We had a historic inauguration in DC this week.  Barrack Obama is now President of the United States of America.  We had many celebrities in town for the festivities and the Washington Post was full of inauguration coverage.  The Democrats that are taking over the Executive Branch are scrambling to find their new offices and exert their control over the government.  We are in the early days of experiencing the "Change" that we were promised during Obama's campaign.

I truly hope that President Obama succeeds as President.  The one piece of really bad news that has come out of the confirmation hearings is that Tim Geithner, the current head of the New York Federal Reserve Bank, has no business becoming the Secretary of the Treasury.  While Geithner is technically qualified for the position the revelations about his personal tax issues effectively disqualify him.  He participation in overseeing the disintegration of major New York banks doesn't speak well of his professional ability.  Hopefully, President Obama will get rid of this guy before he creates any more problems.

As a betting man (every person that invests is effectively a betting person),  I would bet that the Obama administration will continue the fundamental long term trends of prior Democratic and Republican administrations.  I bet there will not be any fundamental change during the Obama administration.  There will be "fixes" to the economy with TARPs and economic stimulus programs but in the end it will all end up with more government debt, substantial increases in the money supply and further debasement of the value of the dollar. 

The early announcements by Obama this week are superficial changes cheered by liberals across the nation.  They really don't have much impact on the deeply ingrained core trends driving the path of the country. 

We will see if President Obama can truly create fundamental change.

TPM

When one lives in the Washington, DC area the pomp and circumstance of the US government are part of your life.  There is no escaping the impact of the actions of the USG when there is a big event in DC.  Every four years we have the inauguration of a new president which creates an incredible number of special events from the inauguration itself, the pre-inauguration festivities and the balls and parties that will be held on the inauguration day evening.  It is great to see all of the people coming into town to participate and celebrate the Obama inauguration.  Our local economy appreciates all of the money the visitors will be spending during the inauguration weekend.

On Tuesday we will have a change of government and Democrats will take over the Executive Branch for the first time in eight years.  The Dems will control both the Executive Branch and the Legislative Branches of government for the first time in fourteen years.  They have a lot to celebrate and deserve to have a good party or two to cap off all of their hard work over the past few years to regain full control of the US government.  There is no question that Obama's inauguration is a historic event.  It is great to see so many happy people celebrating his inauguration and believing that major changes in government policy are coming.

In many respects Obama is one of the luckiest newly elected presidents in US history.  He can't really can't lose on most of the critical issues because he is inheriting such a difficult overall situation that it can't get much worse.  If he is successful in improving things he will be regarded as a genius and get full credit for leading the country forward.  The only area where he and his team are vulnerable is the potential for a significant terrorist attack on US soil.  If that event were to occur after Obama's team has been in place for a reasonable period of time you can bet that Obama will most likely be a one term president.

If there is one fundamental trend that has been place for the past fifty years it is that the USG will create financial obligations for future taxpayers that can't be funded without printing fiat dollars to pay for those obligations.  Many years ago it was the Democrats that were the leaders in creating fiat dollars to pay for future obligations.  In recent decades the Republicans have joined the money printing party as well.  During the Bush administration the creation of future government obligations and the printing of fiat dollars have reached levels far beyond any expectation of earlier decades. 

The fundamental strategy of the US government is to effectively tax the net worth of savers through expansion of government debt and monetary inflation.  The USG creates fiat money to facilitate the transfer of wealth from those that have it to those that don't.  It is a form of creeping socialism and wealth transfer over the long term that very few people understand or will talk about since both political parties are in favor of the this process with only a few policy differences in how it is executed.  Both parties support the process because it allows them to use the process to favor the electorate they need to gain or retain political power.  It is a reflection of the change in attitude within the US population over the decades concerning what is a personal right to what is a privilege of society.  It reflects that change in emphasis from the "pursuit of happiness" with no guarantees about the outcome to a fully developed social contract that has not been earned by a significant percentage of the US population.

I hope Barrack Obama is a truly great US President.  I hope he has a fundamentally different set of perspectives and greater insight than his recent predecessors on these fundamental long term issues.  However, when I listen to Obama's speeches and observe the actions of his team in their interaction with Congress I doubt this is the case.  Obama will simply extend the long term trend of creating even greater amounts of US government debt and fiat dollars and set in motion the future transfer of weath through the tax of long term inflation.

Beware of celebrating too much, the changes we get may not be the real changes we need.  In the end we need to defend ourselves from the actions of our government.  The long term trend is not favorable.

TPM

Israel has been attacking Hamas terrorist sites in Gaza during the past few weeks in response to repeated Hamas rocket attacks in southern Israel.  Israel began its response using ground attack aircraft and has accelerated its response by sending in ground troops with the intent of eliminating Hamas' ability to continue launching its rockets at Israel's civilian targets.

Like most terrorist organizations Hamas operates under the cover of Gaza's civilian population.  Hamas is using the civilian populations as a human shield for its terror activities.  Isreal's response has resulted in many Palestinian civilians including women and children being killed despite its efforts to be extremely careful in targeting the locations harboring Hamas.  Many around the world are criticizing Israel for an uneven response to the Hamas threat.  Many experts are suggesting that a process can be created that will result in the Israelis and Palestinians being able to leave in peace.

The reality is that there has never been lasting peace in Canaan/Judea/Palestine/Israel (pick the historical name you like among these and many others for the region that includes modern day Israel, the West Bank, Gaza and adjoining areas) and there will never be a lasting peace among the peoples that consider this land their rightful home.  The religion based societies that live in the region will fight each other until one side or the other no longer has the will or ability to fight. 

The current Israeli response to Hamas is a major effort to effectively eliminate much of Hamas' terrorist capability and the Israelis know they must inflict major damage.  The collateral damage is unfortunate from their perspective but their overall stakes of their mission make the collateral damage not meaningful.  While this is very difficult for most of us to understand, we are not defending the existence of our nation and our national survival.

The rest of the world needs to stay out of this fight.  We don't really appreciate the most fundamental cultural issues that are at stake.  We need to let the governments and other organizations in the region deal with their issues.  We need to let them determine their own destiny, just as they have for thousands of years.

TPM