Will the Stupidity of the American People Ever End?
by Al Martin
(October 28) The death of Senator Paul Wellstone was a phenomenal stroke of luck for the Republicans. Wellstone was the Democrats' best hope to hold onto control of the Senate. According to the polls, he was going to be reelected. Since his wife was also killed, she won't be able to stand in for him. This is unlike the Mel Carnahan situation in which he also died in a plane crash but his wife was able to take his place. It should be remembered that John Ashcroft was actually defeated by a dead guy (Mel Carnahan) in Missouri. That demonstrates the popularity of Ashcroft, the current Gauleiter of the Beltway. The laws are a little unclear - but what a stroke of luck for the Republicans.
It should be remembered that Wellstone also was the chairman of the new securities reform committee. And it was Wellstone who was attempting to block the nomination of the notorious William Webster, former CIA and FBI head and the Best Friend of Big Business and the Big Accounting Firms, to be the new chairman of the SEC/ Accounting "Oversight" Commission.
If the Republicans wanted to take anybody out, this was THE guy.
Wellstone was also the lead voice in the Senate, pushing for the investigation of the missing $350 million from the Bureau of Indian Affairs. This is the affair in which Secretary of Interior Gale Norton has twice taken the Fifth Amendment and refused to answer questions about how $350 million disappeared late in the Reagan-Bush administration. Judge Lamberth cited her for contempt, but when do they send her to jail? It should also be remembered that Lamberth was a Republican appointed judge.
Wellstone was a very significant player, and if there was one target (the most valuable guy to eliminate), it would be Wellstone. This could be the actual trump card in who will control the Senate.
It's interesting to note that after the reports came out that he had been killed, the markets rallied 120 points and the market pundits called it the "Wellstone Rally." The rally was generated from retail buying, i.e. small investors, and the sellers against it were the shadowy offshore Republican short sellers.
This is evidence that the average American still swallows the Republican-generated idea that Republican administrations are good for markets.
The Smart Republican Money knows that Republican administrations are NOT good for the market and so they were selling into the rally. They were short their own party knowing that if through the death of Wellstone, the Congress becomes a Rubber Stamp Congress, it is going to be more even worse with more Bushonomics.
In other words, the Smart Republican Money knows that Republican Administrations are bad for markets and that's why they go short during their own party's administrations. Yet they continually proselytize by putting out pundits like the Larry Kudlows and Bill Kristols of this world who have deceived the American people (the little people) for decades into believing that Republican administrations are pro-business and good for the economy.
Hopefully the American people are finding out that what is good for Big Business is not good for the small shareholder.
There is a lesson to be learned here, but the little people are still bidding up the market - in anticipation of a Republican controlled Congress.
That's why I keep asking - will the stupidity of the American People ever end?
If the little shareholders bidding up the market knew who was selling against them, if they knew that it was the Republican Smart Money, maybe they'd get a clue. The problem is that they don't know. And that's why I write this column.
In other news, even though 41% of the American people are concerned about the economy and what Bushonomics is doing to us (a record high percentage, by the way), public opinion polls still indicate overwhelming support for George Bush - even with those who say their number one concern is the economy rather than terrorism. And even though they know what Bushonomics is doing to the economy, they still intend to vote for Republicans.
We simply cannot understand the Stupid Factor.
We understand that, according to the polls, the American people are by and large fearful, confused and depressed, as witnessed by the 30% increase in the use of Prozac since the election of George Bush. Nonetheless people need to get a grip. It is very important that the Democrats remain in control of the Senate in the coming election. Otherwise we are going to have a George Bush with a Rubber Stamp Congress, an Imperial Congress, to coin a phrase.
It is our belief, based on Beltway scuttlebutt, that if Republicans do regain control of the Senate and it does become an Imperial Senate, it is entirely likely that Secretary of State Colin Powell and the little band of "moderates" coalesced around him would leave and would be quickly replaced by people from the Hard Right.
In that scenario, the Bush Administration would quickly bring back the few pieces of legislation that had been defeated, such as the National ID Card legislation, the overturning of Posse Comitatus legislation, and undoubtedly the Homeland Security legislation. We are reiterating what we have said before, as we get closer to the election, because it is important that people understand this.
People ask me what is the central problem with Bushonomics and of course it is that you cannot increase deficit spending - indefinitely - while also consistently reducing taxes. It simply doesn't work. This is the key problem of Bushonomics, to wit, Bush signed the Defense Appropriations bill for 2003 -- $430 billion plus on the same day he signed for $21 billion of supplemental defense spending. This must be added to the $389 billion spent in fiscal 2001 on defense, including $38 billion in supplemental spending on homeland security.
If Bush gets a Republican-controlled Congress and the Homeland Security bill is passed, he would also get a separate $40 billion for Homeland Security, which would receive a budget of its own. They would stop financing it supplementally, in other words.
Since George Bush has been elected till the end of fiscal year 2003, we would have spent $1 trillion on defense, security, military and intelligence appropriations. Think about that: one trillion dollars in two and a half years. It's absolutely incredible.
