Eye of the Beholder: Me and my Arrow!

Eye of the Beholder

Eye of the Beholder

It was Lew Wallace (1827-1905) who said, “Beauty is altogether in the eye of the beholder.”

Since I began getting involved in Washington, DC with the debate over healthcare reform a number of years ago, I have wondered more and more about how we have arrived at such a place that every issue, every decision, every need is met with such partisan, fractional, divisive and inflammatory rhetoric. Today it seems that there are no discussions on any issue that doesn’t revert to, “they said this, and what they really mean, is that.”  Or, you can hear a statement from one side or the other to the effect that, “It’s clear that their agenda is to do X, Y or Z to harm us.” Any, and all, of these statements amount to “doodly squat” as Granny Hawkins would say! – a prize to anyone who knows this reference — without using the internet!

Spin is not a new concept

Nothing related to any issue facing our national interest today is devoid of some spin to gain advantage on some other tangential issue–related or not.  Not to pick on any one side, or the other, but how often do we now hear the phrase, unfortunately most recently attributed to Rahm Emmanuel, “never let a serious crisis go to waste.”  Or to be fair, the statement by Senator McConnell that the prime goal of republicans is to defeat the president. If you think Mr. Emmanuel or Mr. McConnell are the first to utter these kinds of ideas, that they meant them completely literally, or that it is not a practice by each side of the political aisle, I have a bridge in Brooklyn I am willing to sell you; if you can convince me you deserve it!

If you think hyper-partisanship and gridlock are new I again encourage readers to go to Google Books and look up some of the old papers from the late 1800s and early 1900s and read what was going on then. There are surprising similarities.

Agenda based legislation now the norm

During the drive for healthcare reform there were a series of changes to the goals of the legislation that occurred as the process spread to one committee after another.  Senator Kennedy began the current process of healthcare reform in the wake of the disastrous attempt during the Clinton administration.  The bill that he authored just prior to his death was the result of his long-term attempt to find some legislation that would be acceptable to people on both sides and improve the healthcare system.  The HELP bill, while clearly not likely to have conservatives jump up and proclaim it a triumph of modern legislation, was still a bill that he clearly had worked hard on to find areas of support from his political opponents and an honest attempt  to find methods to improve the healthcare system. Continue reading

The Two-Bit-Kid vs. The Come-Back-Kid: Which do you want for your candidate?

Entering the Florida primary-of-the-moment race  are ‘The Two-Bit-Kid‘ (Mitt Romney) versus the ‘Come-Back-Kid‘ (Newt Gingrich).  Clearly, Newt has earned the title the Come-Back-Kid, as he has been counted out at least three times in the recent months by many pundits on the left and right. I have called Mitt the Two-Bit-Kid for his inability to gain or stay above 25% in the polls for more than just short period. Often, he has risen above this apparent wall only when others implode, sometimes on their own, and then sometimes with a little help from his friends.

Is it just me, or if you’ re a Californian doesn’t Herman Cain remind you of Willy Brown? Or Marion Berry if you’ re from DC?

The Republican race thus far has not been an awe inspiring process has it?  If we were to take a path along the lines of creating the next “Steve Austin” we clearly could have combined the candidates into our own “One Billion Dollar Elephant Man.”  We could have taken Newt Gingrich’s brain and policy experience (Newt is consistently one of the smartest guys in the room–and he knows how to nail those that the people want nailed!), Hermancain’s simple 999 style(I say Hermancain because, I have never heard any other name for him.  I can’t even tell if this is his first or last namecan you?) Let’s add in some of Rick Perry’s reversion-airy ideas on converting our professional political class back to part-time citizen politicians (something that is definitely needed). How about some of John Huntsman’s ability to speak Chinese (he could tell Chinese Premier Wen Jiabao the inside dirty jokes or tell them where the best Chinese food is in Washington, DC–who would know?) Let’s take some of Ron Paul’s views on the Federal Reserve (and their big bank cohorts)  and their complicity and obfuscation in the current financial crisis (and perhaps his relationship with Arthur Dent, a hapless Englishman who travels the galaxy, could help if the aliens lose all common sense and decide to invade the planet–Come on, you think he doesn’t know him personally?) Now let’s put in a dash of

John Huntsman seems like a nice enough person but he reminded me of a bobble-head doll every-time he spoke!

Rick Santorum’s ability to keep talking to everyone while not  really enhancing the conversation one iota, but seemingly not pissing people off (other than convincing them he is really truly a conservative–and after-all to Rick, that is all that matters right?), Michelle Bachmann’s attractiveness to the Tea Party and her singular focus on repealing Obamacare (Do they still find her attractive?–I mean in a political sense of course), And Mitt Romney’s uncanny ability to continue to run for president after, what is it?–eight years–wining only one state and still not get more than about 25 percent of the electorate interested in him, but still he continues. (Don’t forget the hair–Mitt has great hair! The best that money can buy!)

Please, will someone tell Mitt Romney not to put jell on his implants? It makes them look like a well cultivated cornfield owned by some anally-retentive Iowa farmer.

Now, if we could pull that off we would have the One Billion Dollar Elephant Man (BDEM).  The Republicans are going to need this to go up against the One Billion Dollar Donkey Man(BDDM). (I thought about using the pejorative that I know many of you are thinking but, it would not be appropriate!) Oh yea, he already has one billion dollars doesn’t he!  I think we should put this fact in a bit of perspective.

Lee Majors vs Barack Obama

I did not realize, until I began to research this article, that the show The Six-Million Dollar Man began in 1974.  The same year that President Nixon took us off the gold standard!  Now, how about that for a coincidence!  Lets take a look at what it is going to cost to build a modern replica of Steve Austin and compare that to what either the BDEM or the BDDM is going to actually cost us all.

In 1974, when Steve Austin was being constructed to protect mom, apple pie, and the American way, He cost America $6 million to build and there was a total of $500 billion of currency in circulation (CinC.)at the time.  That was about 0.0012% of the total money in circulation.  Now, if we look at the Billion Dollar Donkey Man or the proposed Billion Dollar Elephant Man, using the benchmark of Mr. Austin, either of these candidates should only cost about $192 million based on having almost $16 trillion total Currency in Circulation today.  But, they will likely cost at least $1,000,000,000.00 each! That equates to 0.0625%–an increase of 520.83%. That is an inflation rate of 13.71% per year since 1974. What do we get for our money?

That’s a 520% Increase!

I guess we should not complain all that loudly, should we?  We only had a 520% increase in the cost of the $6 million dollar man but we increased the total amount of money circulating in our economy by 3,200% Yep, that’s correct! We increase the total amount of money in our economy 32 times what it was in 1972. And of course the value of all the assets of the U.S. increased 32 times as well didn’t they?

While our ideology, and its complete polarization, have made for great copy; no single person or party is responsible for this mess.  We all are!  As I read the paper this morning, I start to see the new push against Gingrich as angry, unpredictable and undisciplined.  I see the attacks on Romney as not in touch with the common man, driven more by greed, and not able to close the sale with voters.  Overall I saw so what!  In sales and marketing there is a thing called the “so what test!”  If after someone tells you something they think is a selling point you can say so what, then they have not made the sale!  I think we need to all say so what a bit more!

Conversely, now I hear, over and over, how the democrats are more afraid of Romney than Gingrich–that Gingrich has so much baggage they feel they can easily beat him. And as Yul Brenner said in The Kind and I, “Etcetera….  Etceteraaaa….  Etceteraaaaaaa!”  Deep inside, when I hear this I wonder if the words of the queen in Shakespeare’s Hamlet ring true?

_____________________________

Player Queen:
Both here and hence pursue me lasting strife,
If once I be a widow, ever I be a wife!
Player King:
‘Tis deeply sworn. Sweet, leave me here a while,
My spirits grow dull, and fain I would beguile
The tedious day with sleep.
Player Queen:
Sleep rock thy brain,
And never come mischance between us twain!
Hamlet:
Madam, how like you this play?
Queen:
The lady doth protest too much, methinks.
Hamlet Act 3, Scene 2

_____________________________

Logically thinking about this, I am not sure I agree with the conventional, or contrived wisdom, that the Democrats are more afraid of Romney.  He has more money at this point, he is more organized, and his background accomplishments key him up directly as the economic foil to illustrate the Presidents economic failures.  In the long run, if we get our collective heads out of our nether regions, I don’t think the rap against Romney on his fiscal achievements, and liabilities,–Bain Capital, taxes et. al.–amount to much in balance.  For everyone who begrudges him his success and fortune, others will want him to translate these skills to work on their behalf.

