O .K .Mr & Ms slick politicians. You want  to change the health care rules.

No problem. I am opposed to government meddling in private sector free enterprise because I don’t thing you are even 25% as able as we are to handle business decisions.

But, if you insist. Here is the only way that I would accept your new rules.

Ready.

Are you really ready for a solution that will turn out equitable for all Americans.

All right, here it is.

Put all politicians, civil servants, union employees & bosses, Congress, the Judges, the President, everyone and all their families into the same program that you want for us.. If what you want to do to health care is so great then let everyone share in the bounty and the benefits of the new system.

No exceptions.

No alternates.

What is good enough for me is good enough for all.

This must be written into law, and unchangeable for a minimum of 25 years. This way if end of life savings is a hidden agenda, it will affect you as well as me. Your families as well as mine.

Of course if you accept this plan we will have to exclude all illegal non citizens, otherwise we could never afford to take care of your health needs at a reasonable level. When they become legal naturalized citizens through existing immigration laws then of course all citizens will be covered.

What do you think oh mighty elite. If its good enough for the people I love, then it should easily be good enough for your loved ones, after all you are JUST public servants.

This plan will guarantee a fair and equitable reform of health care that will protect all the citizens of the United States.

Mess this up and you will be messing up your own family,  so be careful and do a righteous job ,

Fat Louie was getting old.

He was a fat white duck, and he was suffering with the gout.

He had contracted the gout as a result of eating rich human  foods thrown into the lake at Snapfinger Woods Estates, a complex east of Atlanta.

Snapfinger lake was  man made, as an  amenity for the residents of the condominium complex.

Louie had been top duck when he was younger.

His flock consisted of 12 adult ducks in the spring,usually  expanding to 17 or 18 by fall.

His superior swimming ability ensured that  Louie would be the first to reach the food.He loved to showoff his  speed, and he really loved the morsels that his humans threw into the lake.

The gout is a painful form of arthritis that develops from excessive consumption of rich foods. In ducks this results in elevated levels of uric acid, which can crystallize and form painful deposits in a ducks webbed feet or ankles.

In Louie’s case the crystals settled in his right ankle causing pain and a difficulty in swimming and walking.

The gout is known as the rich ducks disease.

Ducks in the wild, subscribe to the adage,” survival of the fittest”. When Louie developed his painful affliction,the flock turned on their leader.He was chased away and forced out of the water.

Louie   spent his days alone,on dry land, He became a clown,waddling around the Snapfinger Woods grounds.  When he saw a potential  food suplier he would go into his pathetic quacking act ,hobbling with great effort. The “awwws” invariable turned into more food for Louie.

As the seasons passed, Louie became fatter and fatter. He was very lonely .

One day he looked at his reflection in the water. ” Louie, your getting old,” he said to himself. ” I think its time to get my leg fixed.”

The Greater Atlanta Duck Association (GADA) had passed the Universal Fowl Health Reform Act of 09 (UFHRA ’09) . According to GADA, every duck in the greater Atlanta area would recieve  free premium government supplied health care .

” Health care on demand. I’m ready  to get treatment for my gout. ” Fat Louie quacked. ” I’m getting old, and its time for me to get back into the water. Maybe I can even find an old Daisey to keep me warm in the winter.”

Fat Louie went to the GADA satellite office in Stone Mountain.

Two very pretty an very young Dasie’ s greeted him at the front door. “Hello Mr Louie,” they quacked. ” Please wait over there and we will add your name to the list.

Fat Louie walked through the door that they indicated.

It was a very large and very noisy room filled with several thousand assorted fowl.

The noise was deafening. There were birds of every species and every age from hatch lings to the very old.

There were wires and roosts filled with  waiting patients and the ground was crowded with non flying birds .

The floor was covered with upward of a foot of  poop, and the cacophony of  hoots, caws,quacks and assorted bird calls was deafening.

Louie looked around for someone in charge.

The scene was chaotic, and finally Louie found a small group of white ducks off to the side,

He waddled towards them glad for some familiar ducks.” Hello everyone. My Name is Louie, Fat Louie. When do I get to see the doctor?”

The group of white ducks looked at him for a moment then all began to quack at once.

” Hold on, one at a time please, I can’t understand you all talking at the same time.”