I have always believed that defense expenditures must be put into the context of the impending threat, and this should always be reiterated. We are now spending as much money on defense as we did in 1986, when the Defense Department called it the Ultimate Credible Threat against the United States. "Credible" did not include global thermonuclear war, but it included the possible attack and invasion of the continental United States by as many as 200 crack divisions of Soviet troops -- through Alaska and infiltration through Central and South America. It was also envisioned that this would be backed by 20,000 T-72 and T-80 tanks and supported by 5000 warplanes. With the limited use of low-yield thermonuclear weapons, it was envisioned that there would be 30-40 million casualties.
That was the maximum credible scenario, the maximum envisioned threat. It was when the Soviet Union's essential military power was at its absolute peak. Now we are spending the same amount of money on defense, wherein the maximum would be increased terrorism attacks against the United States in a haphazard fashion involving at the very most no more than 4000 terrorists at any time, whose capability would be to destroy a dozen office buildings or possibly poisoning the water supply which would be quickly contained. In any case, the maximum sustainable casualties in one terrorist attack may be 30,000 - 40,000 people.
Based on the kind of money we've spent in the past, the damage would have to be a thousand times greater than any damage we face today from any type of military incursion to justify the current level of military expenditures.
It should be noted that in the immediate aftermath of 9-11, the Bush Administration first told the American people that we were going to respond, that there would be a limited military force in Afghanistan, that we would capture or kill Osama bin Laden, that we will smash the al Qaeda organization. They salso said it would be a 90 day operation and it would cost the American taxpayers $3 billion.
Here we are 14 months later and $30 billion of the American taxpayers money later (not $3 billion), and we have still failed to kill or capture Osama bin Laden. In fact, we don't even know where he is. We have failed to quell the al Qaeda organization and according to the Congressional Budget Office, we will be in Afghanistan for years at the cost of $2 billion a month. It becomes a planned program of failure once again.
Knowing that the economy was already falling apart by 9-11, Bush was desperate to shift the focus away from the economy (and what Bushonomics does to the economy) and back to foreign affairs, which has always been considered a Republican strong point.
Bush pushed the Department of Defense (you remember all the leaks that came out after the event in which the generals were very upset about White House pressure), which correctly said that we weren't ready and that our defense posture is such that we simply can't mount an invasion that quickly. Furthermore the Department of Defense had almost no intelligence about Afghanistan and no "friend or foe" material with which to instruct our troops or even maps of the country.
The Department of Defense was right (and I don't know why General Franks, the theater commander, didn't resign; he must have just been concerned about his pension). He said you've got to commit enough troops to seal the borders of the country to prevent these terrorists escaping to neighboring friendly countries.
The Bush Administration was A. Scared about how much money it would cost and B. Even though the Republicans love war, they have no balls when it comes to seeing the body bags coming home. The whole thing has been bungled from the beginning. Then you interject into that mix the fact that the American weapons systems don't work. Remember we've lost 53 helicopters, and they haven't had to shoot one missile. And therein is the second problem. We have ordinance that doesn't work, bombs that don't explode, mines that either don't explode or explode prematurely, Cruise and Tomahawk missiles only 38% of which can hit their targets. The other glaring problem is that the US continues to purchase weapons systems that don't work in exchange for which defense contractors give enormous amounts of money to the Republican Party.
And here's how it works. Every time one of our Apache helicopters crashes and eight or nine people get killed, those eight or nine American soldiers die for that one, two or three million dollars that that defense contractor contributed to some Republican offshore account, from the taxpayers money that went on to build that helicopter.
You could call it Republican Blood Money. Our troops are paying for it.
It should also be noted that this Bush Administration has advisors who are all "chicken hawks," those who want to get us into war, but who haven't tasted it themselves. This is the ultimate hypocrisy.
We have a $200 billion deficit this year and if we get involved with a war in Iraq, and Bush gets his Rubber Stamp Congress, we are potentially looking at a $350 billion federal budget deficit for fiscal year 2003. Even though the United States only services 40% of its debt (thanks to BFLAP, i.e. Bush Fantasy Land Accounting Principles), eventually budget deficits won't be serviced anymore.
Treasury Secretary O'Neill was asked on CNBC -- since Bush was elected, all of the Treasury contingency reserves have disappeared, the stand by letters of credit are maxed out, the Federal Reserve's currency stabilization fund is gone, so where have these billions gone?
And O'Neill just shrugged his shoulders and said I have no idea.
Bush Administrations will and have sapped the money out. These are required reserves that the Treasury, other federal agencies, and the Federal Reserve must maintain by law. Finally people are asking -- where does the money go? And where has the money gone?
The money is usually being filtered through the Department of Defense or through Congressional or White House spending authorization accounts, and it's simply being looped back into the Treasury to be counted as general revenue in an effort to disguise (one of the key components of BFLAP) the true amount of the budget deficits which are created by BFLAP. That's the problem.