Likewise, Gingrich may have baggage, but it just different baggage.  Like the others, in many of the attacks on Gingrich the supposed weaknesses also become strengths.  Unpredictability, is well, unpredictable.  Unpredictability makes it difficult for others to prepare their game plan and stick to it.  Clearly, Newt is the strongest debater, and by almost every account the smartest man in almost any room.  Some have charged this leads him to be undisciplined and that his idea-a-minute brain makes it hard for others to find focus and achieve.  Clearly, this is not the case for some others.  Newt himself has had a disproportionate share of successes, accomplishments and achievements in his lifetime.  Recognized as a quintessential American, more along the lines of the early framers and founders.  He is and been a successful politician, author and consultant. He has been Times Man of the Year in 1995 for his role in leading the Republication Revolution and creating the Contract with America, Earned his PhD from Tulane University, has taught History and Geography,  founded Conservative Opportunity Society, American Solutions for Winning the Future, The Gingrich Group, and the Center for Health Transformation and co-authored over 27 books and documentary movies. Yes, his marital history and admitted infidelities are cause for some to find him inappropriate to hold the office. A number of our founding fathers had similar transgressions.  And for one I am really tired of this as a litmus test for an elected candidate.  I want someone who can lead the country, come up with good ideas and solutions and fight hard and passionately to bring them forward to conclusion.  I want someone who will call things as they are.  I am tired of the politically correct version of our history and our life.  Most importantly, I am tired of our desire to offend no one standing in the way of our ability to recognize the issues on either side and deal with them effectively, timely and efficiently.

Newt has baggage but he also has a long and diverse list of accomplishments!  While Romney resonates with women Newt does not.  While Newt creates the feeling that nothing is beyond his intellect and willingness to take a risk and to fight the full fight, Romney often appears to favor the safe path.  Overall, Newt presents to Americans the Passionate Risk Candidate, while Mitt presents the Safe Bet Candidate.  Who will eventually win may still be anyone’s guess.

Being a Mugwump, I will end up voting for the person that I believe will do the best job and accomplish the most.  There are things that are attractive to me about Newt as I feel what we need now is a fighter, someone who is willing to passionately address the issues we face both inside our nation and abroad.  I think now, I want someone who will not play it safe and who will take the risky path and fight for the best outcome.

I do not worry about Newts baggage, I am concerned that we have changed so much as a society that we no longer want citizen politicians with all their flaws–just read any of the recent biographies of Washington, Adams or Jefferson and you will see what I mean they were all flawed men.  I am worried that today we want political-celebrity-rock star-gods.  We seem to really want to have a Professional Political Class, telling us what to do.  We seem to be willing to accept anything they do as long as they do not become regular everyday people like us!

There are things about Romney I like as well.  I like his tenacity, his success, and his history in the private sector.  His religion and long term commitment with his wife neither sway me nor bother me.  I am not voting for a political-celebrity-rock star-god.  I will vote for the person I think can and will do the best job.  I am still forming this opinion, but I am now down to two candidates only.

What I am most concerned about is us!  I am concerned that the criteria we are using to select our next president is not based on the things we really should be evaluating.  We have said in years past, mostly in furtherance of political objectives, that it is about character.  I think in some cases character matters.  But like everything else, even a persons character has to moderated against the other factors and issues we face.  Genius lies in many people, many cultures, many demographics, many ethnicities, and many degrees of fidelity.  Overall, I want the best person to solve the problems that our country faces today.  The characteristics I have looked at in many ways become conflicting with each other and sometimes conflict with basic human nature.

What do I want?

  • I want plain talk, I want workable solutions, I want clear answers,
  • I want a dedication to America more than I want a dedication to my own self interests,
  • I want someone who knows how to get things done in Washington DC, I also want a citizen politician,
  • I want a strong leader, I want a leader to balance compassion with responsibility,
  • I want a person who can elevate the nation, and myself,  to a new level of greatness in the world,
  •  I want someone who believes enough in our capability to think big thoughts but deliver pragmatic solutions,
  • I want a leader who builds admiration and respect in our nations friends and abject fear along with respect in our nations enemies,
  • I want someone to lead us to a new era of tolerance and respect for each other as Americans,
  • I want someone who can move our full-time professional political class back to part-time citizen politicians,
  • I want a president who is selfless who will sacrifice the potential for “4-more-years” to do the correct thing for the country,
  • I want a president that can help re-engage our youth and re-invigorate our education system in teaching our next generations our real history–what it takes in terms of knowledge, commitment, dedication, hard work, respect and compassion to be successful and responsible national and family leaders,
  • I want a leader that will resolve the ongoing conflict between the powers at the federal level with those at the state level,
  • I want a leader that will inspire all of us to be bigger than ourselves, become more self reliant, and do better at helping each other as Americans.
  • I want a Washington, or a Lincoln, or an Adams, or a Jefferson, or a Jackson, or either Roosevelt
  • I want a pragmatic idealist
  • I want a person who believes that faith plays a role–which faith is not important
  • I want someone who can sees how the Federal government can provide the checks and balances to make sure we all do our best for the country and each other but not one who sees the Federal government provide for us all
  • I want a leader that knows the value of our history–all of it–not slanted to one political side or the other
  • I want a leader that will make the hard choices–the ones none of us want to make and does not soft peddle the solutions to preserve the livelihoods in DC

I could go on and on but this is long enough already .  I would hope that most of you do not find much, if anything, you disagree with–despite your political affiliation.  I also, hope you will notice what you do not see on this list: things like; marriage status, religious affiliation, sexual orientation, size, weight, personal predilections or anything else.  In the long run I am not even sure that in the end I want to ‘like’ the candidate. By this I mean they do not have to be someone I want to go have a beer with.  I really just want the best person, with the best ideas, singularly dedicated to fix the problems and make us a better country.

In the long run this alone would be a great start!  Wouldn’t it?

Headline Screams – Wealth gap hits record levels: But is this significant?

Click Image to Link to Article

Reading my local paper I was struck by the headline, “Wealth gap hits record levels” by Hope Yen.  The secondary headline “Divide between younger and older adults widens as lengthy downturns erodes net worth of those under 35” also raised my curiosity.  In both cases I did not find either statement unusual.  Why would there not be a gap in net worth between people 65 and older and people under 35?

The article further states that there is a 47-1 gap between the old and the young, and states it is the highest ever recorded.  The article cites that the median net worth of a household headed by a person 65 or older is $170,494 and that the median net worth of  households with people under 35 is just $3,662.  I really just want to say – Yea – So what’s your point?

I am more or less astounded that anyone would find this remarkable. All of my life experience indicates that there should be a substantial gap in net worth between the ages under 35 and those 65 and older.

Yea-So what’s your point?

I mean, after all wouldn’t it make logical sense for someone who has worked 40 or 50 years longer to have accumulated much more net worth?  In fact the statistic of the gap in the relative net worth of 47 times actually seems low to me – I will tell you why.  I am starting to knock on the door of the upper age quoted in the article.  From my own history, I had no where near the net worth when I was 35 or younger that I have today. Nor would I have expected it.  Let’s take a look at why that might be – shall we?

When I was 35 and younger, I did not earn anywhere near as much as I have during the period after 35, nor should I.  When I was under 35, I was learning my trade, earning my stripes, gaining experiences that helped me make fewer mistakes and become more valuable.  In those years I was just starting out.  For part of that period, I was renting a home, then later purchasing one.  As such, I was not yet rapidly building equity.  When I did purchase a home I had to buy stuff to put in it; so instead of building net worth I was spending money.

In the years under 35, I was also living a more – I can live forever and worry about retirement after I do and get all the things I want – lifestyle.  I guess you could say, I was less responsible with my money.  Also, this is the period that we go from spending money to attract mates and practice the art of procreation to actually procreating.  For those of us who have both practiced procreating and then later actually procreated, I think we can all attest to the fact that both of those things cost money – sometimes a lot of money.  These costs significantly reduce what we can save and therefore our net worth.

