The answer is seemingly quite simple: 9/11.

It was one of the most horrific days in my life and when you ask any American most of them will agree.

It is a defining moment in history and has altered the world forever.

It has created a cultural, economic and political footprint that will last a lifetime.

I fully support using whatever means necessary for our federal government to bring those responsible for those heinous attacks to justice. I also fully support efforts from the federal government to find out what happened on that day, what led to that day, and how we could have handled it better (e.g. 9/11 commission).

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Yet in our federal government, we don’t always have our priorities in place.

You would think that with the legacy of 9/11, the immediacy of a financial crisis, and a looming government shutdown that our federal government would have it priorities in place.

WRONG.

In the midst of all of the aforementioned situations, the government thought that it would be important to prosecute a baseball player named Barry Bonds that everyone knew took steroids.

Well, after eight years of investigation and prosecution, which only yielded an obstruction of justice conviction because he was evasive in answering questions, a shocking piece of information has been revealed.

The United States government has spent over $75 million of taxpayer money to prosecute Barry Bonds for taking steroids.

News flash: We all know that he took steroids, and none of us care.

Even the most ardent baseball fan would agree that Barry Bonds did not need to have an eight-year federal criminal investigation to find something out that we already knew.

For baseball fans, knowing that Balco, the lab that manufactured and sold the steroids, was shut down and that Major League Baseball has identified all of the steroid users and put policies in place to make sure that it does not run rampant again, is enough.

But here’s the kicker, the United States only spent between $12 million-$20 million (varying numbers from the government, just shows you how good our accounting is) on the 9/11 commission.

That’s right. We spent almost four times as much prosecuting and investigating Barry Bonds than we did find out the truth on the single most important event of the last 50 years.

While I am proud to be an American, I am not proud of the Americans who wasted $75 million of taxpayer money on something most Americans don’t care about.

I’m sure that millions of unemployed Americans out there could have used a job that could have been created with that money.

And even if you believe that Barry Bonds should have been criminally prosecuted, there has to be a way to do that for less than $75 million.

Others will say that we’ve spent billions in more defense and intelligence spending since 9/11, and we’ve spending hundreds of billions in Iraq and Afghanistan. So in actuality Barry Bonds’ $75 million is a relatively paltry sum and it’s not fair to compare what was spent on Barry Bonds to what was spent on the 9/11 commission.

I don’t care.

In the grand scheme of priorities, 9/11 is more important than Barry Bonds and all of his steroids.

There is just no discussion, no debate.

Maybe if the federal government cared about the 9/11 Commission as much it does
about Barry Bonds and his steroids, we might have Osama Bin Laden captured and have all of his co-conspirators put to justice.

But unfortunately our priorities are in the wrong place.

Instead of demanding our elected officials and our federal government to deal with the problems that face our society such as the economy, health care, retirement, security, etc. we continue let the federal government waste our tax dollars year after year with no recourse.

Who prosecutes the people that wasted $75 million of taxpayer money? Do they get fired for wasting the people’s money? What happens to them?

The answer is nothing.

Government is so big it has grown beyond control. There are so many people involved in government waste that you can’t always pinpoint just one person or one group and hold them accountable.

When our federal government bureaucracy has grown so big that it feels it can waste the people’s money with no recourse, the only option is to get rid of the bureaucracy and the bureaucrats.

Maybe if they felt that was a real possibility, they might get their priorities in place and stop wasting our money on things like Barry Bonds, and start focusing on the things that do matter to Americans.

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People are losing their retirements, their savings, their nest egg. Investors are now starting to realize that the U.S. is built on a deck of debt cards and they are starting to fall.

The United States has a current debt-to-GDP ratio of 100 percent just like the other Third World nations out there. It also has future liabilities in excess of $110 trillion (an amount that no other country can even fathom).

All the while, the U.S. dollar is losing strength and the cost of living and feeding a family continues to go up.

But Larry Kudlow says don’t worry.

See his article here:

While Kudlow points out that lower commodity prices should spur economic development, he misses out on several key factors that are needed to properly evaluate the market.

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First, this isn’t a short-term pullback, this is a market correction. When the Dow Jones Industrial Average (Dow) went down to 6547.05 on March 9, 2009, we were supposed to retrace the low to roughly 50 percent. What this means is that our stock market should have faced some major resistance to move beyond the 9750 mark on the Dow. Instead by 2010 we had blown by it, and with the slight exception of the May 2010 flash crash, we never looked back.

Make no mistake, speculation fueled the market. Case in point, look where we are now. When QE2 (Quantitative Easing 2) was implemented by the Fed last December, the Dow was hovering around 11,000. During April the Dow surged to 12,928. Everything seemed great.

Except it wasn’t.

With continual Federal Reserve (Fed) stimulus (low interest rates, and QE2), traders, black box traders in particular, were given cart-blanche to trade financial markets knowing that they would be flush with cheap Fed cash.

Since the cash was always there, traders didn’t care what the economic news was for the day. They were concerned with liquidity and how they could exploit liquidity to make a profit.

That’s why things such as a high debt to GDP ratio, poor housing numbers, and high deficit spending didn’t seem to register on Wall Street’s radar.

However, once the Fed pulled out their cash and ended QE2, traders started to run for the hills. They began to start dumping stocks. In fact, even sophisticated hedge fund managers such as Carl Icahn and George Soros proclaimed that they were disbanding their hedge funds, returning money to investors, and leaving the market at professional managers.

That should tell you something.

Between the top money guys leaving and the Fed pulling out cash, the fix was in. We were all fed the line that once we did the debt deal that financial markets would rally. And they did … for about an hour.

But that’s when reality hit.

Since then financial markets are starting to realize that the United States has no real end in sight to its flagrant spending ways, and astronomical long-term debt. Without Fed easy money to spur buying, investors are treating the U.S. economy for what it currently is … a sell.

Second, Kudlow points to rising corporate profits as being an indicator that the U.S. economy is still healthy. What Kudlow fails to recognize is that corporate profit guidance is being lowered for the second half of this year. Even Goldman Sachs lowered their guidance for the second half of this year.

