Archive for January, 2013

Captain Rick: Many economists were shocked by the magnitude of this drop in economic growth. I was surprised, but not shocked. Those following my reports know I have been forecasting a coming recession for some time. I caution that this is only the first of three GDP reports for the 4th quarter of 2012.  It won’t be until the end of March until the third and final GDP figure for the fourth quarter of 2012 is released. The final figure could be slightly higher or lower. Regardless of the final figure, the economic trend is not favorable. How Congress handles the very serious looming U.S. debt crisis, especially the portion of the Fiscal Cliff that was ‘kicked like a can down the road’ will play a roll in future economic growth. If Congress gets tough and addresses the debt crisis head on, I suspect it will present a deeper, temporary plunge into negative growth territory. If Congress continues to ‘kick the can down the road’, I suspect we will see less of a dive in GDP early on…but will set the stage for a much deeper dive in a year or two…possibly as deep or deeper than the ‘Great Recession’ of 2008-2009.

I see several troubling economic factors that parallel the times leading up to the ‘Great Recession’. The world stock markets are within 2% of the all time highs reached just prior to the stock market crash of 2008. Like then, I see no justifiable reason for the recent market rise. It looks to me like a bunch of gamblers in Vegas betting it all. The market is again inflating into a balloon ripe for explosion. Real estate prices have been climbing at a fast pace, as is real estate speculation…similar to that witnessed prior to the bursting of the real estate bubble, prior to the Great Recession. I can not predict how much farther things can go before a repeat of 2008 occurs…but I feel that a down slide is coming at some point soon. Much will have to do with congress’s handling of the debt crisis. The best thing they can do is ‘bite the bullet’ and suffer the consequences of balancing the budget early on. While that will most likely allow our GDP figures to become even worse than they are now, action soon might stave off an economic catastrophe a few years from now. I wish I could offer a more wholesome outlook for the American economy, but the fact remains…America is facing the most serious financial crisis in its history, one which has the potential to reduce America to a third world nation if not handled properly and soon.

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Captain Rick:

I manage a WordPress blog for my friend Bill, who was diagnosed with stage 4 Merkel Cell Cancer and given 6 months to live. I convinced him to tell his story on a WordPress blog that I would create and manage for him. He agreed and has been relating his gripping story ever since. He has just completed his 6th round of chemo and reports great news of hope. I encourage you to follow Bill’s ‘C’ Word Journey on WordPress and offer your words of kindness and support.

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Bill’s ‘C’ Word Journey on WordPress: http://cwordjourney.wordpress.com/

About Bill: http://cwordjourney.wordpress.com/about/

Bill’s latest post of hope: http://cwordjourney.wordpress.com/2013/01/30/another-petct-scan-and-appointment-light-at-the-end-of-the-tunnel/

Captain Rick: New York Gov. Andrew Cuomo signed into law America’s toughest gun control law. Could this be legislation that begins a sweep of America to control guns?

As a past resident of the state of New York, I recognize it as the toughest state of all when it comes to guns. I am beginning a new series on my blog called ‘Guns in America’. I expect it will be a hot topic on ‘Capitol Hill’ in the coming weeks in light of the recent massacre at Sandy Hook Elementary in Connecticut. This could very well be one of my most difficult reporting challenges to date. I will do my best to report the important facts from both sides of this important issue facing America. With your help via comments, perhaps we can guide America to an honorable solution.

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Details of the New York gun law

New York Gov. Andrew Cuomo signed into law a package of tougher gun measures Tuesday.
The Democrat-dominated Assembly passed the bill Tuesday by a 104-43 vote after the state Senate approved it by a wide margin late Monday.

The gun-control package makes changes and additions to a broad swath of state law, ranging from requiring universal background checks for all gun and ammunition sales, boosting the state’s power to confiscate firearms from the mentally ill and increasing penalties for gun-related crime.

The new laws provide for an immediate ban on semi-automatic rifles, shotguns and pistols with a “military-style feature,” such as a flash suppressor or a bayonet mount. Guns that had been legal but are being banned would be grandfathered in, but their owners must register their firearms with the state or sell them out of state within one year.

Magazines are limited to a maximum capacity of seven bullets, down from the current 10.

The legislation includes a “Webster provision,” a life-without-parole sentence for anyone convicted of killing a first responder. The provision is a reference to the Christmas Eve shooting in a Rochester, N.Y., suburb where two firefighters were shot and killed.

Criticism from gun rights advocates and a number of Republicans in the state Legislature was swift.

