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Blog Watch: Decisions Lie Ahead

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(Comment on this article at http://www.financialwire.net/2010/06/29/burrell-8/)

-- Socio-Political Commentary --

June 29, 2010 (FinancialWire) (Investrend Forums Syndicate) (By Bud Burrell) -- Editor's note: Socio-political events and developments have a direct impact on the market. In the interest of providing shareholders and investors with a broad spectrum of information in regard to such potentially impactful occurrences, FinancialWire(tm) contributor, "The Political Prophet" (R), offers advanced insight with potential ramifications for virtually the entire market spectrum, perhaps best represented by bellwether-type ETFs such as the Health Care Select Sector SPDR ETF (NYSE: XLV), the Market Vectors Agribusiness ETF (NYSE: MOO), the SPDR Gold Trust (NYSE: GLD), the iPath Goldman Sachs Crude Oil ETF (NYSE: OIL), the iShares Dow Jones US Real Estate ETF (NYSE: IYR), the PowerShares Global Progressive Transportation Portfolio ETF (NASDAQ: PTRP), the Claymore U.S. Capital Markets Bond ETF (NYSE: UBD), the Technology Select Sector SPDR ETF (NYSE: XLK), the Industrial Select Sector SPDR ETF (NYSE: XLI) and the PowerShares DB US Dollar Index Bullish Fund (NYSE: UUP), to name just a few. Here, FinancialWire(tm) contributor Bud Burrell offers some of his thoughts regarding recent events:

Last week, we saw the Federal Government jam a series of actions down the throats of the American people, the unintended consequences of which can be felt at a visceral level. This administration seems determined to drive the American people into a series of decisions that they seem unready to make, but for which they are being forced to act whether they are ready or not.

Some of you may be familiar of the story of Reagan taking the Russian Premier to an American grocery store. Shown the immense arrays of products and foods, he left there convinced that Russia could never defeat the United States. In the nineties, the U.S. had a significant influx of Russian and Eastern satellite country immigrants flow into this country at an unprecedented level. I asked a gifted psychiatrist what their most serious integration problem was and he described the grocery store problem from a different perspective.

Those immigrants came from non-free-market economies with little or no choice. When they entered the same kind of grocery store we all take of granted, they would freeze up with all the alternatives, literally experiencing a form of decision paralysis. Some could not overcome it, and withdrew to close family and friend units.

Why do I bring this up? Today, the American people are facing a similar decision paralysis, one leading them into a form of psychosis. Our systems are in breakdown, whether it is out of control government spending broken by debt and entitlement programs, illegal immigration, staggering crime, a broken legal system, wholesale dishonesty and a breakdown of human courtesy. Add a catastrophe like the Gulf oil well break, and what you have is a need for clear thinking and elemental leadership, which appears right now to be non-existent.

Start with basic courtesy. Many years ago, a friend of mine was put into a difficult situation where a casual female acquaintance related to someone he knew as an acquaintance behaved badly in a social situation. She needed a threat to bring another relationship target to heel, and he was the bait without his knowledge. It worked for her. The friend lost a wasted weekend, learned a valuable lesson, but otherwise viewed it as a personal matter, and said nothing to anyone. In a thumbnail sketch of a converse situation, I could describe our political system in similar terms, as I look at the disgraceful trial of Governor Blagojevich, wherein I see a user who has taken to the opposite tack, attempting to taint individuals who were former allies in the open, possibly with less than credible motives.

Our government seems unable to open its mouth without lying. Living in the state of Arizona, I can tell you we have a crisis created by the executive branch unilaterally choosing to selectively fail to enforce crucial immigration laws that are bankrupting the State, while endangering the lives of common citizens. Arizona determined that in order to survive, it needed to pass complimentary legislation to aid the federal government in enforcing laws pertaining to illegal immigrants, and it passed a law that was actually more liberal than the federal law it was forced to aid. Now the President has actually lied to Senator Kyl, telling him first that there would be no border enforcement support until he got comprehensive immigration reform, which he then denied after Kyl told Arizona voters what was going on. You can choose to assess who the liar is.

Louisiana faces a crisis that could literally destroy it as a functioning economic entity. The Gulf oil spill threatens not only the core oil and gas industries that are the foundation of the State's economic activity, they also face loss of their two next largest segments, those being fisheries and tourism. Governor Jindal is an astute and honest man in a job not known historically for attracting such people. He saw the spill crisis, and he wanted to move immediately to ameliorate the horrific impact of this careless and irresponsible failure of BP to follow proper safety procedures. He immediately asked to bring in skimmers from other parts of the world, to get immediately to work building sand berms and barriers to limit the spread of the discharged oil from the broken well head, to involve his State's resources along with those of adjacent states that faced similar catastrophic dangers.

Why did that even occur? The Obama administration barred drilling in shallow waters in the Gulf, thereby driving the major oil companies into deep water with attendant risks everyone was aware of. He could have allowed drilling in waters under 500 feet in depth, or in Alaska, or in the Bakken play in Montana, but no, he wanted to begin to shut down access to oil domestically as part of his environmental agenda, based on worthless science, to drive his big government agenda for a cap and trade program that would shatter the American economy. So how long did it take the federal government to act?

They did nothing for 9 days, then blocked any State action or foreign help with skimmers or berms for another 8 weeks. Short of a major miracle, the fisheries and tourism industries of Louisiana are dead for 20 or more years, and its oil and gas industry is shut down and permanently crippled for the forseeable future for an ill-conceived political attempt to drive drilling rigs out of the Gulf, to locations elsewhere in the World where it might benefit Soros and other Obama supporters. Oil platforms are expensive to build and maintain, and they can easily cost upwards of $500,000 a day to keep idle. What happens? The Oil companies move them where they can be used now, and America is the loser.

As if this weren't enough, this administration would endanger not only our economy, but our basic financial foundation. The Federal Reserve spoke last Friday of injecting an additional $5 Trillion dollars of liquidity into the economy, basically devaluing the U.S. dollar by one-third in a single move. Obama would have the U.S. dollar trade at parity with the Peso. This is a none too subtle move on the part of the hard left to drive our economy into a meltdown that they can use to expand federal power, consistent with the Alinsky, Cloward and Piven agenda.

The Group of Eight has expressed their concern with the economic actions of the U.S. with regard to its profligate spending, which has passed the tipping point where it can be reversed without the American people paying a terrible and long drawn out price to re-establish a free market economy. We now have total debt and unfunded liabilities in excess of $130 Trillion. That cannot be serviced or retired from an economy whose GDP is only $14 Trillion. Prime Minister Merkel heard the U.S. plea that Europe not stop stimulating its economy, and they firmly slammed Obama for his irresponsible spending here, at a time when they are cutting government spending, reducing benefits, pushing out retirement ages, raising taxes and cutting back health care benefits.

Does anyone get where we are now? We are on the event horizon edge of an economic black hole.

Source: Investrend Weblogs (http://www.investrendweblogs.net/bburrell/2010/06/25/dangerous-week/).

(Go to http://www.financialwire.net/?s=brrllbby for other recent commentaries by Bud Burrell.)

Bud Burrell's experience spans a diverse spectrum, including service with the U.S. Military in the Special Forces, as a Finance Officer and as a Project Finance & Accounting Officer. Burrell also pursued studies in fine arts, the Renaissance, Russian history, and Chinese culture. Following years of working on Wall Street, he worked with specialty and derivative money management consulting and research and development in IT and AI. Since then, Burrell has worked globally with major development stage companies from the IT, energy, alternative energy, bio-pharma, and general technology arenas, as well as on counterfeiting and financial fraud scandals.

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