An elderly gentleman with molting feathers and a pair of spectacles perched on his nose, stepped forward.” I’m Daniel Duck. and  I have been  here the longest, so I suppose I qualify as a spokesman.”

“How do I get to see the Doctors? How long will this take? I have things to do at home this evening”

Daniel looked at him and shook his head” I’ve been here waiting to see a doctor about my failing kidneys for almost two weeks.”

“Why so long?” asked Louie,” I thought  UFHRA guaranteed us free medical care.”

“It does my friend, it does. The problem is that there are not enough doctors, and most of the good ones have gone away to other cities. Because of the shortages, the government has prioritised our access to medical care based upon our are, and the cost of treatment. ” He had a sad look in his  eyes.

” You see, I’m old, and not worth very much to the greater good, so they keep putting me at the back of the line. Eventually I’ll get a turn, but the fird flu that has hit Atlanta is keeping the nurses and doctors busy with younger more cost effective patients

They figure I don’t have much time left anyway.”

“Universal free health care my aching right foot,” squawked Louie, and he waddled out of the room and headed towards home so that he could at least die in his own pond.

” I’m mad as hell and I don’t want to take this anymore.”

It really frustrates me to be writing about the state of our economy, and the difficult roads that appear to be our options going forward.

As I have stated many times, the economic cycle which has been riding the credit train has derailed. 

This is not a simple fix like the V recessions of the past 35 – 40m years.

Throwing $ trillions   at this problem feels like it has not created a single  job.

Most of the stimulus money has gone to maintain the status quo. The State union employees usually get to keep jobs which might been terminated.

Now they want to change health care and life choices G-d help us !

With my money, they have already  bailed out :

Banks!

Wall Street!

AIG !

GM

Chrysler!

A wooden arrow manufacturer in Arizona or Idaho or  somewhere, for heavens sakes!

All a bottomless pit of endless spending with no way to pay, and no real hope of creating new jobs.

 The government is the only stimulus that is growing.

Yet with all of this debt and all of this incredible spending, the one sector that could actually help the economy rebound and create bold new directions , is being totally ignored. 

How about small business.

 The inventor.

The entrepreneur

The small manufacturer that employs 8-10 maybe several hundred people.

How about the repair shops and the wholesale distributors.

Retail stores.

Restaurants and entertainment venues.

Where is the bail out or the stimulus to help these millions of small businesses who employ tens of millions of people.

We are bearing the brunt of this near depression,

We are being regulated and taxed to death.

A s a group we are sinking closer and closer to the abyss of bankruptcy and to defaulting  on our debts, obligations, commercial mortgages.

Survival is a daily fight, and it is very frustrating to see all the fat  cats get bailed.

Yet, we get nothing but more squeeze from taxes, unemployed customers, and a shrinking dollar.

WHERE IS OUR HELP?

YOU’LL BE SORRY IF YOU LOOSE TOO MANY OF US.

WE HOLD THE KEY TO THE REAL TURN AROUND!!!!!

Louie was a fat, fluffy, white duck.

He lived on a small private lake, east of Atlanta.

The lake was man-made as an amenity for a small condominium community of rustic, 2 story wooden apartments  known as Snapfinger Woods Estates.

The creek that ran through the small wooded area was known as Snapfinger Creek  and, hence, the name Snapfinger Woods Lake.

When Louie was younger he was the head duck of a small flock  that claimed Snapfinger Lake as their home.

In the Spring, the flock usually consisted of 12 – 14 adults  and would expand to 18-20 by the end of the Summer.

The residents of Snapfinger Estates loved to feed their flock of ducks.  They would throw bread and stale cakes into the water and watch as the ducks raced for the food.

Louie being the leader and the fastest swimmer, usually got to the food first  and he would gobble the morsels in a splashing frenzy of duck gluttony.

As the seasons passed, Louie got bigger and fatter from eating all the rich human foods.

One morning he woke up and realized his right leg hurt. It was swollen and painful for paddling. Louie had the gout.

The Ducks, being wild birds and advocates of the premise “survival of the fittest”  quickly fired Louie from his position of head duck  and expelled him from the community lake.

Louie was devastated.  For weeks he wandered around the Snapfinger Woods Apartments common areas and the parking lots.

He would waddle, dragging his right  foot for sympathy.     The residents  took pity on Louie and continued to feed him.