Large corporations will see that margins are going down and that after enduring a major stock market correction, consumers are not running around the store waving their credit cards dying to spend. Consumers will not consume as much.

Savings rates are going up. The most recent data from the St. Louis Fed shows the U.S. personal savings rate is at 5.4 percent. Compare that with our April 2005 rate of 1 percent, and you can see that Americans are worried that the economy will fall and they will need their money.

That translates to economic slowdown. When individuals do not spend and start to save more, that slows down production and consumption, which in turn slows down the entire economy.

Third, Kudlow believes that there is a big overreaction going on to the problems in Europe. Keep in mind, Kudlow, along with fellow CNBCer Jim Cramer, thought Lehman Brothers was a good buy before it went bankrupt and wiped out investors.

The easiest way to understand the Europe problem is to think of economies of scale. Greece, which in relative terms is very small country, cost over $1 trillion to bail out.

One small country took all of the financial might and muscle of Europe’s top banks and governments to bail out.

Now think of Italy, the newest country on the brink. Italy’s debt crisis is 10 times the size of Greece. I’ll put it to you this way, the European Union cannot afford $10 trillion.

The entire GDP of the European Union is $16 trillion, so $10 trillion is too big to bail out. An additional problem with Italy is that a huge chunk of its debt is due within the next two years. So this isn’t a problem that can be shoved under the rug.

Combine this with a sluggish Euro and a European Union that is dealing with a global economic slowdown and the recipe is not good. With all of the weakness in Europe, the EU’s stronger countries (Germany and France) should start to see some of their strength erode as they are continually forced to bail out smaller players. By the EU charter, the EU guarantees all of the debt of its member nations. Hence, Germany and France will end up paying the bill for Greece, Italy, Spain, and all of the other countries who have overspent and are nearing bankruptcy.

Finally, Kudlow fails to point out several key ticking time bombs in the United States. First is the real estate market. With shadow inventories and foreclosures, home inventories should skyrocket to all-time high levels in the United States.

Second, student debt in America is at an all-time high. Fueled by government loans, universities have been charging students higher rates every year, regardless of what the stock market or the economy is doing. Current student debt in this country is estimated at $1 trillion. Just so you know, that was the amount of money that was needed to bail out our banks.

Third, municipal debt is a major issue. If cities and states start to go bankrupt, all hell could break loose. Remember, less than a year ago, California (the world’s 9th largest economy) could have gone under. The effects of a default of that size would cripple the domestic and global financial economy.

So Mr. Kudlow, in times like these, while panic may not be the right feeling, all is not well. Investors should be very concerned. They should be safeguarding their assets against a major stock market drop and planning for the future.

But then again, maybe that message isn’t one that the talking heads want to hear or give.

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I mean, who doesn’t want to use “common sense” principles to solve the massive problems in the real estate sector?

Who amongst us is for “stupid” solutions?

No one.

Which is why understanding our current real estate quagmire is so baffling.

There are so many easy-to-implement solutions to flush out the housing market and get it going again, yet regulators and bailed-out banks always seem to find a way to screw it up.

The regulators for the most part are completely clueless as to real estate structural inhibitors and macroeconomic stressors.

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Simply stated, they don’t know how the rules mess things up and how to evaluate what’s going on in the rest of the economy.

Big banks, on the other hand, are incredibly sophisticated and prey on their less sophisticated partners in government. Banks driven by speculation decided to pump real estate markets to increase gains and build up balance sheets.

When those markets crashed, big banks went to their buddies in government and asked for a bailout. Their less sophisticated buddies obliged.

Now that our bailed-out banks are heavily capitalized and are making money, they refuse to do anything that would take a penny out of their pockets, even it is detrimental to the overall market.

What the banks have been doing is playing with government regulators and private individuals. The biggest farce that the banks have perpetrated since their pumping of the real estate market is the loan modification.

At first the government stepped in with its own ridiculous, ineffective system called HAMP (Homes Affordable Modification Program) that would use taxpayer money to fix the problem (never a good idea).

Originally $50 billion was allocated to the program. Only $12 billion has been spent.

Originally, it was supposed to help 3-4 million homeowners. To date a little more than 500,000 modifications have been made, and the default rate on those modifications has been as high as 92 percent.

All in all, it has been a disaster.

Rather than face government regulation due to popular will (the people feel that they should get a bailout because the banks got one … and I can’t really blame them), banks have started to self-regulate themselves, including the institution of their own brand of loan modification, to supplant the government’s program.

During the first quarter of this year, roughly 210,000 homeowners received permanent, proprietary loan modifications from mortgage servicers, according to HOPE NOW.

According to the same group, foreclosure starts (the initiation of the foreclosure process) were up 21 percent from February 2011 to March 2011, with 60-day delinquencies at an additional 2.63 million homes.

Combine this with the most recent S&P Case/Shiller index that shows the top 20 metropolitan areas are just a hair above their April 2009 lows, and that should tell you that the housing problem is real and the need for solutions is now.

What banks aren’t telling you is that they are just playing shell games. Yes, they can reduce your monthly payment but that’s because they are extending the term of your mortgage, or just lowering your interest rate.

At the end of the day, the mortgage is still worth more than the house, and eventually homeowners will just stop paying it.

An all-time high of more than 28 percent of single-family homeowners are underwater (in a home where their mortgage value exceeds their home value), according to research firm Zillow, which has been compiling this data since 2009.

Sure, there are some banks that have implemented principal reduction modifications but those only marginally reduce the amount owed on the property and that does not reflect market value.

The only way in which loan modifications will work is if a local appraiser appraises their property and a proper market value is determined. Then on a one-time basis, for primary homeowners only, the bank would reduce its principal balance to the market value of the home.

Some might argue that this is not fair to the banks, and that homeowners signed contracts and should be held to them. A program like this would cause billions of dollars worth of losses to the banks and would deteriorate their balance sheets and lower their share prices.

This is very true.

On that same note, all of the major banks signed contracts and made investments and lost a ton of money. Contractually, they should have defaulted on their debt and gone out of business. The U.S. taxpayers were under no obligation to bail them out.

And if banks want to make real money, they should stop holding onto the idea that they are going to get paid on mortgage paper that homeowners have no financial incentive to pay.

