Smoke, Mirrors and Hurricane Warnings

 

We’ve been had! Again.

First, our leaders in Washington have subjected us to the insult that, after nearly a year of wrangling over the 2011 budget — and even after the American people installed an army of self-avowed budget-balancers in Congress — the best they could do was reduce government spending by a meager $38 billion.

Sure, $38 billion sounds like a lot when you say it fast. But do a little arithmetic and the truth suddenly becomes clear. $38 billion in cuts is no more than 2% of this year’s budget deficit — a microscopic drop in Washington’s vast ocean of debt.

Adding insult to injury, according to the Congressional Budget Office (CBO), even that paltry number was a fantasy. The new budget does not really cut $38 billion in spending — only $352 million.

We had barely swallowed that bitter pill, when we were subjected to the much-ballyhooed budget-cutting plan President Obama presented in his speech to the nation on Wednesday. But even his supporters admit it was no plan at all — merely a loose collection of good intentions and bad ideas that neither the CBO nor his own Office of Management and Budget (OMB) could possibly attach a number to.

After witnessing this budgetary train wreck over the past few weeks, only one conclusion is clear: Washington is still talking a good game — but nobody on either side of the aisle in Congress or in the White House is actually DOING anything about it.

To any investor who’s paying attention, Washington’s latest follies are not merely an embarrassment.

They are proof of the incompetence and cowardice of our leaders …

They are strong indications that our government is unlikely to find the intestinal fortitude to end its spending, borrowing and money-printing addiction.

And they are, above all, a hurricane alarm — a warning that today’s dollar disaster and soaring tangible asset prices are likely to accelerate in the weeks and months ahead.

Good luck and God bless!

Martin

http://www.moneyandmarkets.com/smoke-mirrors-and-hurricane-warnings-44109