The following Fall, the greater economy of the Nation fell into a deep recession and many of the human residents of the Snapfinger Woods Apartments lost their jobs.

Fat Louie’s sources of  gratis food became increasingly difficult to find.

He decided that it was time to go to work ,  so that he could afford to buy his own food.

” What can an enterprising, hungry duck with the gout do to earn a living?” He  thought to himself.

“Of course!”  he quacked, ” Humans love down pillows! …And… Who knows more about down  than a duck?”

Louie did some investigating and found that there were 10 duck -owned, Down production facilities in the greater Atlanta area, employing over 10,000 ducks.

During a bad recession, demand for down pillows and comforters is sluggish, but Louie didn’t  care.  He had a business plan to establish himself and his flock as the Down Kings of  Georgia.

He contacted the Greater Atlanta Duck Association( GADA) and requested a meeting with their Drake  financial chief .

Over the years, the Federal Government had been a major recipient of bird droppings, which was valued as fertilizer .  Louie proposed that GADA call in some political favors.

The Congress and the President had appropriated massive amounts of money as part of several stimulus packages to help fight the recession.

Louie proposed a joint venture with GADA to get some stimulus money for a proposed new down factory.

With $3 million of Federal stimulus money, Louie opened a brand new state of the art down factory.

The new factory, with the massive influx of cash,  had a major competitive edge over the more established and conservative down factories.

Soon, Louie’s factory was growing geometrically and he was able to hire 4000 ducks .  He squeezed most of his competitors out of business  by lowering his prices. After they were out of business, Louie raised his prices by 50%.  After all,  he no longer had any competition.  He DID  have all that stimulus money helping to subsidize his operation though.

The net result of the government stimulus program:

6000 lost jobs.

Hundreds of thousands of $ lost tax revenue from former down manufacturers.

A heavy increase in unemployment insurance claims by the ducks of Atlanta.

Fat Louie got fatter yet, and his gout got worse.

The business cycle is like the cycle of life.

It is born.

It learns how to walk. 

It reaches maturity.

It blossoms .

It grows old .

Eventually it must die.

Business cycles tend to follow credit cycles.

When credit is available, people borrow and spend today for things that they might otherwise not purchase until tomorrow.

Your current automobile might be only 3 years old, and in decent condition for another 3 or 4 years, but easy credit tends to encourage the consumer to buy a new car before it is necessary.

On a macro scale, when credit flows, and people spend on future necessities today, business makes profits, hires new employees , spends more on technology, expands facilities and  helps to generate growth.

When credit cycles contract, a new direction is created. Borrowing shrinks, spending contracts, savings go up and debt is reduced. Businesses contract, increase layoffs, and delay spending.

The last major credit shift experienced by the U S economy shifted to an expansion mode in the early 80’s. The Greenspan and Reaganomics agendas saw an expansion of available credit  which grew virtually unchecked until 2006-2007.

We are currently in the early stages of a Credit Contraction Cycle(CCC)

This is not a temporary pause in an ongoing expansion. We have shifted into a new direction.

The duration of this type of cycle typically lasts for an extended number of years and results in bankruptcies, foreclosures and unemployment.

The Great Depression of the 1930’s is usually shown as the standard of CCC economics, but we experienced similar but lesser extreme contractions in the 1960’s and 1970’s, with Nixon’s taking us off the gold standard as a rapid slide into Stagflation.

This is not a “bad recession” as the experts claim, hoping to keep us calm while our economy unravels.

 We are i n a Depression. It is just beginning, and it will feel more difficult because there is an entire generation of Americans who have never experienced bad times.

Savings have increased from 0% to just over 7% in slightly over 1 year, and demand is contracting because there is less money to spend.

The Administration is trying to add demand by spending money at a super record pace, but  cask for clunkers and various stimulus spending sprees are just moving money from one place to another.

 Demand is not being generated, that will only come when new wealth is created and wages and employment increases.

Unfortunately that will take years, a major shift to expending credit once again, and of course a great deal of contracting and suffering in the interim.

The small and medium business community has been largely ignored by Congress and the Obama administration.

Perhaps as individual entities, they don’t have the clout of an AIG or G M , or Chrysler, but as an aggregate, they are an extremely vital component of American economic health.