If we can rid the market of all of the mal-investment and bring mortgage and property values back down to market levels, we can start to see housing fundamentals start to rise again.

This creates more jobs and grows the market organically as opposed to holding onto overinflated values of mortgages that will never be paid.

But regardless of whether you think loan modifications are a good solution or not, you can’t argue this: if you are going to do loan modifications, do them right.

The banks have been implementing half-solutions which do not address the underlying problems.

The banks have been too worried about perception and who’s at fault. When a bank does a modification that only modifies the interest, or extends the duration of the loan to lower the monthly payment, or only marginally reduces the principal balance, and then a homeowner defaults again (gets behind on their mortgage payment), the banks think they look like the good guy.

In their minds, the banks were benevolent and tried to work with the homeowner giving them concessions on various items, the homeowner agreed to those concessions and pledged to make payments on time, every time.

We are just the good guys, and it is deadbeat homeowners who don’t keep their promises who are at fault.

Nice try, big banks.

A half-step response only escalates a full-scale problem.

So when you do a modification, do it right or don’t do it at all.

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It sounds so harsh. The rich get richer and the poor get poorer.

Almost makes you want to go out and register as a Democrat. That way we can redistribute some of this wealth as our current president would like.

But the current silver market is a classic case of irrational individual investors driving up the price of the market, only to have sophisticated institutions leave them holding the bag.

Well how did this happen and what happens to the silver markets from here?

The silver rally goes back to the bailouts of late 2008. After $700 billion of TARP, billions more to save the auto industry, and the election of Barack Obama, it became very clear that the U.S. was in the mood to print cheap money.

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After reaching a low of $8.79, silver began to slowly rally. First it rallied due to Ben Bernanke almost tripling the monetary base. Then it rallied due to the $860 billion Obama stimulus. Then it continued to rally after Obama became the first president in United States history to rack up a yearly deficit in excess of $1 trillion.

Before we knew it silver was trading in excess of $30 per ounce.

Wow. What a move.

After going up some 400 percent individual investors started to take notice. Then as the U.S. markets started to sputter, Ben Bernanke and the Federal Reserve instituted something called Quantitative Easing 2 or simply QE2.

QE2 has the net effect of placing more U.S. dollars into the financial system and ultimately into circulation.

When more dollars are placed into the market without the necessary demand, inflation happens.

BINGO.

This was the impetus that individual investors needed to get in the game. Silver again started to skyrocket.

Then came news that Bernanke didn’t plan to stop QE2 by this June and planned to take it further.

Blastoff.

We now saw silver hit intraday highs in excess of $49, a sign of major speculation and irrational exuberance.

You see in silver markets, many individual investors are leveraged buyers of the metal. What that means is they take a loan out to buy more silver than the money they have in deposit.

While some individual investors use a smart amount of leverage, many times they are tricked into borrowing anywhere between 4-8 times their money.

Case in point, if you had $10,000 cash in your account, you could buy let’s say $50,000 worth of silver borrowing at 5:1 or five times the amount of money you have in the account, for a total borrowed amount of $40,000.

Utilizing margin is supposed to maximize your profit, but when used unwisely, it maximizes your risk.

If you bought silver between $47-49 with this type of margin, your overall account value would be in the area of $37,000-$39,000 (depending on fees, costs, etc.).

That means that you have lost all of your original $10,000 and you are now liable for the difference between your account value, in this case $37,000-$39,000, and your loan value, which in this example is $40,000.

Had you just bought $10,000 worth of silver, your account would be down to about $7,500-8,000 but you would still have positive equity. With unsafe leverage in our example above, you end up owing between $1,000-$3,000. This is known as a margin call.

From $8k to owing up to $3k. That’s a very big swing.

Now getting back to overall markets. Realizing that leverage and speculation were driving prices higher, the CME Group (which is the owner of the Chicago Mercantile Exchange) hiked margin requirements three times since the beginning of last week.

This caused firms to tighten up their leverage and some firms even made stricter requirements than the CME Group.

The reduction in the amount of leverage that can be used caused selling pressure to increase last week which brought silver down to $45 an ounce after trading higher than $49 per ounce just days before.

Then add on top of this a once in a lifetime event (literally), with the death of Osama bin Laden. This sent silver prices, which rallied back to $48.22, down to $42 per ounce.

However, once the market absorbed the Osama factor, silver prices rose in excess of $47 off its Osama lows.

Institutions know the game. They knew that with margin requirements tightened that if they started selling they could trigger a significant selloff in silver. So they did.

As institutions were selling, individuals who were overleveraged in silver began what the term “margin call” means. As the price went down, it triggered individual investors to sell their positions in order to cover their investment amounts. This drove down the price of silver even further.

Add on top of this hedge fund gurus like George Soros indicating that he will start to liquidate his long gold and silver positions, and the down market can take on a life of its own.

As the market continues to go down further, shaking out most individual investors, we will start to see institutions re-enter the game, buying back in the $30s the same metals that they sold in the $40s.

You see even the institutions that are just getting out now (in the low $40s to high $30s range) aren’t concerned because they’ve been buying silver since it was trading in the $15-20 range.

So to them all they lost was just a couple bucks of profit.

But the opportunity to take silver from $49 to let’s say $36 just to buy it back again and ride it all the way to $50, that’s a score.

For silver buyers out there, key adages provide the proper insight into these markets.

The first adage to follow is to remember history. Historically, gold trades at a 16 times premium to silver. These days that ratio is at 38 (meaning the price of gold is 38 times the price of silver.

Although margin requirements on silver are now more onerous than those on gold, the underlying fundamentals and price ratios for silver make it very attractive.

Secondly, individual investors in silver should be long-term players, not short-term flippers.

Silver is a dangerous metal. It can go up and down as much as 20 percent in just a couple of days. We’ve seen that before. We’ve seen it now. And we will certainly see it again.

If you are a long-term player you can afford to sit out these short-term hiccups and just focus on the long term fundamentals. The U.S. dollar is heading down, emerging markets are consuming more, and the demand for silver (industrial, inflation-hedge, and luxury) is increasing.

