Chris Tomaras / Straight Talk / February 14, 2009

On last week’s show I spoke about the banking system and the Federal Reserve and their plan to try to stop the bleeding and stabilize the economy. This week I would like to continue in that same vein further explaining the stimulus bill and why the government feels so strongly that it be implemented and also the problems the country will face both now and in the future as a result.

On Monday evening President Obama addressed the nation in his first press conference touting the necessity of the stimulus bill and explaining its attributes, and also that there would be a surprise stimulus plan for the banks to be announced by the Treasury Secretary on Tuesday. The Presidents plea for saving the economy was like a broken record, as we heard that same bunch of nonsense from our former President and Treasury Secretary.

In his press conference the President explained that the problems we face are severe and must be seriously addressed immediately if the economy is to survive, while at the same time stressing that we must avoid any distracting political agendas. That obviously didn’t happen. I’ve never seen anything so ridiculous. You stand in front of a podium with an American flag behind you and scare the living daylights out of everyone crying the world is coming to an end and we hand them trillions of dollars, no questions asked.

The President explained that when people have a job, they purchase and invest, allowing companies to do the same and in turn, hire more workers as business expands. Sounds good! So let me ask you, has anyone inspired confidence in you to go out and spend, given what is occurring.

And while job creation is arguably the most important goal of the stimulus package, the parts of the bill which really stand out are the food stamp increases and extensions of unemployment benefits. Shocking! Just another step to turn this nation into a welfare state sooner than later.

I don’t mean to disparage those truly in need of jobs and food because I truly care about them, but we have millions who are bilking the system and this will just make it worse. If we pay for everybody to stay at home, why worry about creating jobs?

On Tuesday, Treasury Secretary Geithner announced that his plan for bailing out the banks, in order that they be able to provide loans to consumers will require additional funds to the tune of at least 1-2 trillion dollars. No big deal! What’s a trillion here or there.

On Wed he responded to Congressional questioning basically saying he could not yet reveal his plan, other than alerting everyone that he is going to need several trillion dollars at his disposal to spend as he sees fit and he will let us know the specific purpose for the money when he figures it out. Sound familiar? This was certainly a real a confidence builder.

Ok so what we know is this. The House version of the stimulus bill was loaded with a bunch of junk and the Senate version of the bill was loaded with less junk. And as a compromise they came up with a 787B version that is filled with a compromise of a bunch of junk. And it ends up a totally Democratic bill except for 3 weak Republicans in the Senate who sold out. The bill is 1100 pages and not one congressman read it.

As I have been saying since this stimulus nonsense began, it would end up a platform for the liberals to put through their special interest agendas disguised as stimulus. This is absolutely the largest boondoggle in the history of our country, handing the future of the country over to the government. Every American taxpayer should be outraged at this Obamination. Welcome Socialism. It’s here to stay. Our enemies don’t need to worry about destroying us. They just need to sit back and watch us destroy ourselves.

Congratulations to Nancy, Harry, Barney and the rest of the Flintstones. They pulled it off and American taxpayers now and in the future will be the benefactors. For those who wanted change, your wish has come true. Get ready because I do not think you’re going to like the outcome.

The more serious problem is that once the stimulus package is implemented, the President and his cronies are on the hot seat to see that it succeeds. I promise you that the only way this will happen is by throwing trillions of dollars more at the problem digging even a larger hole for our kids and grandkids.

According to the President and the Treasury Secretary, this is what they intend to accomplish.
1) They plan on producing 3.5 million new jobs
2) They plan on getting banks back to functioning and lending
3) And, they plan on stabilizing the housing market
4) And they plan on us living happily ever after

This kind of sounds like the parents of an addicted gambler saying they are going to pay for his gambling debts thinking that the kid is going to change for the better by them bailing him out..

It’s going to take several trillion dollars to do what they want to do and there is no assurance that it’s going to work seeing as how it has not worked for other countries in the past. This will be the biggest gamble our country has ever undertaken.

When the US and the world economies were going and blowing in the early 2000’s, manufacturing, productivity, spending and consumer confidence were off the charts. We’ve discussed on many occasions, the reasons for this false euphoria and the huge amount of leverage that gave us a totally false reading as to real and sustainable growth.
Because of that leverage, the number of long term jobs was far over-stated. Now millions of Americans are out of jobs or are in the process of losing jobs.

It’s one thing for the economy to contract when jobs are lost and then expand when jobs increase, all as part of the natural cycle. Several weeks ago I talked about the economic cycle going through recessions and periods of growth and the job of the Fed being, to not let it go too far beyond the peaks and the valleys.

Because the housing bubble created so many jobs that will never be replaced, the government cannot stimulate the economy in a healthy way to ever get back to where we were.

That means that future economic growth will be far less than the artificial growth of the past. This is not necessarily a bad thing but it will create much pain and American lifestyles are going to have to change.