This year's fiscal budget was simply listed as "$200+ billion." Secretary O'Neill stated that from now on we are simply going to state a number and then say plus or minus, because we don't know. They don't know where the money goes and they can't account for it.
Why didn't Mainstream Media touch that?
Why wasn't that a scandal when O'Neill came out several months ago and said that the Department of Treasury has $500 billion missing since the election of George Bush and we don't know where it went?
And NOBODY in the Mainstream Media went with it. Why? Because the people holding the levers of power are making so much money that nobody has a vested interest to ask any questions.
O'Neill was asked -- when is this all going to fall apart? This was referring to the impact of 12 years of Bushonomics I (1980-1992) and the renewed deleterious effects of Bushonomics II (2000 - ?).
O'Neill answered that it all falls apart when we can't service the debt anymore.
It should be noted that prior to the Reagan Bush Regime, the United States Government had always serviced 100% of its debt since the first issuance of US Treasury bonds in 1795. It was during the Reagan Bush years with the advent of BFLAP, wherein the government began to service less and less of its debt. By the end of the Reagan Bush Regime, the United States was only servicing, and still to this day services, only 40% of its debt at any given time. The other 60% of the debt we are not servicing is debt that has been issued in forms of restricted US Government Bonds or Future Contingency Bonds.
If the United States had to service 100% of our outstanding debt, it would commit 53% of the total budget to service that debt. That would effectively cause the United States Government to collapse insofar as 48% of the budget is comprised of non-discretionary spending and 13% of the budget is comprised of necessary discretionary spending.
If the US was forced to begin to service all of its debt it simply could not do so and it would collapse. It should be noted that sometime in the future as Secretary O'Neill pointed out (with furrowed brows), the tab comes due.
Here's an analogy. Bushonomics has created for the United States a variable interest only mortgage with an ever-expanding balloon payment. It's as if a homeowner was using 40% of his income to pay interest on an interest-only mortgage on his house, then continuously expanding the balloon payment in order to service the other 60% of the debt.
Every year there is a budget deficit, the US Government's debt to equity ratio diminishes. The current accrual of debt we are not paying constitutes about $240 billion per year.
The Economic Policy Institute issued a statistic that the total aggregate debt (National Debt) of the United States by the year 2032 would be $100 trillion.
This figure, $100 trillion, exceeds the aggregate assets of the entire planet.
The current aggregate assets of the entire planet are only about $68 trillion. That means all of the money, all of the real estate, all of the gold, all of the oil, everything. Even now the actual amount of US debt on a realized basis equals fully ¼ of the aggregate net worth of the entire planet.
If the entire earth could be converted to a sea of money, it still would not pay the US debt.
That's why we have consistently urged the Bush Regime to spend more money on space exploration, particularly in terms of setting up mining colonies on the Moon and the exploration and eventual terra-forming of Mars because we are going to need other planets in the Solar System to mortgage by 2032 to pay the debt.
Then the Bush Cabal will have to go off planet.
First, under Reaganomics, it was Off-Budget Debt.
Eventually, under Bushonomics, the Off-Budget Debt will have to turn into Off-World debt.
The following is an update on the Al Martin Raw.com Theoretical Stock Portfolio, which, as our readers may know, went short since the election of George Bush, since that's what you do, knowing the havoc that Bushonomics visits upon our economy.
This portfolio is divided into intermediate and long-term holdings of securities with a 5% cash reserve and 15% committed to short term trading activities. On the day when Bush was elected, we recommended liquidating all securities within the intermediate and long-term section of our portfolio and recommended selected gold stocks, REITs and selected long-term US Treasury Bond funds.
To date, the Al Martin Raw.com Model Portfolio, in fixed holdings, has shown an increase of 28% (inclusive of capital gains). We would reiterate our original selection of Barricks Gold as our central gold stock. Barricks is up 24% from the time we recommended it. We had originally recommended it over Newmont Mining because Barricks has much more limited political risk vis-à-vis where Barricks principal producing mines are located and the fact that Barricks has been able to maintain $162 per ounce net production cost per ounce of gold. Furthermore we agree with Barricks gold strategy of reducing future hedging operations of production.
Barricks Gold continues to increase production by approximately 2.1 million ounces per year. Its principal plants are much more modern than almost any other gold operation and the company has shown superb management. We continue to recommend holding Barricks as the feature gold stock of our intermediate and long term portfolio.
The next item is not a joke. Senator John McCain, quoting from a conversation with Attorney General John Ashcroft said that, according to the Attorney General, we would never have complete security in the United States -- until every citizen is frightened of being thrown into jail.
Furthermore, in the conversation, Ashcroft admitted that although they've backed away from the TIPS Program (The Department of Justice's infamous "Rat on a Neighbor" Program), they compiled the names of more than a million American citizens (of the blonde haired, blue eyed Smith and Jones types -- not of the Ahmed or Muhammed variety).
The Attorney General and the Department of Justice feels that these individuals would be "potentially seditious," as the State continues to tighten its control.
In the immortal words of George Bush Sr., "If the truth gives you indigestion, simply take more Prozac."
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