Just look at U.S. debt. We have $14 trillion in unfunded Social Security liabilities, $77 trillion in unfunded Medicare liabilities, and $19 trillion in unfunded prescription drug liabilities.

That’s $110 trillion new dollars that we have to print just to cover our existing liabilities. God forbid that President Obama figures out a new way to start spending even more money.

So when you want to know where the price of silver is going, I’m going to give you the same answer that Steve Forbes gave me today while we talked at Starbucks, “Just follow Ben Bernanke.”

Because as Bernanke gets the orders to print the dollars to pay the bills, silver will go up and up and up.

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Could it be that we got the nuke from Iran? Could it be that we got Gadhafi?

Nope. Even better.

Osama bin Laden is dead.

Almost 10 years ago, we all lost a little piece of ourselves. Some lost family members. Some lost jobs. Others lost their livelihoods. All of us lost a little piece of safety that came along with being an American.

I remember how I felt on that fateful 11th day in September. Nothing was safe.

The Twin Towers that I grew up with in New York City were brought down. The center of our national defense, the Pentagon, was attacked, and one more plane was ready to attack the White House.

On that day, we lost sons and daughters, moms and dads, heroes and patriots.

Everything we ever knew as Americans was thought to be in jeopardy.

All of this, the product of the vision of one man … Osama bin Laden and his al-Qaida organization.

And now that man is dead, shot down outside of Islamabad, Pakistan, as a result of a U.S. covert operation.

Today we are not Democrats, we are not Republicans, we are Americans. Retrieving Osama bin Laden, dead or alive, has been our No. 1 priority for the last 10 years.

And whether you like George W. Bush or Barack Obama, today I pay gratitude to these two commanders in chief of our U.S. military. George W. Bush started out the bin Laden policy of “Dead or Alive,” and Barack Obama and our U.S. military was around to execute it.

Our resolve needed to be steadfast, and our commitment needed to be unwavering. Even after almost 10 years, we could never give up.

First responders and rescue workers didn’t give up on that September morning. Those heroes on United Flight 93 didn’t give up. We owed it to them to do everything we could to bring to justice those responsible for these attacks.

And our brave men and women in the armed forces and the intelligence community did just that. This was a multi-faceted, sophisticated and complex effort. Thank you to every member of our military, every covert officer, every volunteer, every American that did their part in helping to bring bin Laden to justice.

Hopefully, all of those who have lost someone in 9/11 or all Americans who lost a little piece of our freedom can find some comfort knowing that this man has paid the ultimate penalty.

While we can never be the same as we were on Sept. 10, 2001, and cannot bring back those we lost, today we can at least take a breath and breathe a sigh of relief.

This is a great day to be an American. Thank you, and God bless America.

It’s not something that just jumps out and grabs you; rather it slowly eats you away little by little, day by day.

After 10 years since our last budget surplus, Americans across the country, largely due to the tea party, have begun to rally around lower government spending and balancing the budget.

During the days of George W. Bush, America saw deficits as high as $440 billion (still too high in my opinion), yet for the most part, the people did not care.

Enter Barack Hussein Obama.

Here was this slick-talking, Harvard-educated, politician who promised everything to everybody.

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He said that he would not raise a single tax on anyone making under $250,000 per year, which later became $200,000 per year.

He said that he would close down Guantanamo Bay and give civil liberties to terrorists.

He said that he would bring us together, not as red states or blue states, but as the United States of America.

Once Obama got into office, he didn’t stop promising just because the campaign was over. In fact, he promised to cut the deficit in half by the end of his first term.

So let’s see how Mr. Obama has done so far with all of his promises.

As far as taxes goes, one of Obama’s first acts as president was to enact a brand new cigarette tax which disproportionately targeted lower and middle income Americans. He also has made Americans pay the stealth tax, otherwise known as inflation.

Through all of the new spending from the Obama administration, whether it has been stimulus ($860 billion-plus), or Obamacare ($3 trillion-plus over 10 years), combined with the Federal Reserve’s massive money printing campaign (almost tripling the monetary base over the last three years), the U.S. dollar has become weaker than ever, raising the cost of living for all Americans and putting the pinch on those making under $250,000 per year.

On Guantanamo Bay, Obama ordered the dissolution of the prisoner camp, before he ordered to keep it open (sounds like a John Kerry moment). After talking tough on Guantanamo, Obama realized that nobody wanted our terrorists and that Guantanamo was the only place to put them.

He’s batting 0-2 so far, but maybe there’s some bright news, how ’bout that bringing together the United States promise, you know, no more red states and blue states.

I don’t know if you’ve turned on cable TV, read a newspaper, or have just been alive the last two years, but you would be hard pressed not to argue that America is more divided than ever.

Due to Obama’s leftist policies, the people have created a massive grassroots groundswell known as the tea party. Obama has continually tried to play the class warfare card pinning the wealthy against the poor, the haves versus the have-nots.

Things aren’t looking so good for Obama’s campaign promises so far. But wait, Obama did say he could cut the deficit in half by the end of his first term.

This one seems the most plausible, but for a very sneaky reason.

In Obama’s first year in office (2009) , he presided over the largest increase in government spending in United States history. That $440 billion deficit ballooned to north of $1.4 trillion, over a 350 percent increase.

Therefore, President Obama only had to get the deficit down to $700 billion in order to keep his promise, which keep in mind was a $260 billion increase over the previous all-time high of $440 billion.

As luck would have it, the deficit for Obama’s next year in office turned out to be $1.6 trillion, even higher than his last all-time record deficit.

At this point, the American people had enough. They elected in a brand new Congress and demanded real fiscal change.

What was Obama to do? He balked on his most sure-fire can’t miss promise, and now it had gone to hell in a hand basket, leading to the rise of the tea party and the elimination of the Democratic majority in Congress.

So in true Obama fashion, he did the only thing he knew how to do: make a new promise of course.

In President Obama’s last State of the Union address earlier this year, he vowed that he was going to get tough on spending, so tough that he was going to enact a spending freeze.

Yep, after $1.6 trillion of overspending, President Obama vowed that he would never overspend by $1.6 trillion again. He was putting the freeze on it.

Victory Number 1. The tide is turning. Obama is now making promises that he can keep.