A large number of smaller, independent and usually well educated business entrepreneurs are difficult to control and are usually resistant to government intervention,

Hence, in this left wing socialist leaning environment, their eradication  through inaction is a political statement that has been largely ignored by public discussion.

The lack of stimulus funding is a deafening silence in the current “bail out” economy.

CIT Financial a funding company whose primary customers are smaller businesses, was allowed to fend for themselves when credit support became critical.

The misinformation and deliberate misinterpretation of statistics is an attempt to talk away the recession, or at least hold the terrible reality at bay until the Health Care, and Cap and Trade bills are passed.

The government appears to be more interested in an agenda, than in bringing real relief and helpful stimulus to the small businessman.

As a small business CEO, the reality is becoming more painful every day.The American economy and government pundits are pushing for quick passage of their agendas before the harsh reality of the Holiday season shows the depth of our problems.

From many discussions with my customers and my fellow CEO’s in various industries, this upcoming holiday season will be the worst in a very long time.

Gift giving and joy to children is part of the  American psyche, but this year has changed the spend and credit card mentality of the past 30 years.

Gifts will tend to be more practical and less ostentatious.

Employee bonus’s  will be modest if they exist at all.

Once the reality of our economic depression becomes apparent, the push to pass big new social engineering bills will become a  huge drag on the popularity of the Democratic party, and while Obama’s popularity and approval ratings continue to dive, the practical world of US politics will see Blue Dog Democrats strike a more moderate and fiscally conservative stance.

Sadly this will be a case of too little too late.

The damage to our economy has already been perpetrated, and our children and grandchildren will be paying the price for decades to come.

The life line of public bail outs is having  the effect of delaying the inevitable rather that curing the problem.

We need to finish our rebooting of the economy so new can begin to grow.

Ragnor the Hunter was the warrior chief of the Eastern Michenga Clan.

He was on a hunting trip, and was accompanied by a dozen of his personal warrior elite. They were exploring some of the Hazy Granit Mountains which formed the North Eastern boundary of the Michenga lands.

In an unexplored region bordering on the Southern edge of the Great Forest, they found  lands rich in game and wildly dramatic terrain. The retreating glaciers had cut deep gorges and left many icy cold swift running rivers and deep pools.

It had been a successful trip. The litter was filled with pelts and meat, but Ragnor was worried and somewhat anxious to leave their base camp.

Just that morning one of his warriors had discovered a hidden path through the mountains. It appeared  to originate  in the Great Eastern wastlands  bordering the Great Forest.

The path appeared to hug the contour of  the retreating mountains, and was carefully hidden from  view of the Michenga scouts and lookouts.

There were signs of recent Mongol traffic. A raiding party had passed there maybe 3 days earlier. The party consisted of  40 warriors. They were following the path along the base of the mountains, and had taken care to cover their tracks.

Washington has worked hard to keep big business afloat.

We have heard the term” too big to be allowed to fail”, used in conjunction with G M , Goldman Sachs, AIG, et al.

How about small but too numerous to be allowed to fail.

The medium to small business community is the  heart beat of the economy.  This deepening recession/ depression has put many of these vital employers into near  cardiac arrest.

The entrepreneurial spirit of the United States and the creation of new jobs and new ideas is a vital contribution of the Small Business community(SBC).

A trip to many industrial parks shows a depressing number of Available, For Sale, or For Rent signs.

Small businesses have been failing in clusters, and the struggle for the remaining to survive is difficult, with no help in sight.

With the Obama administration focused on a larger agenda, it appears that they have deliberately ignored or possibly overlooked the smaller business community.

Perhaps because they are too numerous and too small to be controlled.

Perhaps the courage and intelligence to start something new makes the entrepreneur a poor candidate to economic socialism. 

In order to survive, the SBC has attempted to keep afloat by drastic cost cutting and layoffs, selling off inventory without restocking, and often being forced into skipping rent or mortgage payments or negotiating drastic reductions as a move of practical desperation.

This is a troubling  move that portends problems going forward for the commercial real estate markets.

The upcoming Holiday season could possible be the final blow to many of the Nations small businesses.

