Hennessy’s View

This morning I felt no compulsion to get back in bad after turning off the alarm at 5:00.  I must be getting used to the practice.

I have been about 90 percent on writing down (Jotting) every commitment that comes into my world.  Oddly, the ones I’m most likely to overlook are the most obvious and visible duties. 

Ignoring the Big Rocks

For example, today my boss asked me to kick off a project that I’d been asking to do for some time.  That was about 9:00 this morning.  I didn’t Jott it until 2:00 p.m.  In between, I Jotted at least half a dozen tiny little tasks, like updating a blog entry and shifting ownership of an email distribution list I no longer manage.

I suspect that I’m willing to hold onto the big projects because I trust they’ll have obvious ticklers to alert me that I need to work on them.  That’s a dangerous assumption. Another project, which comes due on December 4, is STILL not in Jott, nor are any of the tasks associated with it.  My memory has proven insufficient on this project, as I’m now scrambling to tie up several loose ends.

Lesson Learned

The lesson is here is simple:  Take care of the Big Rocks; they’re no more likely to take care of themselves than are the little pebbles.

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The US Government is now on the hook for $7.7 trillion in bailouts and guarantees trying to stave another Great Depression [source].  Mathematically, the government’s scheme cannot work.

Bailout Costs in Perspective

World War II cost about $2.1 trillion in 1990 dollars, which I calculate to be $3.5 trillion in 2008 (assuming 2.8 percent inflation over the period.). (San Francisco Chronicle puts a $5 trillion tag on WWI, though.)  It took 50 years to pay off that debt.  Last year, the sum value of all goods produced in the United States was about $16 trillion.  Never in history the US government obligated half of the GDP in just 8 weeks.

Assuming the government can finance $7.7 trillion at 2.8 percent (assumed inflation) compounded annually on a 100 year note, the payment would be $230,144,154,619.15 per year.   (That’s $230 billion).  Cut the repayment period to 30 years, and the payment swells to $382 billion. 

Bailout Bill Will Never Be Repaid

Since we are already running an annual deficit of about $1 trillion, this new debt simply increase that debt.  In year 2, the deficit would swell to about $1.5 trillion.  In other words, creditors will quickly figure out that they will never be repaid.

Would you lend the government money at $2.8 knowing that only perfect circumstances will allow the government to survive?  I wouldn’t. 

Moody’s already hinted that Federal Reserve notes might drop to some credit rating below AAA in the next 8 years.  That prediction came in 2006 and was based on the costs of Social Security and Medicare.  That was about $8.7 trillion ago.  Expect US Treasuries to drop to AA, A, or worse in the next 24 months.

A lower rating will force the government to pay higher returns in order even out the risk.  Say Treasuries go to AA and 5 percent.  The payment on a 100 year note leaps from $230 billion to $387 billion. 

So what if the government raises taxes?

A tax increase to pay off this astronomical debt would decrease government income, thereby accelerating the debt accumulation.  George Bush’s tax cuts increase federal revenue about 10 percent, so repealing them would logically cut revenue 10 percent.  Again, creditors will never get paid.

Only Possible Solution

The only viable solution to the problem is one Barack and the Democrats will not consider:  eliminate all unconstitutional government departments, programs, and entitlements while holding the line on taxes. 

The Constitution prohibits the government from running Social Security, Medicare, Medicaid, the Department of Education, the Department of Homeland Security, and most of the agencies that sprang up in the 30s, 60s, and 70s.  Those programs account the fast majority of government spending, along with the service on the national debt.  (Read Article I of the US Constitution to see the exhaustive list of programs the government is allowed to run.  All other programs are unconstitutional.)  Those unconstitutional programs account for about 70 percent of the 2007 US Budget, or $2 trillion. 

Feeling nostalgic?  In 2005 and 2006, the deficit was shrinking and government revenues were increasing at about 14 percent per year, the fastest in 25 years.

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Let’s hope that this weeks sees Congress and Barack’s team come to their collective senses about bailouts.

Government intervention in the private problems afflicting General Motors, Chrysler, and the finance business effective reward poor leadership.  Leaving executive compensation off the table completely, the government should foster a healthy climate for business, but no more.

General Motors is not too big to fail; it’s too proud to do the right thing.  Wise liberals, like Seth Godin, and conservatives, like Mitt Romney, agree that the best thing for the GM, for the American economy, and for the government is to let GM file for bankruptcy protection.

Bankruptcy forces GM to reorganize itself into a viable business, which it currently is not.  Bankruptcy forces all of the US car makers and the UAW to restructure union contracts that reflect modern realities instead of childlike nostalgia.  Finally, bankruptcy is the only way to ensure that the financial accommodations are sufficient to fix GM’s problems long term.

The same principles apply to Chrysler and, possibly, to Ford.  I concentrate on GM because its CEO is the most boisterous in telling us that it our duty to save his job.  No dice.  Our duty is to help save his company from him.

P.S.  Seth Godin hints that the NY Times needs to restructure as certainly as GM does. And don’t miss this sobering commentary in the Financial Times of London (h/t Allahpundit)

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I received this e-mail this morning and thought I’d share it. 

We wanted to update you on the media reports regarding the Our Country Deserves Better Committee’s "Thank You Sarah Palin" television ad campaign that launches this week.  Both CNN and CNN International contacted us for interviews on the subject.  The Wall Street Journal ran an online report as did the publication Advertising Age.  MSNBC is conducting an interview with our spokesman, Mark Williams, on Monday morning.

MSNBC already televised one segment discussing our ad campaign, which we will show you below.

Before we do, we wanted to let you know we need to raise just $50,000 more to fund our TV ad buy to thank Gov. Sarah Palin and defend her from all the attacks that continue to be launched against her.  It’s obvious our efforts are striking a nerve, and those who are afraid of Palin’s appeal to America are determined to smear and destroy her.  We must fight back in honor of this dynamic, uplifting and passionate conservative leader.

You can help by making a contribution of $25, $50, $100, or $500.  Some of you will be able to afford a larger contribution of $1,000, $2,500 or $5,000.  Whatever you can afford we thank you for your support!  You can donate online – HERE.

And now we present to you the MSNBC television report that aired last week about this upcoming pro-Palin tv ad campaign:

Watch MSNBC on Pro-Palin Ad Campaign – HERE

The commercials seem wholly positive and thankful, not angry; exuding happiness is one of the key behavioral changes conservatives MUST MAKE if we’re to return to power in the United States. 

I am not affiliated with the group in any way, but I like their message. 

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