Government Spending

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Jaw-Dropping Government Spending Stats: $6.1 Million on "Fancy Goats"

By , Money Morning -

government spending

Government spending can seem absurd at times, and this latest example of lunacy is almost too ridiculous to believe.

On the American taxpayer's dime, the Pentagon spent $6.1 million to import fancy goats from Italy to try and stabilize the economy in Afghanistan.

But that doesn't even begin to scratch the surface of the jaw-dropping wasteful spending habits of our government. Apparently, there was one project that cost $43 million that should have cost $500,000...

Wasteful Government Spending 2013: Who Spends $1 Million on a Bus Stop?

By , Associate Editor, Money Morning • @DavidGZeiler -

Most Americans can't afford to waste their hard-earned money on expensive things they don't need. But their representatives in Congress have made a habit of doing just that with taxpayer money - to the tune of $30 billion in the last year alone. Among other things, they blew $1 million on a high-tech bus stop in Virginia and $415,000 to train "wine educators" in China.

What is Congress thinking?

DON’T BE SO ARROGANT, MR. PRESIDENT

By , Chief Investment Strategist, Money Map Report -

Empires have come and gone. Some lasted a blink of an eye and some millennia.
The question is, after 9/11, the rise of China and a great financial crisis, where does the U.S. empire stack up to its predecessors?
Well, it seems the one commonality they all have is the point when their might was undermined by sloth and greed. And entitlements: free bread and circuses. For some it took years, others centuries.
Here, in a compelling and unique address, is what Romulus Augustus, the last emperor of the Roman Empire, might say to President Obama now about how to keep America great.
Read on and share with family and friends...

The Latest Obama Outrage: the Family's $100 Million Vacation

By , Money Morning -

How much do you spend on your summer vacation? American households usually spend about $1,200 per person on summer vacations, according to a recent American Express survey.

Presidents spend more on their vacations than you or I. They have to. Air Force One and security does cost more than loading the Honda and heading to the beach.

Here's how much some recent presidents spent our tax dollars on vacation.

Ronald Reagan spent most of his free time at his California ranch. Taxpayers covered the cost of approximately $8 million for presidential travel during Reagan's first six years in office, according to the Los Angeles Times. That amounts to $1.3 million a year.

For George Bush the cost of flying Air Force One to his Texas ranch was approximately $56,800 per trip, for each of the 180 trips according to Media Matters. President Bush spent Christmas during his two terms at the White House so his staff and secret service could spend the holiday with their family, according to Conservative Byte.

Now Obama plans to blow away all previous presidents' leisure travel costs on our dime with a better than Disney World extravaganza trip to Africa.

However Obama had to cancel the safari because of the need to fill the surrounding jungle with snipers to guard the president from wild animals!

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Paul Krugman May Be the World's Last Flat Earth Economist

By , Chief Investment Strategist, Money Map Report -

Nobel Prize-winning economist and New York Times columnist Dr. Paul Krugman is at it again. He claimed earlier this week that fixing the deficit is important, but added that "doing it now would be disastrous." He also observed that the 10-year U.S. debt situation isn't really all that bad.
I don’t know how he can make that argument with a straight face.
For five years now, Dr. Krugman has argued that increasing U.S. government spending is vital to our nation's recovery. And for five years he's been dead wrong.
Dr. Krugman claims that "we" just haven't spent enough money... yet.
Here's why that makes him very dangerous...

Why The Fiscal Cliff "Deal" is Spelled P-O-R-K

By , Chief Investment Strategist, Money Map Report -

Behind the scenes of the Fiscal Cliff debate, there was plenty of f-bombing, poison pilling, and grandstanding leading up to the deal - and that was before the members of Congress and the Senate actually got serious with their usual ultimatums, followed by earnest- looking sound bites and posturing. But what gets me really riled up is the amount of "pork" contained in the bill...

Why Japan's "Lost Decades" Are Headed to America in 2016

By , Chief Investment Strategist, Money Map Report -

It's only been a little more than a week since Shinzo Abe won election as Japan's latest Prime Minister in a landslide-election victory and the pundits are already lining up telling investors to "buy Japan" because it's "dirt cheap."

The hope is that Abe's promises of fresh stimulus, unlimited spending and placing a priority on domestic infrastructure will be the elixir that restores Japan's global muscle.

As a veteran global trader who actually lives in Japan part time each year, and who has for the last 20+ years, let me make a counterpoint with particular force - don't fall for it.

I've heard this mantra eight times since Japan's market collapsed in 1990 - each time a new stimulus plan was launched - and six times since 2006 as each of the six former "newly elected" Prime Ministers came to power.

The bottom line: The Nikkei is still down 73.89% from its December 29, 1989 peak. That means it's going to have to rebound a staggering 283% just to break even.