The National Rifle Association, which had previously labeled Cuomo as “America’s most-anti-gun governor,” expressed “outrage” at the “draconian gun-control bill that was rushed through the process.” “Gov. Andrew Cuomo and the New York State Legislature orchestrated a secretive end-run around the legislative and democratic process and passed sweeping anti-gun measures with no committee hearings and no public input,” the lobbying group wrote in a statement.

The new gun laws received praise from New York City Michael Bloomberg, a staunch gun-control advocate whose Mayors Against Illegal Guns initiative has aired television advertisements pushing for tougher laws. “The responsible and comprehensive gun reform bills the governor signed into law today will help keep guns away from criminals and others who are already prohibited from purchasing them,” Bloomberg said in a statement.

Captain Rick: Where does it go from here?  What is the answer?

This is a huge subject that involves U.S. Constitutional Second Amendment rights that protects the right of Americans to keep and bear arms … and consideration of the growing voice in America that is concerned about massacres of innocent people by a person with a gun or guns.

What is the answer? I welcome all reading this to voice your opinion in the comment form provided. Perhaps together, we can find the answer.

I welcome you to follow my blog as I probe deeper into the subject of ‘Guns in America’.

View my entire Guns in Ameria Series: https://atridim.wordpress.com/category/guns-in-america/

Captain Rick: I received a report from my friend Bret who is a frequent commenter on my blog and is on work assignment in China. He sent the following photos and report:

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Bret of Arizona reporting from China:

We flew into Shanghai, drove 2 hours to Suzhou, and the next day drove what was supposed to be 4.5 hours to Jingua (ended up being 6.5 hours because of traffic.)

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Visibility was at best 1 mile. I saw no houses, just miles and miles of dingy apartments.

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The food was absolutely awesome! It was depressing to see how people live. Almost no recreation, and everywhere you looked, there were little vegetable gardens. One thing I can say is they are self sustaining people. I saw no commercial farming at all, just little family gardens everywhere.

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If you look closely at the picture of the scooter, there are 4 people on it with the baby on the back facing backwards…very common.

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Shanghai was clean, but went on and on for miles…It is hard to comprehend the amount of people. My pics were all from a Samsung Galaxy tablet, that is why they are low quality. I hope you enjoy them. Bret

Captain Rick: The House passed the “No Budget, No Pay Act,” a Republican bill that would effectively suspend the debt ceiling threat for several months.
The bill would let the Treasury Department borrow new money until mid-May so that obligations like Social Security and Medicare can be met.
In exchange, the legislation would require lawmakers in both chambers of Congress to pass a budget resolution or have their pay withheld until they do.

The vote was 285 to 144. The bill passed largely on the back of GOP support — 199 Republicans voted for it. But Democrats were needed, and 86 backed the measure.
Leading Senate Democrats said they would support the legislation because it takes the immediate threat of default off the table and divorces the debt ceiling from Republican demands for spending cuts.
President Obama will not oppose the bill if it reaches his desk, even though he would prefer a longer term debt ceiling increase.

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Here’s how the bill would work:

The proposal would suspend the debt ceiling until May 18. Treasury could continue to borrow for payments that have to be made during the suspension period and nothing else.

The debt ceiling would then be restored at its current level of $16.394 trillion plus however much Treasury borrowed during the suspension period.

After May 18, Treasury likely could again use “extraordinary measures” to stave off the prospect of default for awhile, giving Congress extra time to raise the debt ceiling. Treasury could have “sufficient funds to meet all federal financial obligations through at least the end of July.

The bill would also open a path to a longer term increase: It would require the House and Senate to each agree by April 15 to a budget resolution for fiscal year 2014.

If the House and Senate don’t meet the April 15 deadline, lawmakers’ pay would be withheld until they pass a budget resolution or until the current Congress ends in January 2015, whichever comes first.
So it’s not that lawmakers won’t get paid if they miss the deadline. Their salaries would be held in escrow and paid out at some point later.

House Republicans, in coming up with the temporary debt ceiling solution, are in essence conceding that the debt ceiling fight is not their best shot at securing spending cuts and substantive deficit reduction.

Pending Deadlines:

1: Unless Congress acts by March, the pending sequester would trigger close to $1 trillion in defense and non-defense spending cuts.
2: If lawmakers fail to act by March 27, federal funding will expire entirely and the government would be shut down until lawmakers can find some way to agree on spending and taxes for the next year or at least another few months.