Age - Net Worth Table (by author)

From the age of first procreation to the age of 35, the actual procreants got older and the worry of looming higher education cost came home to roost.  So not only did I have the expense of  increasingly ravenous, and growing children to contend with, I had the resulting increases in costs to go along with said children.  So increasing net worth was still not that much of a viable option.

So you see, maybe I am not typical, maybe I was just irresponsible, maybe it is simply my generation, but I don’t see how at the age of 35 and younger one would even begin to have the net worth of someone in 65 or older.  Another factor for the younger households among us is that the percentage of inherited wealth likely does not befall them until they break the 35 year barrier.  Since the average life span for a person in the U.S. has been between 73 and 83 years old throughout my life time, I would have typically been between 47 and 58 when I received an inheritance assuming that a.) my parents had me as their first born at the age of 25 and they lived the average lifespan.  Even if I was second born and my parents had a 5 years gap between their children,  I would have been over 40 before I received an inheritance. And to push the statistic one more level, If I was third born with another 5 year gap I would have been 37 upon receipt of inheritance.  So Inherited wealth, which can add to net worth, and should from my point of view, would not arrive till after the age of 35 years old.

I put together the above chart, simply to see how much a person would have to save each year from the age of 18 in order to achieve the 47 times multiple quoted in the article.  I used the number of periods to earn the multiple as 47 more for convenience than anything else.  I also chose it because it is exactly 47 years from 18 to 65 years of age.  I could not forgo the irony of the calculation.  You will see, that it is very possible for one to achieve this net worth from simple savings of $2450.85 cents per year at an annual interest rate of 1.5% alone.  Forget appreciation in home ownership, forget increasing value and salary in the workplace, forget lowering of cost as children grow and move on, forget inheritance, forget any other factor that could affect the rate of appreciation of net worth as one ages.

The point of the article seem to be saying there is some base inequity between the older generations and the younger generations.  Perhaps, it is laying the groundwork for elimination of social security and medicare because after all older people have had lifetimes to accumulate their wealth and the younger, under 35 have not – but they will won’t they? The article states, that it is the result of the economic downturn that the multiple has arrived at its worst in history.  But I simply do not believe that statement.  I want to see some indication of what the historical period of record is.  I suspect we will find that this measure is a relatively new one and its history does not go back that far.

The author states that Social Security accounts for 55 percent of the income of people 65 and older.  Duh – what would you expect to see as many over 65 are retired and rely now on Social Security, retirement, savings,  and pensions to pay their expenses.  And this measure they are arguing is NOT earnings, it is net worth –  apples and oranges.

In the article the author cites, Sheldon Danzinger, a University of Michigan public policy professor, who says,

“The elderly have a comprehensive safety net that most adults, especially young adults, lack.”

Again, I hope this was not some government funded study to come up with yet another “Duh” moment.

Paul Taylor, director of Pew Social & Demographic Trends and co-author of the analysis, said,

“the report shows that today’s young adults are starting out in life in a very tough economic position.  If this pattern continues, it will call into question one of the most basic tenets of the American Dream – the idea that each generation does better than the one that came before.”

Tell that to those who suffered growing up during the great depression.  I am sure they felt the same way.  The realty is that many generations have not done as well as the previous generation.  The history we learned in school simply ignored many of these facts.  Our history was written to drive the concept of American Exceptional-ism.   So these historical pronouncements often are based less on facts than perception.

Other findings:

-Households headed by someone under age 35 had their median net worth reduced by 27 percent in 2009 as a result of unsecured liabilities, mostly a combination of credit card debt and student loans. No other age group had anywhere near that level of unsecured liability acting as a drag on net worth; the next closest was the 35-44 age group, at 10 percent.

-Wealth inequality is increasing within all age groups. Among the younger-age households, those living in debt have grown the fastest while the share of households with net worth of at least $250,000 edged up slightly to 2 percent. Among the older-age households, the share of households worth at least $250,000 rose to 20 percent from 8 percent in 1984; those living in debt were largely unchanged at 8 percent

We have been preaching, some would say irresponsibly, buy on credit since the 1970s.  We have spent much of the past two decades allowing banks to market credit cards to students in college.  We have been stimulating everyone to go to college ignoring the very visible unintended consequences of a reducing labor pool, lowering income level for college graduates, and massive education debt load upon starting their early life.  Adding insult to injury, or stupidity upon ignorance, our own government practically has forced these individuals to purchase homes in those formative years where they could have perhaps saved a small bit, maybe $2,500.00 per year.  Instead, our government manipulated the market using Fannie and Freddy, stimulated the myth of viable ownership with steadily increasing money supply, and in some cases, forced banks to lend to these young people who were really not yet ready to assume such debts.

So what now?  Along with the class war Occupy Wall Street, you know the 99% against the 1% crowds, who are angry with the people who make large amounts of money through the form of legal gambling called the stock market and who are angry with banks for now wanting to collect on those student loans and mortgages they can’t or don’t want to pay back – will we have another group wage “age war”?  Will we see a new slogan the 27% (those under 35) vs the 12.3%(those 65 and older).

So what is the point of this article?  Is it to amplify a point of how capitalism doesn’t work?  Well it fails there because clearly it has worked for the elderly.  Is it to make the point that it won’t work any more?  Again it fails when you look at the gains simple savings will yield over time.  Is it to make the point that the young have it so tough?  Tell that to the people who grew up in the late 70s and 80s when mortgage interest rates were 14% and 16%!

Perhaps it is time to really look at the lessons from this study.  They are not how inequitable the world is and how unfair it is for the coming generations.  The lessons are imbedded in undoing some of the things that have caused the current problems.  Instead of preaching how all Americans should spend more, and use their credit card more, perhaps we need our government to start to preach austerity for the average citizen!  Perhaps, we should correctly instruct our youth on the real history of America.  You know they still may see America as a great nation!  Perhaps, we should once again tell our youth they need to save and become responsible for their retirement years.  That relying on the government to collect a dollar in taxes that will ultimately end up as less than 30 cents of benefits for them in the future is not a good formula. Perhaps, we need to eliminate the death tax so that what people save and gain in their net worth can actually go to help benefit their procreants – you know their children, their heirs and assigns – the ones who are now worrying so much about their future!

Whatever the point of this article, I submit it is not good for America, unless it was written to point out the fundamental systemic problems and address them in some way other than promoting more income redistribution, and more entitlements for all.  The approach seemingly inherent in this article will not be good for We – the People of America. Of course, maybe I am just reading it wrong. Then again maybe not!

Post a comment if you agree or disagree!  As I am declared a Mugwump, I hear both sides.  I try to decide what I think is best – not what any party tells me.  So tell me what you think!

Republicans & Democrats: Division destroys WE

This article is in response to a recent letter to the editor in my local paper.  In this letter entitled, ” GOP debt”, the writer makes his point that the U.S. debt is the Republican’s fault – that most of the debt incurred has happened under their watch, as a result of their programs.  He blames the current problems of America and its economy on thirty years of their dominance over Washington DC.  This article is not intended to challenge any of his assertions, or to attack the credibility of any of his arguments.  Fundamentally, it will not make any difference whether or not, he is correct as to who was actually controlling our government during the past 30 years.  The end point would have been the same.

Instead, I think it is time for all of us to take a hard look at a timeline for the past 76 years.  I have assembled a brief one here.  This is not meant to be inclusive of every single event, nor could it, as many would debate the events themselves.  I also have not intended this to try, by the volume or magnitude of events for either side, to lead anyone to the conclusion that one side is more at fault than the other – although I am sure some who read this will still complain of bias and that intent.

WE is us – We the People.  Not Republican, Not Democrat – neither liberal nor conservative.  It is simply WE.  Unless, or until, WE again congregate as one in purpose, we all will lose!

I have simply taken my own personal stroll through history and picked the particular events I felt were important, pivotal, in our long and involved – often entangled process – to arrive at the door of what may be America’s economic collapse.  We are at this doorway as a result of numerous decisions and actions.  We have made many many decisions in this period.  Most of the decisions were originally contemplated to fix contemporaneous problems of the day.  In this time we have developed a nasty habit of enacting short term programs with an intention to replace the programs with other solutions later, only to have the replacement step get lost along the way as we allowed the growth of a professional political class and the virtual elimination of the citizen politician on which the country was founded.