Normally the economy gets a major boost during the Thanksgiving to New Years holiday shopping season. Economists are quick to allocate 70% of our economy to consumer spending, and Black Friday is a term dedicated to the day after Thanksgiving as the launch of Christmas shopping season, and the day when many retailers go from red to black, signaling their profitability

The deepening recession, which is sliding into a serious Depression is reinventing consumer spending habits, and I believe that excessive spending and impulse lavish gift giving is not part of our national psyche this year.

Those businesses that are holding on, hoping for that holiday breath of life, may be seriously disappointed this year.

Last week, The Wall Street Journal had a headline ” recovery likely in 2nd half”.

Goldman Sachs has reported obscene profits for the 2nd quarter, and has declared for a major stock market rally similar in intensity to the ” Jimmy Carter is gone” rally of the early 1980’s.

Is it really that easy? Is the worst over?

Should we all get out our cut up credit cards and glue them back together, so we can ” shop till we drop”?

I don’t think so, unless you have a hidden money tree growing in your basement. If you do, don’t forget your friend Charlie.

The recession is officially 19 months long as of July 09. This represents the longest recession since the early 1930’s, which evolved into the Great Depression.

Are the Journal and Goldman right ? Has the government porkbarrell stimulus fiasco really saved the day?

Is Joe Bidenright ” we have to spend money to keep from going broke?” What ever that means!!!

No! No! and Double No!

What I have been telling you for almost 2 years now, is “we broke the machine”. This is not a simple case of throwing money at the problem to create a new bubble, The system has derailed and you can only fix  a broken system by letting it die, and creating a new and stronger one.

The fabric and structure of our society is realigning. Society’s priorities are changing, and fundamental change takes a long time.

This protracted change is what they call a Depression, and clearing a depression takes time.

Time to heal and recover, Time to use up inventory and develop new demand where it no longer exists. A basic change in the format and the foundation that society builds upon.

Debt reduction.

New industry.

New demands.

The death of old habits and a return to basics.

Something major has occurred, and stimulating it won’t work. Over stimulation is what caused it  to break.

The shakeout is just beginning, The cure is a bitter pill to swallow, and includes, bankruptcies, business liquidations, deflation, defaults, and eventually a possible hyper inflation.

Stimulating a depressed economy is having the effect of delaying the inevitable.  A new auto industry based upon reduced labor costs and new innovative designs would have been the best of free enterprise born out of a G M  chapter 11. It would have allowed for the elimination of oppressive union contracts and make American ingenuity competitive with the World once again.

Instead a government bailout will result in a micro managed mis managed auto company kept alive by government funding to save the unions.

The green shoots that the Administration was trumpeting as the beginning of an economic renaissance,  ended up succumbing to too many weeds, too much watering, and way too much fertilizer.

The government is displaying a stiff upper lip, and has enlisted the aid of Wall Street in an attempt to put a positive spin upon a deteriorating market.

Companies are exceeding  lowered  expectations, with shrinking numbers of employees, reducing  overhead to make “less gross sales” look like more profits.

The stark reality is that the government  Bureau of Labor Statistics is cooking the books on unemployment and the state of the economy.

If you count unemployment as is used to be calculated, the picture that they paint as 9.5% unemployment is vastly different and much more ominous.

The real number of unemployed Americans is close to  30 million people, or nearly 20% of the work force. When you compare this statistic to the unemployment figure of approximately  25% during the Great Depression which occurred 3 or 4 years after the 1929 market crash, you can see more rough times ahead.

The bleak statistics are ominous because we are just at the beginning  of the spreading recession/depression.

The disparity between government statistics and reality are created by the following deceptive reporting methods.

#1. People who have used up their unemployment benefits and are no longer collecting, are not counted.

#2. The people who receive the extended emergency unemployment benefits granted by congress are not counted.

#3. They are taking small business job creation estimates and have projected them as actual jobs. In reality, the small businesses are getting taxed and squeezed out of business, or have been forced to contract, not expand .There is easily a large net loss not increase in small business hiring.

#4. People forced to take part time jobs to survive, are counted as employed by the government.

Any trip to shopping malls, Main Street America, and most commercial and industrial areas of any city will show dramatic and massive closing of small businesses.

AVAILABLE  and FOR Rent signs are everywhere and the numbers are growing. This is causing the beginning of another real estate mortgage crisis. The commercial property default,

And the slide continues.

More on the Prime Adjustable Rate Mortgage(PARM) later.