart.php?image=http%3A%2F%2Fwww.sharelynx.com%2Fchartsfixed%2FGC1982btm.gif

God Tests Tea Party, Bernanke Plans Monetary Party

With the budget pressures in Europe, it appears that Sylvio Berlusconi will be forced to cut back on his infamous Bunga Bunga parties in a valiant & selfless effort to save the Euro; but not to worry, Ben Bernanke is ready to fill in that party gap with a big U.S. Monetary Party, stateside!


At his September 8 speech in a small city outside of a more famous, but fictional, Minnesota town, Ben Bernanke reiterated his "pedal to the metal" monetary policy for the next year or two.    More specifically, he said, "the target for the federal funds rate would [most likely] be held at its current low level for at least two more years."  (Economic Club of Minnesota Luncheon, Minneapolis, Minnesota)


Given that the current target rate is already near zero, that pedal is pretty much down on the metal, as far as it can go, leading some pundits to wonder if the Fed has pretty much done all it can do.     Even Ben Bernanke himself, suggested that the ball is now in the court of the fiscal authorities, namely Congress & the President, when it comes to further stimulative action, in an apparent effort to play the "opening band" role for the President's big jobs speech later that day.


During Year 3 of a Presidential Administration that has proven decidedly disappointing on the economic front, however, one begins to wonder whether the fiscal authorities are really in a position to do much of anything either, as far as economic stimulus goes.   Facing the lowest approval ratings of his Presidency and a Congress full of rabal rousing Tea Partiers, how much can Obama & the Democrats really do on the fiscal side?


Obama's tax cut plan may gain some traction, as a more supply side stimulative effort supported by Republicans; and that will have an important effect, when & if it kicks in.   But, what else will the Republicans, particularly the Tea Partiers, support?

Well, it seems that another powerful player in this drama has also made His voice heard.  Just as Almighty God bestowed our core liberties upon us and inspired the American Revolution, He is not going to let this moment in U.S. fiscal history pass, without interjecting His voice into the debate.    Three important Acts of God are being factored into these decisions as we speak.   

Hurricane Irene and the Washington Earthquake have rattled Eric Cantor's constituency, and he is now presenting a much more soft and friendly face to the Obama administration.      And, the Texas wildfires have changed the tone of even the most right-leaning Senator, John Cornyn, when it comes to relations with Washington.   

Both Cornyn and Cantor, two of the most stalwart deficit fighters, are now asking for disaster assistance from Washington, leaving other Tea Partiers nationwide wondering what has gotten into their once fearless leaders.    After all, there is no explicit delegation of power and/or responsibility for disaster relief in the United States Constitution, so - by the 10th Amendment - that leaves disaster relief in the hands of the States and/or the People.    And, given that the private sector insurance industry is capable of insuring so many other risks in our economy, why can't the private sector insure against earthquakes, hurricanes, wildfires, and other Acts of God?     

These Acts of God are a test of the Tea Party.   God is testing the metal of Tea Party leaders, for all to see.  He wants to know if they are really made of the same stuff that the original Boston Tea Partiers were made of.   Given that fully 25% of the American colonial population of those days gave their lives for our great republic, that is a high standard, indeed.    In today's terms, that would translate to 75 Million deaths, a lot more than any natural disaster in U.S. history; and they certainly had no U.S. Treasury or Federal Reserve Bank from which to ask for assistance, only long cold winters and summers filled with manual, farm labor.  

Why can't the States, or even families and churches, provide temporary housing for those displaced by these events?   Why do these so called "Tea Partiers" suddenly succomb to the same evil temptation to fall back on the US Treasury, which Republicans and Democrats do?    So far, it appears that two of our most prominent Tea Party leaders are failing that test and that yet another political label is needed: "TYPO"  (Tea PartY in name Only). 

It remains to be seen what the President & Congress will agree on, as far as fiscal policies are concerned.     The fiscal debate is complicated by this new budget commission and its formal mandate.   Some form of tax cut may emerge, but then again, it may not, because there is no way to pay for it.   One thing and one thing only is for certain in this great republic of ours, and that is that the fiscal "future is uncertain, and the end is always near" (to quote the infamous singer song-writer, Jim Morrison).

The monetary future, on the other hand, seems more clear.   Our fearless Federal Reserve Chairman has another pedal, which is not yet down on the metal; and this one fires the "booster rocket."    

Not satisfied with his $2.4 Trillion stash of US paper, Ben is getting ready to buy more, this time on the long end of the curve, in an heroic effort to save the housing market from further price declines, stimulate new refinancing business for the banks, lower the mortgage burden of millions of hard working homeowners, and salvage Obama's re-election campaign.

With 30-Year yields still relatively high, at 13X the Federal Funds Rate, there is still quite a bit that Big Ben can do with this Monetary pedal.   Given his nature and his fears of the Great Depression, further monetary stimulus seems more likely than not, especially in light of the uncertainty and so-called austerity in Congress.

Those who complain about low yields on their savings might do well to consider the words of Polonius, when he said, "Neither a Borrower, Nor a Lender Be."  (Hamlet Act 1, scene 3, 75) With the 30-Year Bond Rate headed to 2.50%, or lower, equities will become increasingly attractive.    