I don’t know if a professional politician is better for us in the long run than a citizen politician.  I can see advantages on either side.  History and the electorate soon will make that determination.  I do believe that at each step, for the most part, the politicians were attempting to fix the problem in a way they thought was best both for the country as a whole, their constituency, and their own re-electability.  While I can idealize a desire for so much more in the decisions of my representative, I must concede and accept the nature of humanity after all in this process.  It becomes my responsibility to elect the best person in support of the best solution. In effect to be a Mugwump.

In the end, it makes little difference.  Until we truly understand the mechanisms and fundamentals of our current situation – and correct them, we will continue to glide through the open door of disaster – slipping at some point into the empty maw of the economic abyss.

A Time-Line of Key Events

  • 1935: Social Security Act – Franklin Roosevelt (D)
  • 1965: Extension to Social Security Act (Medicare & Medicaid) – Lyndon Johnson (D)
  • 1972: Elimination of the Gold Standard – Richard Nixon (R)
  • 1974: Equal Credit Opportunity Act – Stimulates credit purchases – Gerald Ford (R)
  • 1977: Community Reinvestment Act – Jimmy Carter (D)
  • 1980: Depository Institutions Deregulation and Monetary Control Act – Jimmy Carter (D)
  • 1981: Initial Application of the Mark to Market Rule – Ronald Regan (R)
  • 1985: Home State Savings Bank begins to fail – Ronald Regan (R)
  • 1986: Tax Reform Act – Ronald Regan (R)
  • 1995: End of S&L Collapse – Assets sold to Banks – RTC cost $87.9 Billion – Bill Clinton (D)
  • 1995: National Homeownership Strategy Announced – Bill Clinton (D)
  • 1999: Fannie Mae eases the credit requirements to encourage banks to extend home mortgages to individuals whose credit is not good enough to qualify for conventional loans.
    The Gramm-Leach-Bliley Act repeals the Glass-Steagall Act of 1933 – Bill Clinton (D)
  • 2000: Lenders originating $160 billion worth of subprime, up from $40 billion in 1994. Fannie Mae buys $600 million of subprime mortgages, primarily on a flow basis. Freddie Mac, in that same year, purchases $18.6 billion worth of subprime loans, mostly Alt A and A- mortgages. Freddie Mac guarantees another $7.7 billion worth of subprime mortgages in structured transactions.
    Credit Suisse develops the first mortgage-backed Derivative (CDO).
    Commodity Futures Modernization Act of 2000 declares credit default swaps (and other derivatives) to be unregulated, banning the SEC, Fed, CTFC, state insurance companies, and others from meaningful oversight. – Bill Clinton (D)
  • 2003: Federal Reserve Chair Alan Greenspan lowers Federal Reserve’s key interest rate to 1%, the lowest in 45 years – George W. Bush (R)
  • 2008: Global Financial Crisis Begins – Feds Take over Fannie Mae Freddie Mac and guarantee $6trillion of mortgages, Fed Reserve Lends $85 Billion to AIG, $700 Billion TARP Program goes into effect, Fed lends $1.3 Trillion to companies outside financial sector – $900 Billion loans to banks and buys $540 billion in short term mutual find debt – Fed Loans 133 Billion to foreign banks, Fed pledges $800 Billion more to buy mortgage bonds from Fannie and Freddie – George W. Bush (R)
  • 2009: Fed increases support of AIG by $182.5 Billion, U.S. Government supports various Auto Manufacturers with $34 billion bailout package, Fed Injects approximately $2 trillion into the economy in new currency under term Quantitative Easing. – Barack Obama (D)
  • 2010: Federal Reserve continues injecting money into market under quantitative easing of $1.5 trillion, Banks begin to repay Govt. Loans, Patient Protection and Affordable Care Act is passed – Barack Obama (D)

Whats The Point

When I was contemplating writing this article, I had thought I would explain the relevance of each of the events I have listed.  In the end, I decided it is not up to me to tell you what to think.  It is your right, your privilege, and your obligation to find that out for yourself.  Should any of you wish to ask my opinion, or to tell me what you think, you may feel free to post in the comment section.  I will tell you my thoughts and conclusions and of course listen to your point of view.  Perhaps along with the others who read here we can continue to refine and get closer to a solution – get closer to WE.

The aforementioned timeline is by no means each and every issue that has drawn us into the potential collapse of our economy that we face today.  What is evident from even this brief review, is that the bad decisions were all short term fixes to solve contemporaneous imminent problems of the day – they span all parties and administrations.

My Conclusion

Our economic problems are neither Republican nor Democrat, they are only American.  We have done this to ourselves.  Only if we are united in this purpose, can truly fix them!

My Request of You

I ask each of you, who are kind enough to read my writings, to please circulate this to others if you feel it is valuable.  I believe we can all make a difference if we come together.  I know I can’t do it alone.  I ask you, my readers, to help at least get others to consider that there is something here bigger than ourselves and our politics.

“Pass My Job’s Bill NOW!”: Unions and Immigration – two sides of the same coin

Unions and Immigration dominate news along side of jobs

Reader Warning, this may be a long one! Please be patient.  No sound bites here!

The Argument

In his speech today, President Obama, once again called for congress to pass his jobs bill – NOW!.  The President stated that if they do not pass his jobs bill, which he views as perfect – without any flaw – and will, in his opinion, inevitably return us to prosperity, then the American people, who he states are overwhelmingly on his side, will harshly judge the republicans who are simply resisting for idealistic reasons.  He implied that the American people are tired of the republicans looking out for millionaires and billionaires.  He chose his words very carefully to imply that the Solyndra loan was the result of the prior administration’s programs – that he doesn’t own this one.  In doing so, once again he uses language to obscure this administration’s role in this specific loan. A loan that was denied by the prior administration and recommended by his own administration as not ready to be funded – but yet was funded anyway!

If one were to challenge the Presidents statement based on the inference inherent in the phrasing and timing of the language he used, his administration will seek the cover that was carefully crafted into this statement.  Jay Carney likely will respond, “that is not what he said…”  “What he said is that the “loan program” was begun under the prior administration…”  Continuing with the obfuscation, the President then presents “his” argument that this program is designed to make America competitive again.  As he makes this statement it is phrased so that he now owns this ideal of making America competitive. He would like us to believe that now “He” is making America competitive again. But is he?

He also repeated his mantra that, we need to make education more accessible and affordable and make sure every American goes to college.  His Education tzar, Arnie Duncan, in a recent radio interview, stated, that it is the U.S. governments responsibility to “provide a cradle to career assurance!” Is it?

In his speech he goes on to state that they are funding these loans to subsidize industries in order to get us “competitive” in a world where we no longer can compete.  He continues to state that we can’t compete against China who “subsidizes” their industries.  But if you talk to the manufacturers in China, as I have, – who the President claims the Chinese communist government is subsidizing – they will laugh at this assertion.  Again if you dig below the Presidents rhetoric, or if you challenge him on this statement, you find again that his words have been chosen most carefully.  The President’s administration will tell you that what he means is that China, through its Central Bank, is unfairly manipulating its currency.  Why, because they refuse to artificially inflate their currency, and overpay or over-benefit  their workers to become uncompetitive in the one world economy?

The Truth

In a whitepaper published by McKinsey & Company – September 14, 2011, written by Lowell Bryan, Sven Smit, and John Horn; They state that the current economic fundamentals remain unfixed.  Some of their main points include:

  1. Even if the developed governments, including the U.S. government, had been able to pass greater stimulus measures earlier – including isolating toxic assets – this would not have fixed the longer term fundamentals.
  2. The recent focus on debt ceilings in the U.S. and the sovereign debt crisis in southern Europe has also overwhelmed the public debate and shifted away from the failing economic fundamentals.
  3. In the U.S., the downward trend in labor participation has become pronounced.
  4. Structural economic fixes are needed such as;
    1. Stimulating private investment and savings
    2. Undertake an orderly de-leveraging of households (i.e. get Americans to stop borrowing and start saving – the exact opposite of what we are doing)
    3. Increase participation of labor (production level jobs) in the economy (as opposed to middle-level management and non-producing jobs)
    4. Reform long-term entitlement programs and tax policies to reduce the uncompetitive economic cost structure of American Businesses
    5. Reform education to produce more skilled labor
    6. Reform legislation to simplify and speed commercialization of innovation
    7. Rebuild failing infrastructure.

