Stop Spending

Every weekday morning while wrestling my bowl of cinnamon flavored oatmeal, I am monitoring the financial markets with the gang on CNBC's Squawk Box, sick twisted freak that I am. There have been some historic moments on Squawk, most notably with Rick Santelli's shout heard round the world , and the discussion today was along those same lines as America has a choice to make. Take a listen:



Although Joe Kernen and Rick Santelli have fun slapping Steve Liesman around, the choice America has economically is between the Keynesian economic theory regrading the issue of governmental stimulus in the marketplace (Obama) versus the supply side theories of very limited governmental intervention by lowering costs of production and helping to lift the entrepreneurial spirit of free market capitalism, which then trickles down benefiting everyone (Reagan).

New York Times economist Paul Krugman is in the forefront of those promoting the Keynesian theories, and recently wrote that due to a failure to spend enough, the United States is preparing to enter a third depression. Investors Business Daily takes him to task on that thought.

One of my readers alerted me to a piece blaming George W. Bush for all the deficits we are now experiencing. While the Bush administration did expand the deficit, due primarily to events in the aftermath of September 11, 2001, it is the current policies of governmental interference, in the form of increased regulation and taxation, the assault on small businesses across the fruited plain and the uncertainty of the playing field going forward that has hindered investment, placed meaningful growth in a stranglehold and exponentially bloated the federal deficit. In fact, the governmental stimulus in the public sector further crowds out private investment, where most of the jobs are created.

Explaining the poor decisions the current administration is making is Robert Mundell and Art Laffer, who joined CNBC's Larry Kudlow recently for a frank discussion.

The Obama administration has engaged in a level of governmental stimulus never before seen, and our economy has little if anything to show for it. Foreign countries that engage in this type of socialist activities have run out of other peoples money, causing the civil unrest we have witnessed. Uncle Sam will be dealing with these same issues if we don't change course quickly.

There are a few politicians emerging that understand the severity of the issue, including New Jersey Governor Chris Christie (R) and Wisconsin Representative Paul Ryan (R). For our economy to improve, outside of a sweeping change in November, the government should do just as Rick Santelli suggested, and that is to stop spending immediately.

Supply Side Fuels Economic Growth

The transformation of The United States of America is in full scale operation, from passing legislation our elected officials have limited knowledge of the contents of to shifting language that skirts the truth and evades transparency while implementing legislation our founding fathers would fight against. It is appalling.

Remember no family will making over $250k annually will see their taxes go up? Lie or deception? Obama claims the worst of the economic downturn is behind us due to his administrations activities. Don't bet on it.

Taxes are going up substantially, which curbs economic growth. With that being said, two economic titans recently visited with CNBC's Larry Kudlow to discuss tax rates and their impact on our economy going forward.



The economic activity of the Obama administration is going to prolong the economic crisis we are in (not behind us) and the aftermath will be painful if things are not overturned in November.

Credit markets are not in good shape, and yesterday we saw a big spike in the VIX, a measure of volatility. Pigs don't fly, and the financial stability in Portugal, Italy, Ireland, Greece and Spain remains in critical condition. Canary if the coal mine for the US six months from now? How far will the dominoes fall? Will California follow suit?

In the end, while the stock market is up after companies have beaten dramatically reduced earnings estimates and reduced inventories have been restocked, I remain convinced another downturn is coming. With our irresponsibly expanding and unsustainable debt, we a high fastball to face from real trouble, but then again, that may be the emergency the administration is looking for to further transform our once great economic system and country.

As always in this Obama era, watch the other hand.