Now here's the thing. What's happening in Japan is not "someone else's" problem. Nor is it something you should gloss over.

In fact, the pain Japan continues to suffer should scare the hell out of you.

And here's why ...

The so-called "Lost Decade" that's now more than 20 years long in Japan is a portrait of precisely what's to come for us here in the United States.

Perhaps not for a few years yet, but it will happen just as we have already followed in Japan's footsteps with a "lost decade" of our own.

The parallels are staggering.

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One of the Decade's Biggest Examples of Wasteful Government Spending

By , Associate Editor, Money Morning • @DavidGZeiler -

In February we told you that despite nearing $15 trillion in debt - now close to $16 trillion - the U.S. government decided to spend $592,000 last year to figure out why chimpanzees throw poop.

Now we've discovered yet another example of wasteful government spending that has burned up more than $1.5 billion of your tax dollars - with nothing to show for it.

We're talking about the fruitless pursuit of a biofuel known as cellulosic ethanol, surely one of the greatest government boondoggles of the past decade.

Cellulosic Ethanol Production: What You're Paying For

Both Republican and Democratic administrations have showered companies with grants and loan subsidies with the goal of turning materials like wood chips and switch grass into an ethanol fuel that could be used in automobiles.



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What the Last Roman Emperor Would Tell President Obama Today

By , Chief Investment Strategist, Money Map Report -

Over the course of 700 years, the ancient Roman Empire grew from a small republic to one that stretched from London to Baghdad at its peak.

As one of the world's first true superpowers, the Empire's achievements included the world's first standing professional army, economic prowess, intellectual growth and governance principles that are commonly regarded as the basis for modern society.

But it is also remembered for its spectacular collapse in less than a century under the weight of bad debt, an overextension of the Empire, a collapse of morals that led to a deluded and self-absorbed political elite and reckless public spending that far outweighed collections.

Given the parallels to our situation, I can only imagine what Romulus Augustus, widely considered to be the last of the Roman Emperors, would tell President Barack Obama today about how to prevent the wholesale destruction of our own "Empire."

But it would probably go like this...

Cara praeses Obama, (Dear President Obama)

Like mine, your world is changing fast. No doubt it's very different from the one you thought you'd inherited. Your success will depend on new thinking and an eye to the future taken from lessons of the past.

I wouldn't be offended if you have never heard of me.

I oversaw the dying days of what you know as the Classic Western Roman Empire. My fall in September 476 marked the end of centuries of greatness and the fall of ancient Rome.

Some historians consider my departure as the beginning of the Middle Ages. I understand the nature of collapse: how it begins, how it progresses, and where it all ends.

As a historical footnote to a once great empire, here's my advice to you, Mr. President.



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Obamanomics: What You Can Expect if President Obama Wins the Election

By , Money Morning -

Now that we are left with a two-horse race for president, the markets are going to begin to handicap the November results.

However, when the markets begin to handicap the race it will be about a lot more than just picking the eventual winner.

Instead, everything will revolve around the policies and consequences that come along with the winner.

The difference in approach promises to be stark with "Obamanomics" on the left and "Romneynomics" on the right.

Each one comes with its own set of consequences, though.

Today I'm going to look at "Obamanomics II," or the policies we will get if President Obama is re-elected.

But those on the left shouldn't despair...In my next piece, it's Romney's turn.

As for the horserace itself, it's too close to call, with neither side having much chance of winning a big victory.

President Obama Has the Edge

Even still at the moment, President Obama appears to be ahead. Apart from his modest lead in the polls, my former home state of Virginia appears to be swinging definitively toward the Democrats.

Yes, Republican Bob McDonnell did win the Virginia governorship handily in 2009, but he was a very good candidate. Moreover, turnout in gubernatorial elections is normally low. Thus I believe the latest polls showing Obama with a 7% lead in Virginia are accurate, and without Virginia Romney has a very difficult path to the presidency.

If we believe the presidential election will be close, then it follows that Congress and the Senate elections must be close, too.

If Obama wins in November, the most likely outcome must be that the Democrats will hang on to the Senate, while the Republican House majority survives, albeit much smaller than at present.

With this combination, the president's more extreme wishes (or those of his team) will be restrained. But as a newly re-elected figure he will nevertheless have more power to get what he wants than he does currently.

Whatever the congressional numbers may be, the president's first task will be to face the "fiscal cliff" of January 2013, when the Bush tax cuts and temporary payroll tax cuts expire and automatic spending "sequestration" comes into effect.

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Making Earmarks Pay: Lawmakers Help Themselves to Congressional Pork

By , Associate Editor, Money Morning • @DavidGZeiler -

For members of Congress, the only thing better than getting "pork" for the folks back home is getting a slice of that pork for themselves.

Pork, also known as earmarks, describes the long-standing Congressional practice of steering tax money back to home districts to pay for expensive, constituent-pleasing projects.

