INVESTING WITH NO RETURN

INVESTING CASH WITH NO RETURN

Recently the President-Elect was reported to have said we would spend ourselves back to economic health. This statement appeared in various newspapers about the time we received at our home a check from the government for our daughter who works in England. It was a stimulus check for $600.

Of course, we immediately deposited it in her account, hoping desperately that she would be patriotic and stimulated.

Since she is living in Surrey, England, I have serious doubts that she will be spending her $600 in the good old USA. I have no idea if she is stimulated.

This caused me to wonder how many stimulus checks went to people who either make enough money they don’t need stimulated to spend, or people who would obviously be spending their checks in another country, or people for whom $600 is simply pocket change as opposed to people for whom $600 will make a great difference in their meeting the rent or feeding the kids.

To carry that idea a bit further, suppose all the people in the other categories I mentioned didn’t get stimulus checks but the total amount spent for stimulation remained the same. Would that not mean that the people who really needed the money would get more than $600?

But we live in a democracy and that just wouldn’t be fair, right? Everybody gets the cash, need it or not.

It is important that the Rockefellers, the Morgans, and the Trumps be stimulated. It is simply The American Way.

Since the Obama government is talking to Congress about doing even more stimulating, I assume additional checks will be coming to each citizen regardless of need. There’s that democracy at work again.

Based on his Barak Obama’s own statements, he really does want each of us to go out into the marketplace and spend that money. In fairness, so did George Bush when he sent out the first batch of checks.

Since it would seem sort of unpatriotic not to do so, I anticipate a flurry of purchasing of new Iphones, Blackberry’s, computer games, three-day vacations to Las Vegas, etc.

To the extent that the stimulus checks are spent on stuff made in other countries, the program could be considered a failure.

When they were thinking this idea up they should have taken a look at the automobile industry. If Americans weren’t buying America cars before they got the check, is it realistic to assume they will put the check toward a new Ford?

How about taking the check and investing in some good old American companies on the New York Stock Exchange. Right! That isn’t going to happen any time soon.

For those of you who are not students of history, we have been in the stimulus business for a very long time. We stimulate foreign countries through our foreign aid programs. That great example probably led us to the domestic variant currently in vogue.

Here is the way the foreign aid stimulus effort has worked:

In some cases we stimulate them to pretend they like us.

In other cases we stimulate them and they don’t even pretend to like us. But we keep sending cash anyway.

In yet more cases, we stimulate them and a couple of guys at the head of their government take the money for themselves and hide it in Switzerland to fund their life after they get run out of town. So it would be fair to say that Papa Doc Duvalier, Idi Amin, as well as a couple other leaders of “banana republics” could live pretty well thanks to US Aid even thought their people are starving.

The current year’s give-away in foreign aid will be $39.5 billion dollars.

Here is some information as to this budget right from the website of our State Department (www.state.gov):





Budgets for the Department of State, the U.S. Agency for International Development (USAID), and other foreign affairs agencies totals approximately $39.5 billion:

* Foreign Operations and Related Agencies-$ 26.1 billion
* Department of State-$ 11.2 billion
* Other International Affairs-$ 2.2 billion


Highlights of the Budget

Foreign Operations and Related Agencies:

$4.8 billion for foreign military financing to the Middle East, Latin America, Europe and Eurasia, including $2.6 billion for Israel.

My note: we are giving $2.2 billion to the Middle eastern countries (read Arab), all of Latin America, all of Europe, and all of Eurasia.

We are giving $2.4 billion just to Israel.

Now here is a little bit of rocket science:

The Israelis like us. They like us a lot.

The Arabs do not like us. Not one bit.

Everybody else tosses a coin depending on when we need them: say France in World War II, or maybe South Vietnam during that little skirmish, how about Grenada when Reagan invaded, and then there was all the help we got in Iraq. Well, you get the idea.

Surprised?

The famous CATO Institute says we have spent $1 trillion on foreign aid since 1997. They also say what we received in return was “debt, dependence and poverty.”

Our own AID (Agency for International Development) says much aid “disappears without a trace” once it gets to the country.

Brian Atwood, then of US AID is quoted as saying “$2 billion dollars of US Aid to Zaire served no purpose.”

Given the billions we are spending to bail out our non-performing American institutions, and the number of new organizations asking to be included in the bail out program, and the number of people losing their jobs and having their homes foreclosed, I have a recommendation for the president-elect:

Go ahead and stimulate Americans.
Stop all stimulation of other nations

When we have our own house in order, we can revisit sending money desperately needed here at home, money that actually is generated by the tax our government places on each of us, to other countries that by and large seem to expect it and show very little gratitude for it.

If we do go back down the “give away path” internationally after things look a lot healthier at home, could we please just dump the money on friendly nations, the ones we really want to pal around with, the ones that get in the foxholes with us when the chips are down?

In many cases it could be argued that we have given the many nations who hate us the weapons to use against us. If our goal was to change their minds, it hasn’t worked.

Where I studied business, and where I practiced business in my life, you never threw good money after bad.

Somebody call in the auditors. The State Department has a foreign aid policy built on the same premis as Ford’s Edsel. Ford stopped making Edsel’s a long time ago.

Somebody tell Condi Rice and Hillary Clinton.