Now after a nasty battle to fund the government for the rest of the year, a battle that President Obama largely stayed out of, Obama is back to doing what he does best.

Making promises.

After our government nearly shut down, Obama has emerged like a phoenix from the fire to save America and be the hero. After all Barack H. Obama stands for Barack Hero Obama.

So after those greedy Republicans put forth a deficit reduction plan that cuts $5.8 trillion over the next 10 years, President Obama did them one better.

He has made a promise to cut the deficit by $4 trillion over 12 years.

Less money, more years. That sounds definitely doable. Obama doesn’t seem like he’s reaching too far.

That’s the trap. If American public buys that President Obama will follow through on his promises of deficit reduction, they will stop the protesting and the huge swell of grassroots activity.

They will believe that they have won the fight on the budget.

The American people must realize is that Obama isn’t telling all of the facts and is framing the argument in a deceptive way.

As the law stands now, we would have $7 trillion of deficits over the next 10 years.

What President Obama wants to do is cut the budget deficit in half over 10 years. Well, last time I checked, he’s only got a little under two years left in office.

Basically, Obama has set the bar so far out that he’s saying unless you re-elect me, you won’t have your deficit reduction (which is different than cutting spending, or eliminating the budget for that matter).

If President Obama is not re-elected and the budget goes south, he can say, “I had a plan and you didn’t follow it.”

Obama must subscribe to “Convenient Theories for Me” Magazine (I hear the magazine is growing in popularity).

It’s a great plan for President Obama, not so much for the American people. The Democrats and Republicans keep talking deficit reduction when they should talk deficit elimination.

Rep. Ryan’s plan calls for a balanced budget by 2030. Does anyone else see how outrageous that is as well?

Former House Speaker Newt Gingrich balanced the budget in only three years after the Republican Revolution of 1994. Apparently, Ryan must be taking a page out of the Obama playbook.

This article would have been a far more in-depth analysis of President Obama”s budget plan, if he had one.

All we heard in his speech was that he’s going to raise taxes on the rich, cut in a few areas, with vague details as to how exactly those cuts will be made, and raise revenue (which is code for more taxes).

As more details about this budget come out, we’ll be sure to analyze them, but for now all we have is all that President Obama has ever given us.

Promises.

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It’s not a very nice way to address anyone, let alone distinguished leaders who are responsible for the course of our nation. In fact, it’s quite rude.

However, the time for pleasantries has ended in Washington, D.C. For too long, we’ve had the same problems. The only thing that really ever changes is those we choose to blame for the problems.

After listening to President Obama’s State of the Union speech, I felt a little something in my throat. It’s called vomit.

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After raising the annual budget deficit to $1.5 trillion (about 2.5 times the all-time high deficit), Obama finally decided to get tough. He’s had enough with rising deficits in his administration, which is why he’s decided to “freeze” the deficit at $1.5 trillion.

Yes, ladies and gentlemen, Obama is taking a no-holds-arred approach. He’ only going to spend a trillion and a half more than he is supposed to every year … and not a penny more.

President Obama obviously understands the real problems. Otherwise he wouldn’t come up with this type of phony rhetoric.

On top of that Obama stressed investments in education and innovation as being essential to maintaining America’s economic and technological dominance around the world.

I agree with him. Science, technology, and education are the keys to maintaining America’s status in the world, but let’s call the problem what it is. Technology and business “investment” only accounted for at best some $90-100 billion of Obama’s $830 billion stimulus package, about 11-12 percent (other estimates have the number being significantly lower). The remaining 88-89 percent of the stimulus was pure waste.

What Obama is trying to do is utilize a little bit of good spending to justify a lot of bad spending.

In addition, Obama conveniently omitted is that he’s phasing out the Space Shuttle program, laying off thousands of workers, and making the U.S. reliant upon the Russians and the Chinese in order to launch manned spaceflight. That part seemed to be missing from the speech.

Considering all of the advances that have come from the space industry (the Tempur-Pedic mattress comes to mind) and the national security implications of not being able to launch manned spaceflight, I think President Obama should take another look at his “investments.”

After sipping some Ginger Ale to calm down my stomach, Obama’s turn was over and now it was Rep. Paul Ryan’s turn to seize the spotlight.

I was looking forward to the Republican response because this was supposed to be a new House of Representatives that was heavily influenced by the tea party, which has repeatedly called for balanced budgets and fiscal responsibility.

Sadly, what we got from Ryan was, as John Kerry would put it, “more of the same.”

We’ve heard from Republicans for years that they are all about lower taxes and smaller government. We’ve heard for years that the Republicans are here to lower government spending (although that hasn’t happened since Newt Gingrich left office).

The State of the Union response was no different. Ryan correctly named America’s No. 1 problem, its financial health, and its main culprit, overspending.

However, after properly identifying the problem, he cleverly sidestepped the real solution with the seductive phrase “deficit reduction.”

It sounds good doesn’t it? Who doesn’t want to reduce our deficit?

Yet, as they say, the devil is in the details.

Politicians know that many people confuse the deficit with our national debt (the deficit is how much we overspend on an annual basis whereas our debt is how much we owe overall).

The current House GOP “deficit reduction” plan calls for $2.5 trillion in deficit reduction over the next 10 years.

Again, sounds good doesn’t it? The Republicans are finally hawks on the budget again.

Wrong.

The annual deficit is currently at $1.5 trillion. So they want to reduce it only $250 billion per year. That’s pathetic.

Even if they came out with a new plan to decrease the deficit by a trillion dollars per year, that still leaves us with a $500 billion per year overspending problem and that is an additional $5 trillion over 10 years (plus interest and interest accumulating on interest).

The Republicans and the Democrats for that matter need to start talking about deficit elimination, not just deficit reduction. They need to start talking about national debt reduction and entitlement reduction.

The national debt has now eclipsed $14 trillion. But that’s peanuts compared to entitlement liabilities.

We owe over $14 trillion in Social Security payments, a convenient target for many Republicans who want to “privatize” Social Security. While privatization gives people more control of their money, it doesn’t address the Social Security problem.

When Social Security first was created the average life expectancy was 59.1 years, according to the National Center for Health Statistics. Now, according to the World Bank, the average life expectancy is 78.4 years old.