But in recent years lawmakers started taking pork a step further. Instead of just using earmarks to keep voters happy, some members of Congress have found ways to benefit personally.

Some arranged for improvements to areas near property they owned; others sent money to organizations they would later go to work for after leaving office.

Of course, none of this is illegal.

Congress literally makes its own rules regarding the ethics of earmarks. Still, much of what goes on looks bad.

Take the case of former Rep. William Delahunt, D-MA. The seven-term Congressman retired last year and launched his own lobbying firm in Boston.

Before long the small coastal town of Hull had hired Delahunt for $15,000 a month to help out with a wind energy project.

Coincidentally, Delahunt had set aside a $1.7 million earmark for the Hull project back in 2009. The bulk of his fee - 80% - is being paid from the same earmark money.

And that's not all. The Mashpee Wampanoag tribe has paid Delahunt's firm at least $40,000 to lobby for a casino. As a congressman, Delahunt sent the tribe earmarks worth $400,000.

Delahunt also has done work for Quincy, MA, lobbying for a downtown redevelopment project. Back in 2008, he was sending Quincy $2.4 million in earmarks.

"I cannot recall such an obvious example of a member of Congress allocating money that went directly into his own pocket," Barney Keller, communications director for theconservative group Club for Growth, told The New York Times. "It speaks to why members of Congress shouldn't be using earmarks."

While Delahunt may be the most blatant example of a lawmaker enjoying generous helpings of Congressional pork, he's not the only one.

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Iran is Now a Full-Blown Crisis, Stage Set for $200 Oil

By , Global Energy Strategist, Oil & Energy Investor • @KentMoors_OEI -

Just when it looked like we could take a breather from the Strait of Hormuz, all attention is back on Iran.

There are three reasons for this - all happening within the last week:

  1. First was Tehran's successful launch of a satellite, viewed by all in the region as being for military intelligence.
  2. Second, in his toughest talk to date, Iranian Supreme Leader Ayatollah Ali Khamenei voiced defiance to Western sanctions and pledged open retaliation if they are instituted.
  3. Finally, last Thursday, U.S. Secretary of Defense Leon Panetta expressed concern that, if matters continue, Israel could attempt an air-strike takeout of Iranian nuclear facilities within a month. Iran has been frantically moving essential components of its nuclear program underground to withstand such an attack.
All of this is, once again, leading to a rise in crude oil prices.

What's more, the EU decision to stop importing Iranian crude starting July 1 will cripple any chance Tehran has to combat escalating economic and political turmoil at home.

Yet Khamenei's defiant tone during his Friday prayer meeting speech indicates that Iran's religious leadership will not wait for the system to unravel.

And that is what makes this both a full-blown and an intensifying crisis.

Brinksmanship in the Straits of Hormuz

So what's being done?

Washington has little - leverage, save its ability to temper an immediate escalation by Israel (leverage the U.S. can still apply, at least for the moment). It also has some indirect influence on what the E.U. does.

Meanwhile, Saudi Arabia also is a wild card. It will not tolerate a nuclear Iran.

And yes, there are ample indications that American and Israeli intelligence have concluded Iran will achieve the ability to develop nuclear weapons in the next 18 to 24 months.

Some elements of that process will be available earlier, but remember: A weapon is of little value unless it can be controlled and delivered. The logistical and infrastructure considerations need to be in place first.

Yet with such an inevitable conclusion staring them in the face, the West has decided to embark on a risky path...

The target here is not the nuclear project at all (over which there is less and less outside control). Instead, it has become about creating massive domestic instability to bring down a regime.

Now, this is not about ending the theocracy. With or without Mahmoud Ahmadinejad as president or Ali Khamenei as supreme leader, Iran will remain a Shiite-dominated country. Religion decisively controls politics, and the clergy oversees the society.

The West is seeking a more moderate application of what will remain the Iranian cultural reality.

However, as the brinksmanship intensifies, so will the price of crude oil. Tehran, in this dangerous game of international chicken, really only has one card to play - the Strait of Hormuz.

There has been much misinformation circulated about the strait. Here are the facts.

On any given day, 18% to 20% of the world's crude oil passes through it.

According to the Energy Information Administration, the Strait's narrowest point is 21 miles wide; however, the width of the shipping lane in either direction is just two miles, cushioned by another two-mile buffer zone.

Of greater significance, though, is the fact that most of the world's current excess capacity is Saudi. (This is the oil that can be brought to market quickly to offset unusual demand spikes or cuts in supply elsewhere.) And, unfortunately, Saudi volume must find its way through the same little strait.

If we're unable to access the Saudi excess, that loss guarantees the global market will be out of balance. That will intensify the price upsurge - an upsurge that is already happening.

Now for the question I'm being asked several times a day in media interviews...

Just how bad can it get?