While politicians talk about getting things back to normal they know too well that normal will take on a whole new look.

As they enact the stimulus bill, there will be more trillions of dollars to follow as the Treasury’s printing press will be working overtime.

We know that Government can throw huge amounts of money at the problem. We know that Government can eventually create some jobs. What we don’t know is what and how many jobs and whether or not people will ever again feel secure enough to borrow money and spend that money before our economy further deteriorates.
The stock market is showing little confidence in whether or not the stimulus plan will work and I really doubt that we will go back to a nation of over-indulgent debtors any time soon. The reason for this is that the Government has repeatedly expressed that they themselves are not certain that their stimulus plan will work yet at the same time are asking for trillions of dollars while asking us to trust them.

Should we be fortunate to survive this crisis we will then face the future problem of runaway inflation forcing interest rates to dramatically increase. The Fed would like to see lower interest rates right now but how can they pull it off with all of the debt they have to finance? If you haven’t noticed, interest rates are currently very low yet it has done nothing to stimulate borrowing. At the same time if rates in the future go up the question will be how high must they go to attract investors and where will the money come from given the fact that there is a lot less of it to go around.

We discussed that the economy will be much smaller because we will not be imposing the same over-indulgent misgivings of the past. Manufacturing and productivity will be at lower levels, yet the fact remains that the Treasury  is going to have to borrow an inordinate amount of money to cover the trillions of dollars to pay for their spending fix.
What will happen, being a smaller economy, is that we will have far fewer goods and as a result of the stimulus packages, far more dollars in the system seeking to buy those goods. In other words the supply and demand will be out of balance at the opposite extreme and in order to correct the problem, the Fed will have to take money out of the financial system and slow down spending by once again raising interest rates substantially which then will create a whole new set of insurmountable problems. Just think back to the early 80’s and the Carter Presidency.

I’ve often asked what do we want to look like when we come out on the other side? Do we want to continue to be a debtor nation that teaches its children to borrow and spend? I guess we’ll find out, because nobody on this earth knows the answer.

Last November I quoted a British Lawyer and writer by the name of Alexander Trytler and I think given what we are experiencing it would be appropriate to once again hear his words.

Trytler said:
A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal On last week’s show I spoke about the banking system and the Federal Reserve and their plan to try to stop the bleeding and stabilize the economy. This week I would like to continue in that same vein further explaining the stimulus bill and why the government feels so strongly that it be implemented and also the problems the country will face both now and in the future as a result.

On Monday evening President Obama addressed the nation in his first press conference touting the necessity of the stimulus bill and explaining its attributes, and also that there would be a surprise stimulus plan for the banks to be announced by the Treasury Secy on Tuesday. The Presidents plea for saving the economy was like a broken record, as we heard that same bunch of nonsense from our former President and Treasury Secretary.

In his press conference the President explained that the problems we face are severe and must be seriously addressed immediately if the economy is to survive, while at the same time stressing that we must avoid any distracting political agendas. That obviously didn’t happen. I’ve never seen anything so ridiculous. You stand in front of a podium with an American flag behind you and scare the living daylights out of everyone crying the world is coming to an end and we hand them trillions of dollars, no questions asked.

The President explained that when people have a job, they purchase and invest, allowing companies to do the same and in turn, hire more workers as business expands. Sounds good! So let me ask you, has anyone inspired confidence in you to go out and spend, given what is occurring.

And while job creation is arguably the most important goal of the stimulus package, the parts of the bill which really stand out are the food stamp increases and extensions of unemployment benefits. Shocking! Just another step to turn this nation into a welfare state sooner than later.

I don’t mean to disparage those truly in need of jobs and food because I truly care about them, but we have millions who are bilking the system and this will just make it worse. If we pay for everybody to stay at home, why worry about creating jobs?

On Tuesday, Treasury Secretary Geithner announced that his plan for bailing out the banks, in order that they be able to provide loans to consumers will require additional funds to the tune of at least 1-2 trillion dollars. No big deal! What’s a trillion here or there.

On Wed he responded to Congressional questioning basically saying he could not yet reveal his plan, other than alerting everyone that he is going to need several trillion dollars at his disposal to spend as he sees fit and he will let us know the specific purpose for the money when he figures it out. Sound familiar? This was certainly a real a confidence builder.

Ok so what we know is this. The House version of the stimulus bill was loaded with a bunch of junk and the Senate version of the bill was loaded with less junk. And as a compromise they came up with a 787B version that is filled with a compromise of a bunch of junk. And it ends up a totally Democratic bill except for 3 weak Republicans in the Senate who sold out. The bill is 1100 pages and not one congressman read it.

