Saturday, May 06, 2006

Some Simple Logic

If the fire department warns you that you need to clean the pine needles off your roof, it is probably a good idea to clean your roof.

If at the end of the fire season you have not cleaned off the needles, and your house still stands, it does not mean the fire department was wrong.

If Warren Buffet and other great investors warn of a calamity waiting to happen due to derivatives, and it has not yet happened, don't count their insights as insignificant history.

The fact that their warning of a potential collapse has not yet occurred does not mean we are safe, in fact the danger may have increased. Folks may have just quit listening.

If people on both sides of the political aisle, lovers of big government all, are starting to worry about loss of freedoms and destruction of the American way of life - pay heed.

Yes a broken clock is right two times a day.

It's true, some folks are always looking for disaster.

But when people closely associated with a phenomena become increasingly concerned - bells and whistles should be sounding.

California will someday have its greater earthquake, but folks tend to ignore preparation except when a smaller quake has just shaken them up.

The markets have been quiet. The volatility index (VIX) is ridiculously low. Bond volatility is also extremely low, emboldening over leveraged players. Nothing really bad has happened in years -- some form of "really bad" is overdue.

Freedom has slipped, taxes have climbed, the American way of life is being exported.

When I was born in the early 1950s I have been told taxes were at about 4%, and my mom didn't have to work. That was the American way.

Today if you count all the state and feral federal taxes, fines, and fees your family is paying over 50% of their paychecks in taxes. Some of the taxes come out before you see the paycheck, the others assault you all day long.

Income tax, property tax, state tax, gas tax, registration fees, etc, and big hidden taxes like inflation and the compliance costs of
over regulation.

A wife now has to work full time - in essence her entire income and more taken by the government.

The American founding fathers rebelled over taxes of about 2%. Our taxes today are over 50% and the average fellow once again has no representation.

The American dream is being taxed and regulated out of existence. If you start your own business the government is your instant partner. You spend the money, you fight for the permits, you take the risks, and if you succeed - the government wants at least half of your profits.

For those that hate big corporations - this is their game. In exchange for their support of politicos they get some tax breaks from the huge burden that weighs on the rest of us. With the individually empowering technology available, small business could soon kick the huge corporations tail, if small businesses were not tied up in red tape.

Small business is the engine of America and could, to all of our benefit, run circles around bureaucracies - if they didn't have that huge government tumor weighing them down.

It would be nice to shrink the government by 95% or so, and give us citizens back our money. While we are at it let's make a constitutional amendment that no new laws may be made, and no new agencies formed, unless two laws or two agencies are retired.

Financial asset markets are perhaps ready to fall. America has for decades been descending ever deeper into a Romanesque despotism trap. And you still haven't cleaned those pine needles off your roof.

Perhaps it is time to prepare some safety measures in your life - just in case the experts are right.


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