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What the World Will Look Like if Occupy Wall Street Wins

By , Chief Investment Strategist, Money Map Report -

There are many reasons why the Occupy Wall Street movement could fail - a lack of cohesion, too many directions, no leadership, not enough money, and no representation, to name a few.

But what if it "succeeds?"

What would our investing landscape look like and what would we do about it?

I think that's an interesting question, especially since Occupy Wall Street has gained some traction, even taking on a global appeal. And more importantly, there are two other reasons the movement could succeed:

  • First, our political system is broken and has deteriorated into little more than a fancy debating society.
  • And second, the world's central bankers remain out of control; their bailouts are saving the irresponsible at the expense of the hardworking. Our regulators and Wall Street remain locked in an unholy alliance that has done very little to fix the underlying problems that have resulted from decades of bad fiscal policies, unsound monetary practices, and dysfunctional leadership.
You may remember the 1960s and the many protest movements that were very clearly focused on civil rights and the Vietnam War. You even may have been part of a few.

A lot of people thought they would go away, too. But Tom Hayden and his collection of Students for a Democratic Society didn't. Nor did Abbie Hoffman, Bobby Seale, and others. Their passion and that of thousands who joined in eventually succeeded in changing the course of social consciousness.

OWS could too.

By shunning the hierarchy that is organized politics and corporate America, there is the sort of strength necessary to address the growing disparity and the vanishing opportunities that are the new economic reality for millions of Americans.

I, for one, am hopeful that OWS will find the leadership needed to clearly delineate its goals and mandate change on the strength of the raw unvarnished potential that is now driving it.

I am also hopeful that OWS will succeed in raising the social consciousness to the point that living within our means becomes both an economic and political reality.

But that's just me. You may have entirely different feelings. That we might not agree is irrelevant.

Since OWS began, I've been watching carefully and doing a lot of deep thinking about what things might look like if OWS "wins" - however you define the term.

So here's a look at some of the potential changes that could take place if the movement succeeds:

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GDP Is a Lie – It’s Time for a New Measure of Economic Growth

By , Money Morning -

Gross domestic product (GDP) is the most commonly used measure of economic growth. But GDP isn't just inaccurate and misleading - it's the contrivance of Keynesian economists seeking to push their own, big-government agenda.

That's right. GDP is a financial ruse - the biggest of the past half-century. And it's time to move past it to another, more accurate measure of economic growth.

Keynesian economist Simon Kuznets designed GDP at the height of the New Deal era. Kuznets first revealed the measure in a report to Congress in 1934. GDP takes into account consumption, investment and government expenditure to create a measure of economic growth.

But the Keynesians employed some chicanery, or sleight-of-hand, to generate this statistic. A close look reveals the dirty little secret about GDP: It intentionally overplays the importance of government spending - and in doing so inflates the role that Washington plays in each of our lives.

And it's been doing this for 77 years ...

The Biggest Lie of the 20th Century

Gross domestic product is supposed to be a measure of all the goods and services produced here at home.

But there's a discrepancy.

You see, private-sector output is measured by the price people are prepared to pay for it. But government output is fudged: It's measured by its cost.

That means GDP increases any time the government spends money. It doesn't matter if that money is actually put to productive use or not - GDP rises nonetheless.

The bureaucrat devising regulations that damage business? His salary increases GDP. The $300 million Alaskan "bridge to nowhere" of a few years back? That was $300 million added to GDP. The jet-fighter project that costs billions, and is plagued by huge overruns that lead to its cancellation? Those billions add to GDP.

Even public-spending "stimulus" programs, however foolish, are always effective according to the GDP definition, because their cost is simply added to output.

It's obvious why big-government Keynesians would like this calculation: It substantiates their claim that government spending stimulates economic growth.

In the real world, however, this makes no sense. Indeed, none of the examples above actually add to economic welfare.

Don't misunderstand - some government output is very valuable. We could not exist in a free society without a court system that protects our property rights and a national defense that protects our borders. In most other cases, however, if government output were truly cost effective, the private sector would've already taken the initiative (and probably done so at lower cost and greater impact).

So how can you get an accurate measure of economic growth?

Arithmetically, there's a simple solution: You take Line 1, "Gross Domestic Product," in the Bureau of Economic Analysis' GDP Table and subtract from it Line 21, "Government Consumption Expenditures andGrossInvestment. "

That gives you a net number, which we can call "gross private product," or GPP. It's a measure of all the output produced by the private sector. In general, it will underestimate national "welfare" unless government is really bad. But it will give you a much better idea of the output the market economy is producing.

Indeed, looking at GPP's past performance helps to explain some things that GDP doesn't.

Keynesians like to proclaim that World War II got America out of the Great Depression: Thus, if you make stimulus big enough, it will solve economic problems.

This is the biggest lie of the 20th century.

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