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Chris Martenson

Sunday, November 22, 2009

Executive Summary

  • State and federal laws and regulations are increasing.  At what cost?
  • State and federal governments are already too large to be sustainably supported.
  • Government employees now outnumber manufacturing employees 2:1. 
  • Public servant average total compensation is twice as high as the average for civilian employees.
  • Government must shrink.  It will benefit from seeking savings, capping new rules, eliminating old rules, and reducing revenue consumption.
  • We are looking at a massive funding crisis.  Can we head it off?

Becca and I just went through the process of buying the house that we have been renting for the past few years.  The experience has given me another distasteful brush with state laws and regulations.  Over the years, new laws have only been added, never subtracted, making this house purchase entirely different from the one I conducted only ten years ago.

Yesterday, a backhoe came into the yard to completely expose the septic tank covers (three of them), along with an element of the leach field, which took a lot of digging to find.  Why?  Because the state now requires an inspector to peer into these contraptions to assure that they are working, as part of something called “Title V” regulations.  Once everything was dug up, it took only a quick glance from the inspector, who had to sign off on a piece of paper before the sale could go through.

On the surface, how can one argue that having an inspected and functioning septic system is a bad thing?  However, the way the law is written, it only has to pass inspection at the time of sale.  Every sale.  If we decide to sell the house a week after we buy it, the whole process would have to be repeated.

This entire septic system was professionally designed and installed six years ago.  It has been pumped every year, with full documentation of every step.  But no matter.  The law requires the state inspector to be able to peer into the septic system’s innards every time the house changes hands.  No exceptions.  So heavy machinery was brought in and the yard torn up.

We could live here for 25 more years, and we wouldn’t have to go through this process again.  Or we could sell it in a week and have to do it all over again.  Never mind the fact that if a septic system is not functioning properly, the homeowners will undoubtedly be highly motivated to get it fixed.  And never mind that there are non-invasive ways to tell if a system is functioning properly.  Those factors are apparently irrelevant in the eyes of the law.

This tale is just a small, state-level story in one person’s life.  But it is being replicated a thousandfold in a 2,200-page health care bill, a 1000-page Disability Act bill, a 340-page Patriot Act, and numerous other documents combining into more than 72,000 pages of rules and regulations to go along with more than 60,000 pages of tax code (up 44% in nine years). 

And that’s just at the federal level.

Government Funding Crisis
PREVIEW
Sunday, November 22, 2009

Executive Summary

  • State and federal laws and regulations are increasing.  At what cost?
  • State and federal governments are already too large to be sustainably supported.
  • Government employees now outnumber manufacturing employees 2:1. 
  • Public servant average total compensation is twice as high as the average for civilian employees.
  • Government must shrink.  It will benefit from seeking savings, capping new rules, eliminating old rules, and reducing revenue consumption.
  • We are looking at a massive funding crisis.  Can we head it off?

Becca and I just went through the process of buying the house that we have been renting for the past few years.  The experience has given me another distasteful brush with state laws and regulations.  Over the years, new laws have only been added, never subtracted, making this house purchase entirely different from the one I conducted only ten years ago.

Yesterday, a backhoe came into the yard to completely expose the septic tank covers (three of them), along with an element of the leach field, which took a lot of digging to find.  Why?  Because the state now requires an inspector to peer into these contraptions to assure that they are working, as part of something called “Title V” regulations.  Once everything was dug up, it took only a quick glance from the inspector, who had to sign off on a piece of paper before the sale could go through.

On the surface, how can one argue that having an inspected and functioning septic system is a bad thing?  However, the way the law is written, it only has to pass inspection at the time of sale.  Every sale.  If we decide to sell the house a week after we buy it, the whole process would have to be repeated.

This entire septic system was professionally designed and installed six years ago.  It has been pumped every year, with full documentation of every step.  But no matter.  The law requires the state inspector to be able to peer into the septic system’s innards every time the house changes hands.  No exceptions.  So heavy machinery was brought in and the yard torn up.

We could live here for 25 more years, and we wouldn’t have to go through this process again.  Or we could sell it in a week and have to do it all over again.  Never mind the fact that if a septic system is not functioning properly, the homeowners will undoubtedly be highly motivated to get it fixed.  And never mind that there are non-invasive ways to tell if a system is functioning properly.  Those factors are apparently irrelevant in the eyes of the law.

This tale is just a small, state-level story in one person’s life.  But it is being replicated a thousandfold in a 2,200-page health care bill, a 1000-page Disability Act bill, a 340-page Patriot Act, and numerous other documents combining into more than 72,000 pages of rules and regulations to go along with more than 60,000 pages of tax code (up 44% in nine years). 

And that’s just at the federal level.

There’s a new Martenson Report ready for you.  It’s quite germane to today’s market action. 

Link to Risk Increases – The Flood Continues

Here’s a snippet:

The liquidity flood continues, with money dumped into the markets on a weekly (if not more frequent) basis.  Last week the Fed pumped more than $18 billion into the system through its purchase of agency debt and MBS.  That’s what we know about.  This week we found out that central banks around the world have pumped a quarter of a trillion dollars into Lloyds.

How many other such deals do we not know about?  How much of this secret money is reflected on the books for the public to scrutinize?  Why does the Fed refuse to be audited?

New Martenson Report: Risk Increases – The Flood Continues
PREVIEW

There’s a new Martenson Report ready for you.  It’s quite germane to today’s market action. 

Link to Risk Increases – The Flood Continues

Here’s a snippet:

The liquidity flood continues, with money dumped into the markets on a weekly (if not more frequent) basis.  Last week the Fed pumped more than $18 billion into the system through its purchase of agency debt and MBS.  That’s what we know about.  This week we found out that central banks around the world have pumped a quarter of a trillion dollars into Lloyds.

How many other such deals do we not know about?  How much of this secret money is reflected on the books for the public to scrutinize?  Why does the Fed refuse to be audited?

Monday, November 9, 2009

I’ve long been cautioning that there are no historical parallels to the present that could guide us on whether inflation or deflation is going to dominate the next investment horizon.  I’ve recently spent some time arguing that deflationists may have overlooked the impact of allowing financial companies to ignore their losses and pretend that they did not exist.

Even further back, I warned that the signs we were seeing were most consistent with a liquidity flood, which I encourage you to re-read, as it can explain much about where we are headed.  I will build on this theme in this report.

Briefly, the signs of a liquidity flood are a rise in those asset classes most subject to the effects of freshly printed money (stocks, bonds, and commodities), a continued expansion of an already bloated Fed balance sheet, and a return of a risk appetite to the investing world. These things all predictably accompany a flood of freshly printed money pouring out of the Federal Reserve.

Risk Increases – The Flood Continues
PREVIEW
Monday, November 9, 2009

I’ve long been cautioning that there are no historical parallels to the present that could guide us on whether inflation or deflation is going to dominate the next investment horizon.  I’ve recently spent some time arguing that deflationists may have overlooked the impact of allowing financial companies to ignore their losses and pretend that they did not exist.

Even further back, I warned that the signs we were seeing were most consistent with a liquidity flood, which I encourage you to re-read, as it can explain much about where we are headed.  I will build on this theme in this report.

Briefly, the signs of a liquidity flood are a rise in those asset classes most subject to the effects of freshly printed money (stocks, bonds, and commodities), a continued expansion of an already bloated Fed balance sheet, and a return of a risk appetite to the investing world. These things all predictably accompany a flood of freshly printed money pouring out of the Federal Reserve.

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