Peter Yastrow's Blog

Growth ? are you serious ?

People keep citing the 3.5% growth rate of our GDP as a clear indication that we are recovering.

Let’s get our heads out of the sand and think.

The stimulus package is $950 billion, give or take $100 billion. ( its their accounting issue, not mine ).

As of May 2010, they have spent approximately 50% of the stimulus money.

Our economy is approximately $ 14 trillion dollars.

½ ( 950 billion ) / 14 trillion = 3.39%

The spending of our stimulus package accounts for all of the growth we have seen.

Get ready, because when the stimulus runs out, our economy will slow down. The projects that were undertaken were not productivity enhancing, and will not create good jobs. They just perpetuate the status quo, until the problems return.

Our government has made a serious and dramatic mistake with regard to the stimulus package. It appears that in an effort to repay campaign contributors, this administration took advantage of the economic turmoil. They rammed through a spending bill that has little chance of creating any long term growth, but absolutely added a trillion dollars to our debt burden.

It’s a disaster. I am afraid.

peter

“Navigating Choppy Trading Waters” – Peter’s CNBC guest appearance in NYC

Airtime: Wed. May 12 2010 | 5:31 AM ET

Peter Yastrow, of Yastrow Origer, tells CNBC how he’s navigating the choppy trading waters.

A Greek Tragedy

A Greek Tragedy

Greece is the cradle of modern thought. The concepts of architecture, democracy, philosophy, art, drama all can be traced back to early Greece. The Socratic method of inquiry, and debate is a standard tool of higher education in all of the world’s universities.
Now Greece is teaching the world a new lesson. Greece is teaching us about one of democracy’s shortcomings. Democracies are poor credits. Do not lend to Democracies.
Elected officials’ incentives are dramatically skewed towards taking on debt. Typically the debt is to pay for a large highly visible project, which will get a lot of press. The benefits will be obvious for everyone to see. But the costs are easily dismissed, because they will be spread out over the entire tax base, far out into the future. Only the most fiscally responsible politician would turn down the opportunity to spend some money on behalf of his constituency.
Greece spent money on the Olympics, and never recovered. Government officials made bad decisions. They made assumptions about the future, and were wrong. Yet, as individuals they were not responsible for their poor decisions. They got to throw the party, but didn’t have to clean up the next morning. It happens over and over again in democratic regimes. Obviously there is going to be a lot of parties being thrown.
The allure of debt is too powerful. Like the siren’s song that lured the sailors to crash on the rocks, borrowing money always sounds beautiful. Decision makers, who will be praised for their progressive thinking, will naturally tend to favor spending projects. Effective government in action, spending our money.

And that is the whole problem. They are rioting in Athens. The citizens want control of their own finances. They want to keep their wages unchanged, and their taxes unchanged. However that is impossible, the government spent money they did not have, and now it must be repaid. The citizens are on the hook for the debts of the officials.

We need to learn, from the Greeks who are rioting in the streets of Athens. We need to understand that their elected officials screwed up, but the citizens pay. We need to comprehend that our Congress, and our President are on a spending spree of epic proportion. They think they are heroes. They are governing us. Just remember, they might be wrong, and we are going to have to clean up the mess.

j.o.y. to the world

peter