Like the Affordable Care Act, the President wants us to force congress to pass this legislation quickly before, as former speaker of the House, Nancy Pelosi, said we can read what is in it.  More importantly, it is not the reading – but the understanding of whether or not this will work.  The President is becoming very long on his implied -“trust me” plans.  He seems to either not recognize, or not care, that the majority of Americans no longer trust him or his advisers as their track record is putrid at this point.

While the focused effort at fomenting insurrection based on converting class envy into class warfare is getting quite a bit of play in the main stream media, it is not really playing in Peoria, or Winnemucca.  How will Americans feel if this concerted effort to stir up hate and discontent in the willingly disenfranchised boils over into a true insurrection?

The Presidents Jobs Bill, is being resisted, not because of republicans love for millionaires and billionaires or a reliance on them for campaign funding.  All of our professional political class (republicans AND democrats) loves, courts, and whores themselves to the so called millionaires and billionaires.  The bill is being resisted because most economists – outside of the presidents supporters – and good common sense find serious flaw with much of the underlying logic of his plan.  Further, history, including very recent history, shows that many of these approaches are not addressing the fundamentals and do not work.

The Kaiser Excuse

The Solyndra loan is one that this administration, the President, and the Vice President, own  lock-stock-and-barrel!  The prior administration had clearly and distinctly passed on this “so-called” investment.  Upon arrival in DC, and after some very in-judicious meetings with the lead investor – and big Obama bundler – George Kaiser; the administration decided not to simply revive this investment opportunity, but to expedite it and use it as a major public relations asset for both the Vice President and the President.

Now that this issue has blown up in the face of the President, his press secretary has characterized the meetings between George Kaiser and the President as discussions on his “non-profit ‘family foundation'” gifts program.  Once again they use carefully constructed phraseology to obscure the issue.  In this seemingly simple statement, most Americans will draw the connection to the Kaiser Family Foundation.  The Kaiser Family Foundation is a venerated non-profit known for its tremendous philanthropy and commitment to health care and the primary legacy of Henry J. Kaiser.

Houston we have a problem!  George Kaiser is no relation to Henry J. Kaiser nor is he connected in any way to the Kaiser Family Foundation.  He does have a family foundation, and he is a big contributor to charities including his Tulsa Community Foundation.  It is perhaps simply convenience that the administration chose this term to refer to his meetings and our own bad judgement to draw the conclusion that it was not “the” Kaiser Family Foundation – our bad!

All Jobs Are Not Created Equal in Fixing the Economy!

As the President is pushing his Jobs Bill he is really pushing Union jobs.  He is speaking about infrastructure, make work jobs.  Yes, it is true the infrastructure in America is in disrepair and needs to be rehabbed but this does not translate into making America competitive.

In his lecture to America this morning, he stressed the need to make us competitive again in the new world economy which he strongly supports.  We clearly need to become competitive again. And it is also very clear, that we are not competitive with China, Singapore, Taiwan, India, Hong Kong, Malaysia, Mexico, and many other nations around the world.  But will Union jobs and government subsidies really bring us back to being competitive?  The short answer is, no!  Looking at the U.S. Economy on the whole, taking tax money from the U.S., in any form, and passing some of that money back to companies to lower their specific costs or to provide incentives to people in America to buy their products does not make America any more competitive to the rest of the world.  It is just a zero sum game.

Think of this as your own piggy bank.  You have ten pennies in the bank.  If you pull 5 of them out of the bank to give to your friend to buy a stick of gum from you (that you paid three cents for) and you put them back in your piggy bank.  You still have only ten pennies in that bank.  Yet, you not only did not make a profit on the gum, you lost three cents overall.  This is the same shell game.  Lets take a look at some more realistic numbers.

The cost per man-hour to build a car varies widely in the world and even here in the U.S.  No matter whether you are building a luxury car or an inexpensive bare bones vehicle, the cost per man-hour is relatively the same.  It is the number of man-hours, and the price of the basic materials that changes the total cost of the car.  If you look to Detroit, the estimated costs for labor are approximately $85.00 per man-hour to make a car in this shining star of American manufacturing (at least according to the current administration).  If you look to Japan the per man-hour cost averages about $46.00.  If you look to Alabama, where some Japanese car manufacturers have moved their manufacturing the cost is about $28.00.  And some estimate the cost in India, at $18.00.  Is it any wonder that Detroit cars are not competitive in the world market?  And why the difference between Alabama factories and Detroit?  Can you say Unions?

Now I am not against unions – nor am I against union workers.  Unions have done some very good things historically for America’s labor pool – particularly related to dangerous employment conditions and mistreatment.  But Unions have also done some very bad things, perhaps knowingly, to America’s ability to compete in a one world market.

To coin a phrase, this is something we are “fundamentally” ignoring!  Our problem with being labor competitive comes in two basic areas:

  1. We have almost no natural labor pool left
  2. The labor pool we have costs way too much compared to the rest of the world.

There are other things that impact our competitive position in the world like, we no longer produce much in the way of raw materials, much of our business is based on middle-man transactions. And most of what we produce at the higher costs are sold at home doing little to reduce the steadily increasing trade deficit.  While these things are also very important, let us hold them for a later article.  The intent of this article is to focus on jobs and labor and the Presidents increasingly unfathomable position.

Why no labor pool?

Along with the focused drive, since 1972, by the banks and government to get us to stop saving and start spending, and the modification of the push to foster credit based purchasing, we have also been purposely closing trade schools and tech centers and redirecting those who would have gone into the skilled labor category to go to college. We are now a nation that does not value  the base laborer.  The person who creates valuable goods and services with their own hands has been left in the dust and become a second class citizen in a nation of college educated plumbers, welders, carpenters, cabinet makers, taxi drivers, and fast food managers.  I have repeatedly seen companies requiring a college degree for many professions like basic sales that should be more reliant on people skills simply to reduce the number of applications.  Most of the top sales people I have know in my career were without a college degree.  They learned their skills at the school of hard knocks.  I saw at least one such individual rise to one of the top sales positions in one of the top tech companies.  He almost single handedly took this company from a start up spin out to one of the premier producers in its class. In the end he was displaced by a policy decision that now required all executives to have a college degree.  It is no coincidence that within a few years they fell from favor in the market.  In some cases “book learnin'” does not compensate for real in the market experience.

While it is emotionally fulfilling to know these people have gone to college and perhaps studied the teachings of Confucius, or the writings of Chaucer; but has this made them better plumbers of has it just added to the expense of training them and increased their expectations and lifestyle and driven up their cost structures?  Is there value to them from this education?  Of course there is, but is there really value economically to America in their labor role?  No, it is in fact an unnecessary expense economically. Please remember I am not making a moral judgement here and I am not saying people who choose to, or end up forced to, practice a trade should not be allowed to go to college.  I am simply pointing out that this may not be the best economic solution for our world competitiveness problems.

While America has fostered the “everyone goes to college” mantra, closed its labor and trade schools and become dependent on immigration, legal and otherwise, to provide the required base level workers; places like Singapore still track a large percentage of their youth into labor and trade related programs.  Only a select few get stimulated to go to college.  Is this better morally?  Who knows, let the philosophers sort that out.  But economically, they are one of the countries kicking our asses, and we can’t blame that on the “subsidies of communism.”  By the way, kids that really want to go to college can choose to do that in Singapore, they are simply encouraged to go into trades and they venerate their trade workers and laborers.

So why is the President fostering class warfare, cradle to career assurance, union based infrastructure jobs and subsidizing industries to be competitive in the one world market?  Come to think of it why is the President such a supporter of this one world view?

The Reason

To start with,  who is this guy we elected?  Was he a prominent businessman?  No!  Was he a skilled civic executive?  No!  Was he a well  know economic theorist? No!  Was he a person who was well schooled in international relations?  No!  Was he an accomplished leader of any sort?  No! Well Maybe, if you consider he was elected as a state senator and then as a U.S. senator – in both capacities he quickly focused on the next step of his career but he had few accomplishments other than electability.

