Merry Christmas, Happy Hanukkah and A Happy New Year! I usually end my final missive of the year with these wishes. But, since the rest of this e-mail is loaded with lumps of coal, I thought I would start out with the happier note! Now, on to details that could just as easily have been provided by Ebenezer Scrooge.

Post-Thanksgiving, there were basically two issues remaining for Congress this year. I will address each separately:

Funding the Government: A bill to fund the government for the balance of this fiscal year passed both Houses on a bipartisan vote and is expected to be signed by the President very soon. The total spending in this bill was determined by the “debt limit agreement” in August. So, all that had to be worked out were the specifics within that number ($1.043 trillion). So, that means no government shutdowns before September 30, 2012. Additionally, it is standard practice in election years to fund the government from October 1st through at least the end of November on a Continuing Resolution (CR) rather than try to get enormous spending bills done weeks before an election. So, I expect that next year… Read More

Europe’s Effect: Europe is a long ways away. It may seem like what happens there can’t be of that much consequence to us in America. But, that’s not true. Just as conflicts that ignited in Europe in the 20th century dragged us into two world wars, the effects of economic unrest on that continent will involve us, as well – whether we like it or not.

To coin a phrase, Europe is in economic deep doo-doo. They are suffering a huge crisis born of too much debt of which the causes and potential cures are far too complex for a meaningful analysis in this short format. Suffice it to say that Europeans have given themselves a lot of socialistic benefits without paying for them, instead choosing to borrow the money. The resulting union-dominated socialism has led to very little growth. Italy, for example, has had zero GDP growth in 10 years! Without GDP growth, you cannot grow wages, benefits, government, or social and environmental policy. But, they have tried to do all of that. Germany is the most prosperous country in Europe, but even their prosperity has not been pure. Note that 50% of all of Germany’s products are exported; most… Read More

Regular readers know that I am not surprised by the failure of the 12 members of the “Super Committee” to come up with an agreement for $1.2 trillion in deficit reduction over the next 10 years. But, I am surprised that Speaker Boehner and Senate Majority Leader Reid did not come up with something. Now, because there was no agreement, the so-called “sequester” or automatic cuts are scheduled to become law on January 1, 2012, although the cuts do not actually begin to occur until one year later.

So, you might ask, what happens next? Because of the 23 Senate Democrats who are up for reelection next year, the Senate majority is extremely risk averse. They literally seem as though they don’t want to vote on anything with any controversy for fear that either a yes vote or a no vote will cost them popular support at home. Dozens of bills that have passed the House, some by large bipartisan majorities, have not and apparently will not even be considered in the Senate. So, it looks like nothing much is going to happen in dealing with the deficit for some time to come, right?

Actually, not right. Congress has become even more… Read More

Sing again: The last laptop report, entitled “Song of the Shopkeeper”, engendered more positive responses than anything I have written in a couple of years. It wound up being published as a front section editorial in The Washington Times, and received some radio coverage as well. It seems that almost everyone has a “shopkeeper” in their family’s past or present or knows of one. I thank you all for your comments and stories. I am honored to give voice to all you shopkeepers out there. One regular reader of these missives suggested a quote that I should have put in the original tome. Napoleon Bonaparte is said to have once derisively described England as, “a nation of shopkeepers”. It was meant as an insult. I wonder if Napoleon remembered these words when his army was later defeated by those very same “shopkeepers” at the Battle of Waterloo?

The Numbers are In: The federal deficit for the fiscal year ending September 30, 2012 was $1.298 trillion. That is the second highest deficit ever. Here is a chart of the deficits for the last 5 years, in billions of dollars:… Read More

I’m a car guy. Most of you know this. However, I’ve recently become the housing guy in Washington. This is not due to any direct background or experience. I have only bought 3 and sold 2 houses in my life, all of in which the captivating Mrs. Campbell and I have lived. It is partly because I serve on the committee that deals with such issues. But, it is mainly because I know we never go into recessions without housing and cars leading us in, and we never recover without housing and cars leading us out. These two industries are just too big a part of the economy and too important to the psyche of consumers. The car business is doing better of late, but housing is not. There are many reasons our economy stinks, but one of them is certainly because the housing market is still in a decline. The economy will not be strong again until we turn it around.

When you have a sick patient, the first rule is, “Do no harm”. The housing market is sick. Much of what is causing this sickness is the fact that the housing finance system, anchored by Fannie Mae and Freddie Mac, failed. We have to replace that system. As many of you know, I have a… Read More

We all are familiar with the rest of the variations on this phrase describing the dedication of the US Postal Service (USPS) in delivering the mail. Well, snow and rain may not be keeping the Post Office from delivering the mail, but financial problems within the USPS may soon halt delivery.

This has not gotten much publicity, but the USPS is in real trouble. The USPS is an independent, but wholly-owned entity of the federal government. It is designed to be self-supporting such that the rates it charges will cover the costs of delivering the mail. This worked for a long time. Obviously, for over 200 years. But, not so now. After earning modest profits from 2004-2006, the agency started hemorrhaging money in 2007. Between 2007 and 2010, it has lost over $20 billion. These losses are now accelerating in 2011 with a loss, in the first 3 quarters of this year, amounting to $5.7 billion. The USPS has already borrowed the maximum $15 billion it is allowed to borrow under the law and has already deferred another $4 billion in payments to its employee retirement fund to cover these losses. The Continuing Resolution adopted by the House last week… Read More

As regular readers of this missive know, I am a lifelong Republican. Accordingly, I have never been to a Democrat campaign rally. That is to say at least until last week. Last Thursday, I attended one…..on the floor of the United States House of Representatives. President Obama made a special request to speak to a Joint Session of Congress and I assumed it would be a major policy address. Far from it. It was a campaign speech. There was scarcely little serious policy content present. The first indicator of this was when Obama asked us to “pass this right away”, a line which appears on the first page of an 8 page speech, before saying what was in his plan. That’s like demanding that someone buy something inside a box without telling them what is in the box. Another indicator of lack of substance was his repeated assertions that the $450 billion one-year cost of the bill would be “paid for”. He also made this assertion on the first page of his address. Three pages later he says, “It will be paid for. And here’s how: The agreement we passed in July will cut government spending by about $1 trillion over the next 10 years.… Read More

“The inherent vice of capitalism is the unequal sharing of its blessings. The inherent virtue of socialism is the equal sharing of its miseries.” – Sir Winston Churchill

Socialism Has Failed………Again: The last month has not been a good one for the now highly interconnected world economy. Certainly, we have many problems in the US, with crushing debts and deficits and no job growth or really any growth in the economy at all. Expectations that the future looks bleak add to a lack of investment and risk-taking as more and more people stick their financial heads in the sand. But, it’s even worse in Europe and other places around the world. The huge fiscal problems in countries like Greece, Portugal, Ireland, Italy and Spain may result in debt defaults and are affecting not just their growth, but ours as well.

If you look at the problems in this country and those in Europe, you find that they are really just differing degrees of the same problem. Our governments (federal, state and local) in the US have spent too much money and borrowed too much money and now don’t have enough… Read More