SNL Obama-Hu skit speaks volumes about US debt problem

I was at a friend's house Saturday night, talking about business and life when SNL came on the TV. I don't watch much television, so we took a break from the conversation and watched one of the skits.

I remember SNL from the 70s and 80s when Bill Murray, John Belushi, Dan Akroyd and Eddie Murphy were cast members. Maybe it was because I was growing up and didn't pay that much attention to politics, but I never remembered SNL being really political.

However, I was taken aback when I saw this skit that showed Chinese Prime Minister Jintao Hu accusing President Obama of being a liar and trying to screw him and his country with the enormous debt that the United States owes China.

It was funny when the actor playing Prime Minister Hu said: "Why you not kiss me before you do sex to me?"

If Saturday Night Live realizes the American debt problem is this big and virtually unmanageable, I'm pretty sure that China and every other nation-state on the planet understands this as well. Under George W. Bush, it was apparent that the federal government had no intention of being fiscally responsible or getting close to a balanced budget.

Under President Obama, it's doubly apparent that the political inmates (Republican, Democrat and Tea Partiers alike) are running the asylum and want to do what's politically in their self-interest, instead of what's in the best interest of American citizens.

Even if Benny and the Feds don't "officially" implement QE3, it looks certain they'll continue to print large sums of money to try and inflate their way out of this debt problem and keep the economic party going as long as possible. Based on this SNL skit, it looks like the credit/debt/currency keg is just about dry - and the party's almost over.

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Thoughts on Commodities...

I've thought about my prediction for the price of wheat, which is... we'll see Hard Red Winter Wheat at $10.00/bushel or higher by Labor Day. As they say in the NFL: "After further review..." I think it's entirely possible we could see this occur by Memorial Day, or even May Day. Here's why:

Floods in Australia, drought in Russia, and dry conditions in the U.S. Central Plains - plus the Federal Reserve's insane "Quantitative Easing II" policy (aka, money printing on steroids) all look like rocket fuel ready to explode the price of wheat higher.

The Fed's insanity has increased and will continue to increase the price of other commodities, such as crude oil, natural gas, gold and silver. I've been considering what factors could prevent this explosion in commodity prices. The only things I can think of are sharp cuts in government spending, and a Paul Volcker-style interest rate shock treatment. Watching what Ben Bernanke says - and more importantly, what he's done - it's pretty obvious that Ben is no Paul Volcker.

He seems hell-bent on printing money, while the Congress is hell-bent on spending it. Even with Republicans taking control of the House, I don't see politicians at the federal (and most state) levels having the gumption to seriously address government spending, entitlements, and most importantly... state and municipal pension plans, which have huge unfunded liabilities.

Not to mention Social Security and Medicare at the federal level.

Could we see some downward corrections in the short term? Absolutely.

Markets can - and usually do - act in irrational ways in the shorter term... but always trend according to the fundamentals in the long-term. Easy money, tighter supplies and crazy government spending are why I'm bullish on commodities for the foreseeable future.