Look, I am not saying President Obama is incompetent!  I am pointing out that in the related experience he has little to qualify his views on this subject or to make some of the decisions that he appears to be making.  He is in fact relying on others to tell him what to do and these others, like most of our professional political class are corrupted by hidden agenda.

The President was trained as a community activist.  He apparently was very good at that.  What is the primary tool of a community activist?  It is to disrupt the status quo by using class envy as the pivot to foment unrest.  By convincing those that have less, that the ones that have more have attained it to their detriment.  In propagating this issue they gain the leverage, the power, to force changes.  These forced changes do not come about because they have been derived based on reason, due diligence and careful consideration.  They are forced into the stream based solely on the emotion of the moment.  Good community activists can get the minority so agitated that even the mere mention of due diligence or careful consideration becomes more evidence of the supposed evil intent of those who have more.

So why are we surprised to see this now?  And more importantly, why are we so blind to the real implications and the lack of focus on the economic fundamentals?  Could it be that another fundamental issue that is failing us is our education system?  McKinsey seems to think so, but I am not sure their reason coincides with mine or perhaps yours.

Additionally, our President has aspired, in fact worked hard, to become part of our professional political class.  He has in fact obtained the pinnacle of this class.  By doing so, he has assured that his future is taken care of by, and on the backs of, the same people that elected him to this office.  He is beholding to all that got him elected in the first place and is further constrained in his actions by those he will need to get himself reelected.  As I have said before in a prior article “Our Professional Political Class: An Island Cannot Rule a Continent!“, his currency is votes, and he appears willing to pay all of our collective equity in order to continue to gain these votes.

The Reality

I started this essay with the supposition that Unions and Immigration are two sides of the same coin.  While it has taken me much longer than normal to come back to this point, I feel in this case the preamble was both necessary and poignant.  Further, I think that the preamble is where we will find solutions – if we really want to solve this.

Since we have all but eliminated our labor class through the closure of trade schools, technical schools, and primary production industries (like farming, fishing, mining, oil and steel) and attrition through the aging of our population.  We have created a false expectation that everyone should go to college and our economy can not only absorb the expense but also have appropriate jobs available for these college graduates who all expect to be doctors, lawyers, Indian chiefs etc. – anything but “common laborers.”

We are left with no where to go but immigration to find those willing to work in the jobs we don’t want and at wages we can afford to pay, and still find you college educated plumbers willing to buy America’s goods and services.  We have unions who are, by their own claims – their own mantras, only looking out for the workers not American competitiveness.  But many of the workers they increasingly represent are not laborers but middle managers and low level executives.  The Unions, it appears, are dead set against immigration to solve the labor dilemma and they are dead set against relying on one world competitive wages as it would decimate the wages of the working class and the resulting stream of dues the leadership survive on.

Caught in the middle is the President. If our hypothetical coin is a quarter, then the President represents the low grade copper core.  On one side he has the silver representing the unions, the silver on the other side – immigration.  He can actually solve neither and have the solution be in the best interest of Americans.  He is left with obfuscation, and diversion.  He is in crisis mode as his pole numbers collapse.  And in crises he is falling back to the tried and true tool-set of community activists world wide – class warfare. We cannot count on this President, nor this congress, to solve this one.

In the end if we don’t solve it – we will all suffer!  At least he has acknowledged, that we are not competitive in the one world economy.  That is a step.  Not a step for the President, who can’t see or refuses to see the real implications of what he is advocating.  It is a step in that it take one more vague disingenuous argument off the table.  It takes the recently repeated ad nauseaum statement that “we are the most competitive nation in the world” – off the table.

We, now recognize that we need to become competitive again or we lose to those throughout the rest of the world who are willing to do the menial, tough, hard, exhausting jobs that we wont.  We also recognize that most of the rest of the world will do the jobs that we are actually willing to do for far less than we will! .  Until we begin to again rebuild primary production and manufacturing in America, and are able to staff the jobs with workers that are willing to not only do the job efficiently, but also at a pay rate that allows the American production to be cost competitive in the one world economy, we will fail.  No amount of robbing Peter to pay Paul, to build it, or buy it in America, will bring us back to successfully compete with those that will do what it takes for less.

America has an inordinately long row to hoe to get back to where we were.  We need to discontinue myth building, and begin to focus on the pragmatic.  We need to reject the community activist play book of class envy – come – class warfare and focus on resetting expectations.  We need to retrain many workers in production level jobs.  We need to review our educational policies and reopen trade schools.  We need to change the mind-set that everyone should go to college.  Not everyone should go to college.  Sending everyone to college lowers the standards of a college education and in the end lowers the value of education in general.  It is not necessary to get a good base education through the end of high school if everyone is also going to go to college. Also, after we send these kids to college they expect to be pad at rate commensurate with their education and its expense/investment. We need guidance counselors to again guide students into the most appropriate occupations.

Finally, we need to venerate the workers in America – the laborers in America.  We need to reduce the occupation of these required labor jobs by those expensive, excessively educated and overly trained persons with people appropriately costed and trained.  We need to once again elevate the community value of the individuals that convert the raw materials to valuable products, who convert their raw talent and effort to desired commodities. We need to have the unions and all groups, cartels, associations and members to recognize that unless we begin to put our nations ability to compete ahead of entitlements, grants, gifts, gimmes, and subsidies, we will become yet another backwater on the road of history.

I will leave you with this final thought.

It has been estimate that over 1/2 of all Americans receive at least 50% of their compensation directly or indirectly from the federal government or government sponsored programs.  By 2016, it is also estimated that this number will grow to a whopping 65% of the population receiving over 70%.  Our combined trade deficit since 1972 is almost $12 trillion.  In other words, we have purchased from the rest of the world $12 trillion more than we have sold to them.  How long can the business, that is the United States of America, continue to take in so much less than we sell.  This has been the case since prior to 1972, and in order to survive we simply increased the $500 billion in total currency then to over $16 trillion today.  But our piggy bank is empty, since most of this newly created currency has just gone to pay, by today’s numbers, 50% of the population 50% of their wages so they didn’t really notice there was a problem and the professional political class could continue to get their votes.

As Hot-Rod Swales said to me one day in 1965, “It do make you think – don’t it?”

President Obama’s Speech: Critical Question Continued

In his speech last night president Obama asked a key question.

President Obama asked, “Where would America be if we had not passed Medicare and Medicaid?”

As I said in my post last night, “President Obama’s Critical Question,”  the president’s question should not have been be a feel-good throw-away line, as it is the underpinning of the base argument, that Medicare and Medicaid have been good for us as a people and for the country. Clearly, the president believes that the answer to these questions is in the affirmative. But, what if the answer is not?  These are areas that I think many need to analyze.

Those who have been reading my articles know that I have a strong concern that the underlying issues in our health care system and our economy are systemic and the areas we are focusing on are, in effect, addressing the symptoms of the problems – not the root causes.  In my upcoming book, “The History and Evolution of Health Care in America: The untold back-story of where we’ve been, where we are, and why health care needs more reform!” I look at the relationship between the rising costs of health care and trace in part one cause to the large expansion of government programs like Medicaid and Medicare.  I also found correlations between the rapid increase in the amount of currency we created, after we jettisoned the gold standard in 1972, and the disproportionate allocations of these new monies to health care and other government subsidized programs like housing.

The relationship of the Total Money Supply (M3) to our current economic issues I will cover in a later article, but for now look at the direct, almost point for point, correlation of the rise in the total health care spend in the U.S. and the increase in the money supply.  I think there is no doubt that the significant increase in the amount of currency in circulation and the rapid rise of health care costs run hand in hand.  It is very clear, as Sancho said to his master, Don Quixote de la Mancha,

“Whether the stone hit the pitcher or the pitcher hit the stone – it was going to be bad for the pitcher!”

In this case, we can argue later whether the increase in currency drove the increase in costs or the increase in costs drove the need to increase the currency, it was the expansion of Government programs like Medicaid and Medicare that drove the increase in costs.

Housing also rose in a point for point correlation as well.  Unlike with health care, you can see it was an advance indicator.  This make sense, according to economic theory and the basic premise of fractional reserve banking because our the engine of economic expansion (the creation of new money) is debt.  Most preferably mortgage debt.  If housing prices did not rise and new homes and the resultant mortgages did not happen then the banks would have become rapidly out of covenant if the new money existed before the new mortgages were there to leverage against.