You see Social Security wasn’t designed to be a retirement program. It was designed to be somewhat of an insurance policy. When you lived pass the life expectancy (which was 59) and made it to 65, you would be able to cash in from the funds that you paid into the system, so that you wouldn’t have to keep working into your old age.

After medical advances curing polio and the invention of penicillin, people started living longer, yet Social Security’s retirement age remained the same at 65.

Since 1960, life expectancy has only risen roughly 8 years (70-78), which equates to a pace that can rounded up to say that every 5 years our life expectancy goes up 1 year.

Utilizing that scale, for everyone who is 55 or older, everything stays the same. But for everyone under the age of 55, the retirement age goes up. If you are 50-54 it goes up to 66. If you are 45-49, it goes up to 67, and so on and so forth.

Everyone under the age of 18 will be eligible for Social Security when they reach 78 years of age. After that Social Security eligibility age goes up 1 year every 5 years.

That’s real Social Security reform that drastically reduces our entitlement liability by a minimum of 50 percent.

Then there’s the 10-foot tiger … Medicare. Currently the United States has more than $77.8 trillion of unfunded Medicare liabilities, according to the Federal Reserve.

How the United States is to address this problem was not even a topic of conversation during the State of the Union or the rebuttal.

The only thing President Obama has said that would lower the cost of health care is to have medical malpractice reform, to reduce lawsuit awards for malpractice.

The Republicans only have an empty promise of repealing and overriding Obamacare.

I say it is an empty promise because 1) They don’t have the votes in the Senate to pass any legislation and 2) They can’t even smell the 2/3 majority that it would take to override a presidential veto.

If the Republicans were really serious about repealing or at least gutting most of Obamacare, they would attach those reforms to a bill that the Democrats really want to pass. That would force the Democrats to play ball and negotiate and eliminate many of the cost-raising provisions of Obamacare.

But even that doesn”t go far enough.

Remember, we still have over $19.5 trillion worth of unfunded prescription drug liability. Again, no one is even talking about this.

America needs real reform, structural change. No longer can the same old partisan talking points be used as sufficient rhetoric to quell the American people.

The American people must rise up to call out Democrats and Republicans for their empty promises and fancy rhetoric. The American people must remind them that if we are to restore America to her former greatness then we must appeal back to the founders.

We need “Common Sense” in government. We need to remember the Benjamin Franklin adage that, “He who goes a borrowing goes a sorrowing.”

In the age of cable television and the Internet, the American people can become informed like never before. With knowledge, the people can demand real change.

That’s good news for America … bad news for Washington politicians and bureaucrats.

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Well, today in Washington, D.C., there are no losers, just politicians.

You see, Republicans wanted to extend the 2001/2003 tax cuts for all Americans. They believe that lower taxes are key to running an economically viable nation.

That’s not altogether a bad idea.

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Democrats feel that increased spending and lower/middle class tax rebates are the way to get our struggling economy back on track.

That’s debatable, but there are some good uses for government spending. The sad thing is that those cases are few and far between.

For instance, cyber security and space exploration are examples of good government spending. Having our national databases hacked by the Chinese and relying on the Russians or the Chinese for a ride up to the space station … not such good ideas.

But I digress. I mean why have things like cyber security and a space program (which is being phased out by the Obama administration) when you have so many other important things to spend on in a new stimulus … err, I mean…Tax Cut Bill.

You see, like Rahm Emanuel says, you never should let a good crisis go to waste. Here America was in crisis facing a massive tax hike in the middle of a recession. Congress literally had to act now as the holidays were approaching and the tax hikes ready to rear their ugly head come January 1.

This was an opportunity. Sure, Congress could have just passed an extension of the tax cuts. But that would have been too easy.

Congress also could have followed the law and passed a dollar in spending cuts for every dollar in tax cuts per the Reagan-era PAYGO law. But that would have been too responsible.

So what did our friends in Congress decide to do? They decided to pass a win-win deal for Democrats and Republicans.

The Republicans wanted an extension of the tax cuts no matter what. The Democrats were happy to give that to them at a price.

In the end, an extension of some tax cuts ended up being a $990 billion debacle.

Yep, that’s right, $990 billion (although I presume that it was strategically valued at $990 billion so that it wouldn’t be over the magic $1 trillion mark, but then again has there ever been a government budget figure that wasn’t underestimated?). This bill is even larger than the $787 billion Obama porkulus bill.

So what’s exactly in this $990 billion bill? Necessary items for the growth of our nation, of course.

Some of the goodies in our beloved tax cut bill are the railroad track maintenance credit, a 7-year recovery period for NASCAR raceways, accelerated depreciation for business property on an Indian reservation, tax credits for mine rescue training, tax incentives for investment in the District of Columbia, and special tax breaks and subsidies for the rum industry.

Eureka!

What’s really been ailing our economy is that rum prices are just too high. Why should we pay $20 for a bottle of Capitan Morgan? That’s ridiculous.

Well, good thing that the new tax cut bill addressed that with a $235 million subsidy for rum makers in Puerto Rico and the Virgin Islands.

Whew! Crisis averted.

Yet, our friends in Congress didn’t stop there.

It turns out that the ethanol lobby didn’t feel like they were getting their fair share, so they got $6 billion.

Technology companies such as Microsoft and Boeing wanted in on the action, so they got $6 billion too.

All in all about $55 billion of goodies handed out to friends. Ah, the change that we can believe in. Apparently, the only thing that really changes is which party to blame this time.

It gets even worse. Had Congress just passed the income tax cuts ($359 billion), Alternative Minimum Tax Indexing ($140 billion) and the Estate Tax Changes ($68 billion), the total cost of the bill would have been $568 billion as opposed to $990 billion.

So how does the bill almost double in size?

Well, throw in about $56 billion in unemployment payments for people who have been out of work for up to 99 weeks, add in $120 billion of a payroll tax holiday, $21 billion of refundable tax credits, with a $146 billion dash of business expensing writeoffs, and a sprinkle of $80 billion so-called business tax extenders (i.e. major government subsidies for green technology), and you can start to see how the bill becomes so big.