The S&P 500 may head lower in the next month, or so, as the markets continue to struggle with the Greek situation, US fiscal uncertainty, and global economic growth concerns.    Indeed, this citizen believes it will test 1050, where it will form the head of a head & shoulders bottom.    

Then it will turnaround and head higher on a massive, new bond buying program from the Fed, which pushes long bond and mortgage yields to historic lows, and teaches investors that, in the end, Polonius was right.   It is better to own equities, than to be a borrower or a lender.   They are a "must have" for the coming monetary party to be thrown by Ben Bernanke et al.

Al Gore, Environmental Slave Profiteer

It amazes me that so many Americans are willing to tolerate 8%+ unemployment, 15%+ underemployment, 49+ Million people in poverty, high gas prices, and a lackluster economy, when they know that we can do so much better than that.    The American economy is capable of achieving 5% unemployment rate for sustained periods of time; and the difference between the current conditions and the full employment rate of 5% is night and day for tens of millions of People.      Indeed, those who work in the field of humanitarian relief ought to be focused on America, instead of Africa.   Under Obama's policies, America can no longer afford to be the world's humanitarian reliever.    We are being dragged into poverty and third world status, before our very own eyes!

The poor economic performance of this economy begs the question, "How can any U.S. administration, with an educated staff and all the powers of the Presidency, possibly continue on with such inane policies as this administration is doing?"

The answer lies primarily in misguided environmental policy; but before I launch into my critique of Obama's environmental policies, please allow me to lay out my environmental credentials. I am not some long-time supporter of big oil and the old energy industry, who doesn't give a hoot about the environment, as one might surmise from the coming attack on Obama's environmental policies.    Rather, I am a "Green Republican."  I have worked in the U.S. Senate as an environmental research intern.   I care about the environment.   I care about clean air and clean water.    In short, I care about good stewardship of the Lord's great earth.     Still, I submit to you, that Obama's policies are wholly ineffective at achieving meaningful environmental gains.   Considering the damage to millions of People's lives and savings accounts, these policies are worse than just ineffective environmental policies.   They are, without qualification, treasonous and oppressive violations of every American's right to the pursuit of happiness.

The primary reason that this economy is not recovering faster is the high price of oil, and other commodities.   The oil price affects the price of everything else, in the economy.  That's why oil and energy are such contentious issues.    They affect every aspect of our lives.  Every product that we buy.  Every service that we use.   Everything that we do on this earth, these days, requires oil, or some other form of energy.     And, with oil trading well above $100 per barrel, it is no wonder that so many millions of People are unemployed, underemployed, and/or living below the poverty line.

Yet still, the Obamites, backed by a small cadre of elite venture capitalists, like Al Gore, who are heavily invested in alternative fuels, look the other way.   They turn a blind eye to the poverty and the unemployment, and even the right to pursue happiness of tens of millions of People.    They argue that high oil prices are the only means to achieving a clean tech revolution; and they are willing to destroy the lives of tens of millions of Americans in pursuit of that end.    If ever a man deserved the label of "evil profiteer", it is none other than Albert Arnold Gore, Jr.   He is a modern day slave profiteer, forcing Millions to pay high energy prices, so that he can profit on his green energy ventures.

Such policies are immoral and unjust.   First of all, it is not necessary to throw tens of millions of Americans into poverty in order to achieve a clean technology revolution!   Anyone who tells you that high oil prices are necessary to achieve clean technology goals might be an outright imbecile, but more likely, they are just a misinformed parrot, who is repeating that idiotic brain pollution after seeing it on CNN, or other liberal media outlets.  Or, like Al Gore, they are trying to hawk the IPO's of junky, clean technology companies that they are heavily invested in.  

As a matter of fact, there are three (3) important pre-requisites to a strong and viable clean technology revolution; and the first one is: FULL EMPLOYMENT.    Innovation occurs best, not when an economy is struggling along with 9% unemployment and high poverty rates, but rather when the 'old economy' is doing well. That's when people are feeling optimistic.   That's when people are willing to try new things.   That's when investors and corporate managers have enough cash flow to invest in clean technology research and development.   And, that's when the capital markets are strong enough to sustain a major wave of innovation.   Innovation is the crowning achievement of a prosperous economy, not an excuse for keeping tens of millions of Americans in unemployment and poverty.

The other two pre-reqs are:  strong capital markets & low inflation.    Yet, still, after more than three years in the White House, Obama hasn't achieved any one of those pre-requisites, let alone a booming clean tech revolution.  Not one single one.    As any college professor will tell you, you must complete the pre-reqs before your take the advanced coursework.     And, as any GOOD college professor will tell you ... if you cannot complete the pre-reqs after three years in the White House, then you are not accepted into the advanced courses at all!   No excuses!  All excuses, ranging from "The Crash of 2008" to "The Dog Ate My Paper," are no longer acceptable.   Obama should be kicked out of the White House for poor performance!  BOOTED!

At the end of the day, every other public political ambition of Americans, including even legitimate environmental goals, is dependent on a strong economy and an abundant supply of affordable energy.    Furthermore, there are more than 300 Million private American dreams that also depend on abundant, affordable energy supplies.  


Energy policy is the pivotal issue of this election, and Newt Gingrich is the only Presidential Candidate who understands this. That's why I urge you to join me in supporting Newt Gingrich for President of the United States of America, and that's why I urge you to purchase these important books about the New Reagan Revolution.  The future of America depends on it!