Lastly in this article, I include a chart of a few other cost histories, lest we think that all parts of the economy had the same correlation to the increase in the money supply.  Clearly, wheat corn and eggs did not experience the same effect from the increase in the money supply – nor does it appear they led the need to increase the supply.  I believe that most peoples practical experience is that not all things have risen in value twenty times in the past forty years.  Herein is the potential rub!

I will continue the discussion related to the presidents key question in my next article.  In that I will focus on how the creation of Medicaid and Medicare changed our personal character related to our view of our personal responsibility for our health care and how this change has affected our fiscal habits and our purchasing patterns and trends.

Please feel free to comment on this article or send it to others.  As I have said many times this is not a republican nor democrat issue.  I think this is an American issue.  I am not an economist just someone trying to understand why these things are happening now.  We need pragmatic solutions not demagoguery so lets find out what is the truth and then how we can fix it!

What goes around may be wrong: ‘three charts to email to your right-wing brother-in-law’

‘three charts to email to your right-wing brother-in-law’ « The Obama Diary (Photos, Videos, Words).

There has been a bunch of reposts of three charts showing the relative deficits and spending increases from Both President Obama and President Bush. While this gives great fodder for the let’s bash each other and show just how bad the other guys were crowd, the charts themselves are a waste of ink and lung power to debate.

While the charts, are interesting, and like most statistics represent the adage that,

“there are lies, damn lies and statistics”

popularized by Mark Twain and originally a quote from Benjamin Disraeli; they are irrelevant to the bigger problem. While we can argue about one president solving the budget problem and the other one making it worse, all were relying on the underlying bad economic engine to make it all right.

Those who have read my posts on the subject, know I believe there is a deeper problem. The massive increase in currency since 1972, which in my opinion has given rise to a national crisis of false and inflated values and costs for subsidized programs, health care costs and housing I believe, is the real problem. Perhaps, it is our own underlying valuation of our economy and our assets that are the problem?

M3 With 1972 Gold Standard Trendline

Since we all seem to like charts, I will pose my own here. I am not posting this to assign blame, we have way too much of that going around. Nor, am I saying this is an infallible calculation – as I myself am not sure. I will leave it to others to wrangle with that debate. I am posting it to have you see what I saw as I was studying the rising costs of health care and started looking at other segments of the economy. I have a number of charts that will appear in my book. In the meantime here is the one that started me thinking.

This chart is relatively simple. It is the M3 (the total money supply calculated by the Fed) from 1900 up to 2010. From 2006 on the Federal Reserve decided to no longer report the M3, the M3 then had to be estimated.  There are a number of different estimates, their only variance is the shape of the curve after 2007. And they don’t make much difference in the current problems.

There was about $500 billion in currency in 1972. Today estimates put that number at somewhere between $10 trillion and $15 trillion. What doesn’t change much regardless of the trend, forecast or growth calculation you apply is what the projected economy would be if we had remained on the trend-line as it was prior to 1972. This line will project about $3 trillion on the baseline economy for today – assuming we had continued on the Gold Standard. If you factor in the gains we would still  likely have had in the technical sectors as a result of the investment in NASA, the curve shows additional growth to somewhere between $5 and 6 trillion.   This is still a far cry from the unbelievable 20 to 30 times we have multiplied the economy during this period.  Remember,  “lies, damn lies and statistics!”  I hope you treat this projection with the same scrutiny as all the others!

I am simply suggesting that we need to look deeply at this issue and diligently consider it’s effects if this supposition is even remotely correct!

The Blame Game: A Recent Letter to the Editor

“…it is thus compromise on the basis of tolerance for others’ opinions that lead us to good solutions….” – Benjamin Franklin

In a recent letter to the editor, yet another writer wants to make the point that the current economic problem is President Bush’ fault. He uses all of his 200 words to carefully craft a picture of why it was Bush’ fault.

Yesterday, I saw the same thing as to why it was President Obama’s fault. Again, all two hundred words carefully selected to make this seemingly very important point.

Having written a few letters to the editor, I can tell you from first hand experience it is not usually for me a five-minute thing. Two hundred words is a very narrow field to present a counterpoint to some point you are debating. Usually it takes almost half of the space to frame the issue in the first place.

These two writers are not alone. I see tens, if not hundreds, of these dialogs each day. Each side spending an inordinate amount of time to present the case why this person, or this party was wrong, wrong, wrong…

Clearly, the sheer volume of people, and the amount of time, bandwidth and ink devoted to this subject would indicate it is of the most extreme importance. Well it’s not!

The big issue at the moment is solving the problem. And solving this in a pragmatic way – not partisan way. unfortunately, it is not just the new mayor of Chicago who thinks no crisis should go to waste. It seems to be the philosophy of many of us if not most of us.

Each issue appears not to be an issue we need to solve – more it seems they are issues we should exploit for some other benefit. This has been the pattern since the early 1960s. The Great Society was not just to find solutions to help the poor, it was as stated by Lyndon Johnson on a phone call with Wilber Mills and Carl Albert,

“something that we (democrats) can run on for the rest of the century.” (listen to the President Johnson Tapes online, search on medicare)

And we can’t leave republicans out of this either. They have played the same games over the years.

Since everyone seems to think we need to assign blame before we solve the problem, let’s do this. Lets agree to start at the beginning of the root causes…

  • It is Franklin Roosevelt’s fault for describing Social Security in 1935 without recognizing that the transition to a private annuity system as he described would be lost to the winds of entitlement fever.
  • It is Truman’s fault for both extending the coverage and not addressing the concerns of the legislators at the time that argued about future insolvency.
  • It is Eisenhower’s fault for also increasing benefits and coverage while again not addressing the growing concerns over solvency
  • It is Kennedy’s fault for again extending the coverage and entitlements and getting assassinated before he could begin to affect some of the changes he saw needed to be done.
  • It is Johnson’s fault for extending the original act to include Medicare and Medicaid, ignoring the advice of the experts in congress including Wilbur Mills who repeatedly warned this scheme would not work, and then codifying the grants and gifts to the poor as the method to ensure democratic election and instituting the class warfare approach that is now the norm.
  • It is Nixon’s fault for removing the country from the gold standard instead of extending the standard to all precious metals.
  • It is Carter, Regan, Bush and Clinton that further reduced the restrictions on the banks, changed the regulations like the Mark to Market Rule and eliminated the Glass Steagle Act that multiplied the fiscal problem and continued the course of expanding entitlements.
  • And it was both Bush and Obama that again compounded the problem by consenting to the short-term solutions and compounding debt based fixes.
  • Further, it is all the congresses, bankers and federal reserve leaders that are also at fault for not addressing the issues, using them to fulfill other agenda and promulgating their self interests ahead of strategic solutions.
  • And finally, it is us for not paying attention and reveling in the constant, and unrealistic, expansion of our wages, home values, benefits, and desire for more without looking for or listening to concerned opinions.

Did all of these actors in this damnable play behave badly for their own self-interest? Not really. Where there certain hooks that were included at each phase to get our consent that were in their best interest? Of course! In every case there was justifications for why, and many times good arguments on why in the short-term this solution, or that solution, made sense. The problem was, they also knew in the long-term there would be a problem and did, or could do, nothing at the time to fix it. Of course, once the issue was temporarily solved – no one else chose to address it so it was pushed to the future to deal with it. And now it is ours. And it is, in fact ours. It is not our children’s as we like to think. We have run out of time and circumstance. That is why the symptoms of the disease are again raising their ugly heads with a vengeance.

Now that we have discussed blame, let us all tolerate the blame assigned to our favorite figures as we relish the blame in those we don’t like. If we simply agree the blame is inclusive and historically almost all-encompassing, then perhaps we can stop the blame debate, at least for some of us, and focus on solving the current dilemma.

This problem is a collective problem. One – many years, many parties and many administrations in the making. It is at our doorstep and will either define the next stage of our prosperity as a nation or our inevitable decline. We must all stop trying to focus on who it was that is at fault and how we can use it to foist our “pure” ideology on the other side. We simply must find a good pragmatic solution.

As Ben Franklin said, ” it is thus compromise, based on tolerance of others opinions that leads us to the best solution!”