Captain Rick’s Words of Caution:

Many Americans are getting sick of hearing about all of the subject of the fiscal cliff, national debt and the debt ceiling. I hold little hope for our representatives in Washington to fix America’s fixation for debt anytime soon. The above measure only kicks the problem down the road for a few months. Soon, America needs to wake up to the reality that we can not keep spending like ‘there is no tomorrow’  and cutting taxes at the same time. Democrats need to get off of their ‘high horse’ and realize that American can not keep providing money and grants for everything that ‘sounds cool’. Republicans need to get off of their ‘high horse’ and realize that taxes need to be increased to cover the costs America is facing today. Hopefully, somewhere along the line they will come together and actually agree on a balanced budget…before its too late. America still has some time left to ‘get it right’ financially while our foreign friends are still willing to invest in America… but the ‘candle is growing dim’. The continual act by our government of ‘kicking the fiscal can down the road’ philosophy must end soon, or America will be eventually be faced with an unsolvable problem of how to cope being a third world country.

If you want to learn more about the serious financial problems that face America,

CLICK: Captain Rick’s Fiscal Cliff Course 101 … The course starts at the very bottom.

Captain Rick: The record freeze that has gripped Arizona’s Valley of the Sun for the past 5 days is giving way to warmer temps.  It was the longest cold blast to hit the greater Phoenix area since 1978.

Having lived in the Valley since 1996, I can say with out a doubt, it was the longest, coldest streak I have witnessed here. The digital weather station at my Gilbert Oasis measured early morning lows of 27.9, 26.1, 26.2, 27.9, 30.2 (F) during the past 5 days. I have only witnessed one day colder…25.2 registered on January 15, 2007, part of a 2-day cold snap. This 5-day frigid blast far surpassed it. This was the first year my fountain froze solid. My pool water dropped to a record low of 39F, smashing the old record of 43F. I ran the pool pump all night for 5 days straight to keep the above ground plumbing from freezing, beating the old record of 2 days. I also insulated my water supply line. Unlike houses in cold climates, water supply lines in the Valley enter the house above ground, subjecting it to the rare event of freezing.

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A desert freeze can be beautiful, but also very destructive to its plants. During my daily walk today, I was amazed at the extensive damage to the tender desert plants and trees. The fichus trees, lantana, bougainvillea, honeysuckle, bird of paradise, aloe, hibiscus and several other tender plants were severely damaged. It is the worst plant destruction I have witnessed here. I suspect I will have to prune many of my plants back to nearly nothing. I will probably loose some. Even the hardy oleanders got frost bitten badly, killing all of the flowers and buds that were in bloom. I suspect that the normal explosion of floral color and beauty in the Valley will be a bit delayed and diminished this spring.

On the bright side…temps closer to normal begin returning to the Valley of the Sun tomorrow.

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Captain Rick: Gross domestic product (GDP), the broadest measure of the nation’s economic health, grew at an annual rate of 3.1% from July to September (Q3). That’s more than double the sluggish 1.3% rate in the second quarter, however it only measures even with the break-even line. 3% economic growth, represented by the red line in the chart below, is necessary to provide enough jobs and wages to keep pace with U.S. population growth. America has fallen short of the line in all but three quarters during the past four years. A GDP growth rate of 5% for 4 quarters is required to reduce the unemployment rate by 1%.

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Consumer spending, which typically accounts for more than two-thirds of the U.S. economy, was the single largest driver of economic growth between July and September. U.S. households bought more motor vehicles and health care services, leading consumer spending to rise at a 1.6% annual rate in the quarter.

Government defense spending was another large driver, rising 12.9% in the third quarter. And home sales picked up, also contributing to economic growth.

Meanwhile, businesses built up their stockpile of goods and were hesitant to make new investments. Business spending contracted at a 1.8% annual rate in the quarter, dragging on overall economic growth. The largest cuts in business spending were on equipment and software.

Economists point to uncertainty about 2013 taxes and government spending cuts as the culprit that’s weighing on business investment decisions. The uncertainty generated by fiscal ineptitude has basically shut down investment spending. 

Economic Outlook: Overall, economic recovery remains sluggish. On average, the U.S. economy has grown about 2% a year for the last three years. Essentially this means the economy has actually going backwards at a rate of about 1%. Major portions of the fiscal cliff remain unresolved. The fiscal cliff and the pending debt ceiling will have to be addressed by about March 1 to prevent government default. The manner in which they are addressed will play a role in whether America dips into another recession next year.