Senator Raymond Burr Shares His Thoughts
I sat on a panel this week in Charlotte on “Strategic Transactions – Planning for 2012 & Beyond”, hosted by Moore & Van Allen. One of the first speakers was U.S. Senator Richard Burr, who gave an incredible speech outlining the current global landscape, the political climate in Washington, and what lies ahead.
Senator Burr began by noting that the Senate is not inclusive, has no debates, and the result is that politicians are choosing not to vote or to control votes, rather than deal with the critical issues in this country. When asked if he expects this to change, his forecast is that people can expect more of the same, e.g. nothing will be passed. For example, the Senate spent the last week debating whether a specific law that had already been passed!
This inability to act couldn’t come at a worse time. Globally, Senator Burr noted that we have more pressure points that at any other time in history.
– Europe is on the edge of a capitalization cliff, with $3.8T capitalization required for their financial services. This is not only a dangerous trend, but crumbles when one opens up the balance sheets of companies that could easily fail with a rise in interest rates.
– China will never have transparency, as the situation gets worse. The government last year quietly capitalized their financial system by over $1T. This in a country where consumer spending is 1/3 of GDP, vs. 2/3 of GDP in the US. The government is the biggest spender in China far and away by any measure. This is unsustainable as their long term debt crisis continues.
– Japan has 200% of GDP as their national debt, 97% of which is financed internally by the Japanese people. For the first time ever Japan has gone out for global financing – and it should be interesting to see what interest rates their bonds go out at?
– The Middle East is in chaos, as the rest of the world (ROW) depends on the Middle East for oil. Egypt cannot hold fair elections, Israel and Iran are on the verge of colliding, and the killings in Syria continue.
– The US has had three years of anemic economic growth and no job growth. The credit markets have become overly regulated by bureaucrats who think they can pick economic winners to lend money to better than bankers. Although the capability of banks to loan money is good, the thresholds have become so stringent that it is not happening. US debt is at $15T, and is projected even in a rosy picture in the new budget to increase to $20.8T. This makes the $400B in debt the Greeks find themselves in look like pocket change.
To address these issues, Senator Burr believes several things must happen:
1. People need to get back to work. He believes in having people on unemployment spend 20 hours a week looking for work, and 20 hours a week doing volunteer work. As some of the people he knows have done this, they note that “there is no better place to find people with money who will hire you than when you are working in a nonprofit organization.”
2. Establish a budget blueprint. We have gone 3 years with no budget to follow. This makes business planning very difficult, especially when it comes to capitalization.
3. Cut $1T to balance the budget. But we also need to grow the economy. This could take the next 25-30 years to do, but let’s get started.
Senator Burr ended his speech with one of the most poignant statements I have heard in a long time. He noted that an individual went back to his country after visiting the United States and when asked why the US was such a great country, responded “The greatness of this country is based on the capability of its people to help people in need.” In other words, the capacity to give to others is what makes us great, not policy, not our military, or our social security system. It’s time we take care of the problems we face, and help one another out.