By Charles Payne, CEO & Principal Analyst
4/8/2011 9:30:08 AM Eastern Time
It shouldn't be the case, but what's happening today in Washington is a deeply complicated maze that intertwines politics as usual with fresh thinking, cowardice, and simple stupidity. I'm talking the inability to hammer together a late budget because Democrats and Republicans are $7.0 billion apart. One side says it is okay with $33.0 billion in cuts, the other is taking the bold approach of $40.0 billion in cuts. Yikes! We are talking about a drop in the bucket in a $3.8 trillion budget. Let's not forget how often we were reminded on the campaign trail the system was supposedly littered with waste, fraud, and abuse. Of course, the President was supposed to go through the budget and tax code "line by line", and that never really happened, either.
I have a beef with both sides of the aisle. It's so interesting that the more politicians watch and tilt at poll numbers the more beholden they become to those poll numbers. The old guard on both sides has already been sucked into that vortex, but thus far those freshmen "Tea Party" candidates are holding the line much to the chagrin of powerful elites from New York, DC, and Hollywood. But how much longer can the Tea Party guys hold out with their poll numbers diving? The political pendulum seems to swing back and forth at the speed of light these days. But, these freshmen knew the deal and seem okay coming in... In fact I got the impression they would consider it a badge of honor to stick to commonsense and tough choices rather than pander to pollsters and media.
On that note, the Tea Party folks were put in an odd jam yesterday when the House passed another continuing resolution (CR) to keep the government moving for a week. The measure passed the House 247 - 181, but six diehard Tea Partiers voted against the same bill President Obama has said he would veto. Strange bedfellows? There aren't many things that Michelle Bachmann and Mr. Obama agree on but it seems extending the budget to keep the government going for another week is one of them. Of course they oppose the bill for different reasons. Ironically, 16 Democrats voted for the measure, which would also cut $12.0 billion from the budget. I normally would be against the bill, too, but adding in funding for the troops for the rest of the year is commendable.
Hearing people that hate the U.S. military and U.S. power chime in about those poor soldiers is disgusting and disingenuous, yet they finally have a point. I want to see soldiers get paid, but draw the line there only because everyone could get paid and then some if there ever was a dedicated attempt to remove waste, fraud, and abuse. Spending is out of control, and the federal government is bloated. Every job is not essential and in fact, we could discover just how nonessential many jobs are. Since September 2008, local governments have lost 416,000 jobs, and while it's painful most of these governments continue to function.
The White House loves to point to corporate America's success yet doesn't acknowledge how swiftly businesses moved into survival mode. Survival mode is a euphemism for letting people go.
So, I get how complicated the gamesmanship can be and I understand why some want to cut to the chase, but I thought the $12.0 billion CR was a great way to lob this grenade back to the Executive Branch.
I'm reminded of the "Lord of the Flies" where a group of British schoolboys stranded on an island descended and surrendered to the worst traits lurking in our beings. With their schoolmaster they worked as a unit, without there were power grabs, intimidation, and war. I wonder when the White House is going to step in to take command and responsibility for the budget. It is one thing to try to stay above the fray in the hopes of not getting hit with shrapnel while avoiding tough decisions (tough for them not me), but how about really stepping in to bring order? It's all about the blame game for now, later it could be about the slaughter.
I read an interesting piece about Germany having to defend its actions with respect to the Libyan war. Its European counterparts, also known as the Keystone Kops, are still smarting that the great and powerful Germans haven't helped. (Germany did send an extra squadron of AWACs to Afghanistan so NATO could free up theirs for Libya.) As it turns out, Libya is saying they are glad they haven't gotten involved in what is a mess in the desert. Moreover, if the plan was to stop savagery and prevent "countless innocent deaths" then it's off course big-time. In addition to mounting civilian causalities, there are reports Libyan rebels are torturing and murdering those loyal to Kaddafi.
One German official has likened the situation to the "Jacobin fervor" that occurred after the French Revolution. The Jacobin Club was founded in August 1789 in France by a group of elites and artisans, and by 1791 there were 900 "clubs."
The mob in Paris attacked the Tuileries palace on August 10, 1792. The insurgency was too much for the Swiss Guard, who despite their training and discipline, saw 600 of their 950 members killed while trying to surrender. The Jacobin fervor was bloodthirsty, and among other things oversaw the execution of Louis XVI.
Then, these agents of terror sent thousands to the guillotine as they spread murder and mayhem during the September Massacre.
Perhaps the French see parallels and don't have a problem with it, although it goes completely counter to the stated mission. I think it's helpful to understand this page in history because I think a second term for President Obama would see an economic reign of terror with environmentalists and other non-business types resurrecting the spirits of Jacobin Clubs. Plummeting poll numbers, including only 38% saying he deserves a second term and 55% wanting someone else in the White House, feels like a second term is not a done deal though.
In the meantime, NATO is trying to lay the groundwork for slaughter but hasn't been able to get that right. In the name of humanity I say thank goodness.
Oiling the Machine
Consumer credit climbed again, this time by 3.8% to $7.6 billion last month. Credit cards did actually dip to $794.0 billion from $796.7 billion, while non-revolving debt (auto and student loans) edged higher to $1.626 trillion from $1.615 trillion. These are the kinds of loans banks have been accused of not making, so this is great news only because it means banks see daylight and are responding to that instead of a boot on the neck. Banks are still walking scared knowing a Jacobin fervor could await them in another two years to go along with the disastrous financial regulatory reform law(s).
I haven't followed it closely but since millions of U.S. taxpayer dollars have been poured into the case, I'm excited the Barry Bonds case is in the hands of the jury. What do you think? Was this a smart and necessary case? Will the government win or lose? Is Barry's childhood friend the best friend ever?
Despite crude oil surging to levels that I thought would automatically put the stock market in panic mode; stocks are ready to explode out of the gate this morning. Just goes to show that once we see it coming it is okay, for the moment.
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