As I have been saying since this stimulus nonsense began, it would end up a platform for the liberals to put through their special interest agendas disguised as stimulus. This is absolutely the largest boondoggle in the history of our country, handing the future of the country over to the government. Every American taxpayer should be outraged at this Obamination. Welcome Socialism. It’s here to stay. Our enemies don’t need to worry about destroying us. They just need to sit back and watch us destroy ourselves.

Congratulations to Nancy, Harry, Barney and the rest of the Flintstones. They pulled it off and American taxpayers now and in the future will be the benefactors. For those who wanted change, your wish has come true. Get ready because I do not think you’re going to like the outcome.

The more serious problem is that once the stimulus package is implemented, the President and his cronies are on the hot seat to see that it succeeds. I promise you that the only way this will happen is by throwing trillions of dollars more at the problem digging even a larger hole for our kids and grandkids.

According to the President and the Treasury Secretary, this is what they intend to accomplish.
1) They plan on producing 3.5 million new jobs
2) They plan on getting banks back to functioning and lending
3) And, they plan on stabilizing the housing market
4) And they plan on us living happily ever after
This kind of sounds like the parents of an addicted gambler saying they are going to pay for his gambling debts thinking that the kid is going to change for the better by them bailing him out..

It’s going to take several trillion dollars to do what they want to do and there is no assurance that it’s going to work seeing as how it has not worked for other countries in the past. This will be the biggest gamble our country has ever undertaken.

When the US and the world economies were going and blowing in the early 2000’s, manufacturing, productivity, spending and consumer confidence were off the charts. We’ve discussed on many occasions, the reasons for this false euphoria and the huge amount of leverage that gave us a totally false reading as to real and sustainable growth.
Because of that leverage, the number of long term jobs was far over-stated. Now millions of Americans are out of jobs or are in the process of losing jobs.

It’s one thing for the economy to contract when jobs are lost and then expand when jobs increase, all as part of the natural cycle. Several weeks ago I talked about the economic cycle going through recessions and periods of growth and the job of the Fed being, to not let it go too far beyond the peaks and the valleys.

Because the housing bubble created so many jobs that will never be replaced, the government cannot stimulate the economy in a healthy way to ever get back to where we were.

That means that future economic growth will be far less than the artificial growth of the past. This is not necessarily a bad thing but it will create much pain and American lifestyles are going to have to change.

While politicians talk about getting things back to normal they know too well that normal will take on a whole new look.

As they enact the stimulus bill, there will be more trillions of dollars to follow as the Treasury’s printing press will be working overtime.

We know that Government can throw huge amounts of money at the problem. We know that Government can eventually create some jobs. What we don’t know is what and how many jobs and whether or not people will ever again feel secure enough to borrow money and spend that money before our economy further deteriorates.

The stock market is showing little confidence in whether or not the stimulus plan will work and I really doubt that we will go back to a nation of over-indulgent debtors any time soon. The reason for this is that the Government has repeatedly expressed that they themselves are not certain that their stimulus plan will work yet at the same time are asking for trillions of dollars while asking us to trust them. Ohhh K

Should we be fortunate to survive this crisis we will then face the future problem of runaway inflation forcing interest rates to dramatically increase. The Fed would like to see lower interest rates right now but how can they pull it off with all of the debt they have to finance? If you haven’t noticed, interest rates are currently very low yet it has done nothing to stimulate borrowing. At the same time if rates in the future go up the question will be how high must they go to attract investors and where will the money come from given the fact that there is a lot less of it to go around.

We discussed that the economy will be much smaller because we will not be imposing the same over-indulgent misgivings of the past. Manufacturing and productivity will be at lower levels, yet the fact remains that the Treasury  is going to have to borrow an inordinate amount of money to cover the trillions of dollars to pay for their spending fix.
What will happen, being a smaller economy, is that we will have far fewer goods and as a result of the stimulus packages, far more dollars in the system seeking to buy those goods. In other words the supply and demand will be out of balance at the opposite extreme and in order to correct the problem, the Fed will have to take money out of the financial system and slow down spending by once again raising interest rates substantially which then will create a whole new set of insurmountable problems. Just think back to the early 80’s and the Carter Presidency.

I’ve often asked what do we want to look like when we come out on the other side? Do we want to continue to be a debtor nation that teaches its children to borrow and spend? I guess we’ll find out, because nobody on this earth knows the answer.

Last November I quoted a British Lawyer and writer by the name of Alexander Trytler and I think given what we are experiencing it would be appropriate to once again hear his words.

Trytler said:
A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from policy, which is always followed by a dictatorship.

The average age of the world’s greatest civilizations from the beginning of history has been about 200 years. During those 200 years, these nations always progressed through the following sequence:
• From bondage to spiritual faith;
• From spiritual faith to great courage;
• From courage to liberty;
• From liberty to abundance;
• From abundance to complacency;
• From complacency to apathy;
• From apathy to dependence;
And, the final stage is from dependence back into to bondage.

And that’s this week’s straight talk.