Now for the $64,000 question: how do we pay for it?

Well some of you might suggest that we cut existing spending to pay for new spending.

While that might seem logical, you must remember this is Washington, D.C., that we’re dealing with.

Why do things like cut spending, and balance the budget, and pay down the national debt, when we can crank up the old printing press?

You guessed it, Obama is just going to put in a call to his buddy at the Federal Reserve Mr. Bernanke, and tell him to oil up the machines because he needs a fresh trillion dollars printed up ASAP.

Don’t you just wish that you could fire up your HP printer at home and just start printing money? When the power bill comes every month, don’t worry about it. Just make sure that there is ink and paper in the printer and you’ll be just fine.

While that seems preposterous to you and me, this is the real power that our president has, and he’s teaming up with Congress to put our country further in debt.

Keep in mind, because Obama “compromised” by extending the Bush tax cuts, he’s going to expect the Republicans to “compromise” by extending the debt ceiling.

Currently, the U.S. is only legally authorized to have $14.3 trillion of debt. However, that can be changed by an act of Congress. And when President Obama reminds the Republicans that their tax cut bill was the trillion dollars that put them over the edge, the Republicans will cave in to his demands to allow the nation to go trillions more in debt.

How high can the ceiling go?

It just depends how high Obama is willing to ask. Maybe he’ll go for just another trillion. If he’s daring maybe he can push the debt ceiling to $17 trillion maybe, even $19 trillion. After all, he is the Compromiser-in-Chief.

So in the end every political party got what they wanted, a win-win deal. Republicans got tax cuts and Democrats got more spending.

Yes America, only in Washington, D.C., can we make a deal that not only increases spending but decreases tax revenue. Simply put, we have to pay for more with less.

Hopefully, when the new class of representatives and senators comes into office next year, we will have a change for the better. Maybe the threat of the Tea Party can keep newly elected politicians honest.

For our sake, I hope so.

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Want to watch your favorite movies any time of the day? We have Instant on Demand.

Didn’t think that Terrell Owens got both feet in for his touchdown on Monday Night Football? No worries, we have instant replay.

We have instant popcorn, instant pudding, and pretty much instant everything.

So with all the advances of modern technology, what is taking so long to clean up the real estate market?

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We have all of the tools to fix the market.

Want to start selling foreclosures? We can use the power of the Internet to do massive online foreclosure auctions as opposed to gathering on the old courthouse steps.

Want to gather investors? Start an investment group on Facebook. It’s really that simple.

Yet despite all of the tools available to us, the real estate markets remain a disaster.

National home prices have changed -5.0 percent quarter-over-quarter. In fact, looking at national home prices since their mid-August peak, price declines are even more dramatic, changing -6.8 percent.

Roughly 1 out of every 4 homeowners has negative equity in a home (meaning that their home is worth less than their mortgage).

And just last month, all of the major banks halted the sale of foreclosed properties.

So what has been the government’s response to all of these problems?

In February 2009, President Obama announced “unprecedented action to solve the mortgage/housing crisis in America” (if you watch him he tends to say unprecedented a lot). He announced the $75 billion Making Homes Affordable plan to keep four million Americans in their home and fend off foreclosure.

Also at Obama’s urging, the Federal Reserve purchased $1.25 trillion worth of mortgage-backed securities and the U.S. Treasury made plans to spend an additional $220 billion to buy even more mortgage-backed securities.

So how has that worked out for us so far?

Well, buying all of those mortgage-backed securities did help, it’s just that buying them helped the banks and not the American people.

The banks with government favor (Bank of America, Goldman Sachs, Citigroup, Wells Fargo, Chase) all received government bailout cash and not one of the big boys went under.

Hooray for Obama!!!

He saved the big banks!!!

Three cheers for Obama now that wealthy bank executives don’t have to face the music for their poor judgment and risky investments.

Instead of having to deal with the massive losses that they should have incurred and face the wrath of shareholders, bank executives had their mess covered up by trillions in bailout money that subsequently led to record bank profits in 2009-2010.

Just think about that for a moment. Banks made more money after the bailouts than what they did during the height of the real estate boom.

When you think of it that way, how is that not outrageous?

Now for the rest of the little people, things haven’t worked out so well under Obama.

Of those 4 million people that Obama was supposed to save, only 495,898 have received permanent loan modifications since the program was launched in 2009. Of those modifications, 11 percent redefaulted on their new lower-cost loans after nine months. After six months, a little less than 10 percent of modified loans were delinquent.

Yet according to the administration, the program is going great.

Raphael Bostic, assistant secretary of the U.S. Department of Housing and Urban Development, said the Obama administration’s efforts have helped “millions of families” stay in their homes, although no one in the world of news, media, academia, business, or real estate can find anything to support that claim.

By no means is the picture rosy for real estate.

“There’s still blood in the streets,” said David Dweck, founder of the Boca Real Estate Investment Club and organizer of the Foreclosure Convention of South Florida. “A lot of people are suffering. But as long as you buy right, you’ll be in good shape.”

But because the banks used shoddy paperwork to do all of their foreclosures, there might be litigation as to whether some foreclosures were legal, meaning that investors who are picking up foreclosed properties now have to worry about whether the bank will take back the home that they just bought because a processor in the back office didn’t dot their I’s and cross their T’s.

This brings us back to our original question: why real estate won’t bottom?

One word: litigation.

In states that have numerous laws regarding foreclosures and that require judges to oversee the foreclosure process, the housing market is a disaster.

For instance, look at Florida. Florida’s median price of a single-family home was $133,400 in September, a 48 percent drop from the highs of June 2006, according to the Florida Association of Realtors. Even worse, condos have dropped some 61 percent since that time.

In comparison, states that do not require a judge’s ruling to foreclose such as California have rebounded quite nicely and have been able to get the foreclosure process down to around 19 months.

That number could be even smaller if the government hadn’t implemented loan modification programs and moratoriums on foreclosure.

In states like Florida that require judicial hearings to hear foreclosure cases, state governments have learned that they don’t have enough judges to handle the massive flood of foreclosures. This year Florida had to spend an additional $9.6 million to hire new judges, magistrates, case managers and clerks to hand the foreclosure caseload.

