Daily Archives: October 26, 2010
This speech by Dave Cote, CEO of Honeywell (to the Chamber of Commerce) was forwarded to me by a friend. It is one of the best summaries of our fiscal/financial problems I’ve seen in a while. Usually, when I see a 34 minute video I’m loath to give the time necessary to watch it, but this one is both fascinating and deeply disturbing. Take the time.
Cote lays out in words and charts our coming fiscal train wreck if we don’t do something “proactively”. As he says in the speech, we can do what is necessary to solve the problem or at some point, the bond market (as it did in the case of Greece) will do it for us. One will be painful, the other is catastrophic.
Dale’s post below about “Following the House of Bourbon” is essentially given facts and figures by this presentation. For instance, the discussion about China’s defense expenditures being paid for by our interest payments. Cotes points out that if spending remains unchanged through 2020, we’ll be paying almost a trillion dollars in interest a year. At this point, foreign governments own 45% of our 9 trillion in debt. China owns at least a trillion of it. And there’s no end in sight of the sale of government debt here.
The last point Cote makes that echoes Dales warning is about how quickly this will happen if we don’t do something.
While the problem builds slowly and inexorably, financial markets respond abruptly. When that decline does happen, it won’t be a case of minor monthly changes that give us 15 months to adjust. The hurt will come overnight as the herd moves against us. And then it’s too late.
That could happen at any time without warning triggered, as Dale points out, by some seemingly insignificant occurrence that normally would receive only passing attention. I don’t think, for the most part, people understand that very important point or they’d be beating down the doors of Congress.
Cotes also addresses “political will” and whether we have the will to do what is necessary (and endure the political consequences) to get this nation’s fiscal policy on the road to sanity. He notes that the public is more engaged now that in quite some time (and that’s a good thing) but are really focused on the wrong things (although they do recognize the gravity of the situation, he thinks they’re focused on fairly irrelevant portions of it).
The distilled point of course is politicians only have the spine the public gives them and unless they’re assured the public is behind doing what has to be done to solve the crisis, their risk-averse nature will have them continue to kick the can down the road.
Anyway, highly recommended. It will give you a great idea of what our situation is, where we’re headed and what the results of continuing to ignore it promise.
In another variation of the “it’s not the message, it’s the delivery”, Nancy Pelosi has informed the world that, “we haven’t really gotten the credit for what we have done”.
Well Ms. Pelosi, you will get all the credit you deserve on November 2nd.
Pelosi’s remarks reflect a growing trend of frustration expressed by Democratic leaders on Capitol Hill and at the White House. Senate Majority Leader Harry Reid (D-Nev.) said last week that Democrats’ biggest failure in this election has been not to adequately sell their accomplishments to voters …
You simply cannot be any more disconnected than this. 3 trillion in debt, almost 10% unemployment and the Democrats 18 month priority? A monstrosity of a healthcare bill that will increase the deficit.
Another note to Ms. Pelosi – it’s hard to grab “credit for what you’ve done” when every single candidate out there is running away from those “accomplishments”. Nope – what they’ve “done” is exactly what they’ll be receiving credit for on election day.
By the way, Ms. Pelosi – PAYGO has been a raging success, hasn’t it?