So while prices in Florida are on the decline, prices in California are on the rise. California has seen the median price for town homes, condos, and single-family homes rise to $265,000, a 20 percent increase from the April 2009 bottom.

Many experts suggest that there could be as much as 30 months of shadow inventory in the real estate markets (homes that are vacant waiting to be foreclosed but are not up for sale). With that type of black cloud looming over the economy, the best thing to do is foreclose.

I understand that there may be families out there who are struggling to make ends meet and who can’t make mortgage payments. After all, unemployment is at 9.6 percent and broad unemployment (which includes people who’ve given up looking for a job or who have been unemployed for over a year) is around 17 percent.

Yet sadly, the reality is that people who couldn’t afford the homes they bought shouldn’t live in them. If you haven’t paid your mortgage in over 2 years, you probably shouldn’t be able to live in your home for free while the courts are backed up. We don’t need judges and multiple expensive hearings to tell us that.

There must be a reasonable 12-18 month timeframe for foreclosures that protects the rights of the homeowners but also allows for expediency in the system.

Just from people that I’ve met, I’ve heard that some people haven’t paid their mortgage in over 3 years and are still living in their homes.

This has to stop.

The quicker that we can get all of these homes foreclosed the quicker we can get real estate going again.

While putting all of these homes on the market will have the effect of raising inventories and lowering prices, it will provide stability in the long term. Investors will know that the bulk of the foreclosures are behind them and can feel safe investing in market that is ready for rebound as opposed to avoiding disaster.

Combine that with rising asset prices and real estate could be in line for a very sharp rebound, but only if governments and courts get out of the way and allow the markets process the foreclosures.

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They say that an honest man has nothing to fear. So I guess Government Motors CEO Ed Whitacre is doing his best not to be afraid.

We saw the first signs back in April, when GM’s Whitacre launched a massive commercial campaign advertising that the taxpayers had been paid back in full with interest 7 years ahead of schedule because more customers are buying GM vehicles.

This sounded fantastic, almost too good to be true.

Upon further review, it was.

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With the administration’s help, GM took out a new TARP loan in order to pay back an old TARP loan that was only worth some $6.7 billion, and then used millions of taxpayer money to advertise the lie.

Officially, the U.S. government has a $49 billion equity stake (stock) in GM. Unofficially, propping up GM has cost us far more.

You have to factor in the $25 billion in loan guarantees extended to GM and Chrysler under the Bush administration. Throw in about another $25 billion in “Green Loans” that the Department of Energy has extended to carmakers like GM to build fuel efficient cars such as the new Chevy Volt.

Then sprinkle in about $4 billion that the government used in Cash for Clunkers. Add on top of that about $17.2 billion in total bailout expense of GM’s financing arm, GMAC, and top it off with government bailouts of all of the major part manufacturers for car companies like GM and Chrysler.

Now you have a clearer picture of what it’s costing us to bailout GM.

With all of that money that the government is on the hook for, Whitacre is under tremendous pressure to bring GM to the public markets via an IPO and have the government sell its shares on the open market.

But let’s face it. The economy is sluggish at best. The United States is looking at official unemployment at 9.5 percent and broad unemployment at 18 percent. GDP recently has been cut in half after revised statistics came out (originally reported at 2.4 percent for Q2 now at 1.3 percent).

With the economy starting to slow down and with Americans out of work, does anyone really think that people will go out and buy a $41,000 matchbox-sized Chevy Volt?

Of course not. People don’t have jobs, banks aren’t lending, and people are less willing to overspend on consumer goods and luxury items.

So how does GM launch the biggest IPO in the U.S. amidst one of the worst consumer markets in history?

Back in 1999, a man by the name of Franklin Raines was given a directive by President Bill Clinton to increase home ownership. The problem was that people couldn’t afford the homes. The solution: give them the homes anyway.

Thus the subprime solution came under way.

Now a similar solution is being played out at GM. The government bailed out GM’s financing arm GMAC and made it into a bank with strict lending standards. But you can’t do subprime with strict lending standards.

That’s why GM decided to take about $3.5 billion of its taxpayer cash and acquire AmeriCredit, one of the nation’s largest subprime lenders.

GM’s plan is to boost sales of its vehicles by lending to people who otherwise couldn’t get a traditional car loan.

See, GM doesn’t care whether people can pay for the cars or not. They have a mission of padding the balance sheet so that they can launch the largest IPO in U.S. history. It’s said to be somewhere between $50 billion and $75 billion.

To give you an idea of how big that is, Visa’s IPO was only $17 billion.

Once the IPO is launched the government and GM executives can cash out their stock while the value is still high.

Eventually, people will either have to pay for the car loans or GM will sustain massive losses, like it did during 2005-2009 when it lost over $88 billion, about $25 billion to $35 billion more than the entire company is worth today.

By the time that happens guys like Obama and Whitacre will have cashed out and once again it will be individual shareholders who will be left holding the bag with GM.

When that happens, guess what?

GM already has been declared too big to fail. So when the you-know-what hits the fan again, after GM pumps its balance sheet full of subprime auto loans, guess who’s in line for a bailout?

That’s right. Once GM launches a huge new IPO just wait a couple of years.

You’ll see the new CEO of GM (because I assure you Whitacre will be long gone by that time) taking the private jet of shame all the way to Washington, D.C., to beg for bailout cash after the company was pressured by the government to make risky loans to pad its balance sheet. GM will say that the government made them make bad decisions that caused them to go in heavily into the subprime auto market.

What the government and GM don’t know is that those who fail to learn the lessons of history are doomed to repeat its mistakes.

GM is trying to create an auto bubble to boost its sales and get out of government debt. The last time that we tried to create a bubble to stimulate a slumping economy was when we tried to create a housing bubble, and we all know how well that turned out.

I wonder when the IPO will come out. Will it come out before the mid-term elections this November?

Will it be just in time for Democrats who will try and ride the Obama coattails touting that its GM investment was a huge success?

Just like politicians used free homes to get votes, it seems like they will start using free cars to get votes. If history serves us right, GM will be the right vehicle for politicians to win an election, and once those politicians get elected, they will have to deal with the problem that they created.

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