St. Mary’s County: Our Home

Home: St. Mary's County

August 14, 2011
Tom Loker

St. Mary’s County, Cicadas buzz, warm summer nights.  Hot and humid – to everyone else, but to those of the county, it is just somehow right!

A few hours ago a summer thunder-squall made its way across the bay – a Virginia gift.

An Adirondack chair on the front porch – the one facing the water – the stars shimmering as the cooling breeze from the bays and rivers offer some respite.  The astral show above – a perfect closure to the vibrant hues and shades of the evening sunset – now closing Nebraska, or Oklahoma’s day continuing its way around the world

Sitting here in this now and then, the smells of honeysuckle & mulberries, tobacco & corn, cows & pigs, fish & crabs, oysters & beer –the bay and the earth commingle in a distinctive perfume familiar to those who have called this land home.

“You must be Judge Loker’s grandson, Dr. Ford’s nephew.  He operated on me in 54.  I went to Leonard Hall with your uncle Billy.  I remember your dad and Dipsey Combs at Bailey’s most days.  Your cousin ….  is married to my cousin…”

The ties to each other are the comforting linkages that make each, at once exceptional and ordinary.  To put on airs or fancy ways can only cover a few beats from our common roots.

Rich or poor, we eat as one. Crabs, fish, muskrat, ham (stuffed and old), potatoes (new), goose, duck, deer (never venison), kale, field cress,  winter cress (greens), magical oysters steamed, fried, stewed,

I want to meet the first person who decided you could eat an oyster – but God bless him for his courage.

scrapple, cracklin’s, beer and bourbon, whiskey and wine.  A common fare we all share.

Obligations run deep in blood but it is the duty of neighbor and kinship that drives us. The love of God, born in our state’s founding charter of religious tolerance and freedom for all and our dominant catholic faith instill further the love of land and water.

Where ever we are now, in this physical world, one of us only needs to sit outside in the evening…  Take a sip of beer or whiskey…  Lean back – find the stars in our  eyes…  Close them and we are at once home.  St. Mary’s County.

Semantics: Its just not for politicians anymore.

America Circling the Drain

America CTD?

Word games – we all love to play them. On occasion it is fun to pit ones intelligence against another and use words to obscure what we are saying or twist another’s words into something they clearly would never have said. But, has an intellectual challenge for some, become a threat to our national existence?

 we have lost connection with the little engine that for over two centuries made us, that little engine that could…

It seems the word games we all learned to play as children have become the weapons of war on ourselves, wrought by others for their own gain and power. The diatribe that is now offered as debate in all phases and venues of our public discourse – from the popular media to the halls of our congress (once the proud battlement of high ideals and lofty goals) has become a bitter, petty and self-serving process. Its practitioners now use language to obfuscate, confuse, deflect, disguise, denigrate, excoriate, and disrupt anyone and anything, usually in pursuit of goals that no clear majority would support.

As a result of this semantic game, we have lost connection with the little engine that for over two centuries made us, that little engine that could. By using words to cloak and obscure the faults in our economic systems, created by years of short-sighted decisions and weak temporary corrections, the economic crisis some have long predicted appears to be on our door step at last. But unlike 70 years ago, the “our” is no longer the American “our.” It is now most of the world’s “our!”

 A reader commented – without the government subsidizing this purchase, regardless of the long-term economic sense of the investment, the industry would not exist…

In 2007, Ellen Hodson Brown, J.D. published a book titled, “Web of Debt.” In it she chronicles the rise of the fractional reserve banking systems, how this historical standard architecture was flawed, and how we could expect to see evidence of its predictable mathematical failure. This book is a very good read, whether or not you are an economist or even mathematically inclined. It will get you thinking, and whether you agree with Ms. Brown’s conclusions or not, she will help you see some things you have yet to see about one of the main processes that provide us our modern existence.

Recently, in a brief post I wrote relating to a local news article on the purchasing of solar panels for Yosemite National Park, a reader responded with the comment that I was failing to see the whole picture. He stated that, without the government subsidizing this purchase, regardless of the long-term economic sense of the investment, the industry would not exist as no one would be able to afford the products and therefore we would not get the benefits from them or have these options for future generations.

This got “me-to-thinkin’” as they used to say where I grew up. Is it possible that, what I see as desperately flawed logic could make some sense? Even though many of my recent posts appear to be more based on our economy, what I am most focused on is our health care system, or lack of a system to be more precise.

As I researched my upcoming book, “The History and Evolution of Health Care in America: The untold backstory of where we’ve been, where we are, and why health care needs more reform,” I learned that many of the drivers of our currently unsustainable health care system have their roots in; semantic based obfuscations, bad economic policy decisions of the past and the political fostering of the entitlement philosophy we have today.

In the area of health care, and retirement, we are now of the mind that these are our due. We believe we should be able to receive any care we want, at any time that we want, and if we can’t afford it then the government, i.e. everyone else, owes this to us. And just between you and me – we never really can afford it, can we? I mean, with all the modern conveniences we also want; like the large flat panel, and the vacation every year, and the new car, and the second home, and for all of our kids to go to college and become doctors and lawyers; I mean it’s not right to expect us to not have these things in order to pay for retirement or health care later now is it?

…have the government subsidize the cost of the product so we can buy it. Now, in a vacuum this logic can make some sense…

Thinkin’ more on this, I also came to the belief that another flaw of this logic is the base economics of the decision itself. To recap, we can’t build the product at a price that people are willing, or able to pay. Therefore, we need to have the government subsidize the cost of the product so we can buy it. Now, in a vacuum this logic can make some sense. If the consequence of these decisions was not exclusionary to other things we need then, assuming we all agreed, taking some money from each of us to pay the cost of a non-sustaining industry with the hope that it would become sustaining, may be something we would choose to do. But we are not in a vacuum. Every decision we make in our economy to subsidize one industry is taking monies we need for other things-like health care and retirement.

The larger problem today, is that we have inflated our domestic costs so much already, in this new world economy, few, if any, of the things we build here in the U.S. are cost-effective. Solar is yet another great example. Comparing the cost of U.S. designed and built solar panels with those made in China shows a stark reality. We are in the long run subsidizing a business we will never gain from. This is exactly what we have been doing for the last 75 years. First Japan, then China, next Indochina, now India, we have subjugated ourselves to being pioneers in technology, and letting the rest of the word dominate by base production. Their base production margins dwarf our pioneering margins. In this new world economy, we are now in competition to all others. Throughout the past 75 years we have either lost, or purposely abandoned, many of the market segments that gave rise to our industrial and economic power.

So in our semantic fed delusion, first, let’s tax, or fine, some group, who we can use semantics to argue has more than us and if possible demonize how they got it from us unfairly in the first place. Next, since, according to the semantic, they abused us in some way to get it, the government needs to subsidize it because a different, and semantically disadvantaged, abused, and often relatively small group wants it be paid for, at least in part so they can have it. One other key to this semantic process of entitlement is this group must be, or have a semantic appeal to another group, large enough to represent a significant voting bloc.

Now, just like the Yosemite solar panels someone, actually all of us, must pay for them. Some say, “We all pay for them!” Others say, “Oh no! We will make the ‘Rich’ pay for them!” This brings up other faults in this tortured logic tree. Whether it is taxes, fines or fees, the additional costs reduce profits, increasing prices, decreasing discretionary spending, lowering domestic sales, increasing relative costs, lowing profits, driving down wages, and shifting higher margin to other countries production. This very observable and familiar Zero Sum Game process now requires more subsidies. This progression is referred to by a very technical term (CTD) “Circling the Drain.” If you have any difficulty grasping this problem, you can go back to the beginning of the paragraph and repeat, reading until it becomes clear. For some this clarity happens just after they hear the big flushing sound! Woooooooooooossssssshhhhhh!

As I thought more about this issue, I realized if Ellen Brown is correct, and I suspect she is, continuing to apply this logic is not only dangerous, it is fatal economically. Normally, when a government prints new money, it is not inflationary, but stimulative, as historically this new currency is offset by real work product with real value that has a lingering effect in our domestic economy.

I just wonder if this new world economy, combined with our current lack of competitive margin based productivity, exacerbated by the governments current practice of allocating new currency to be created for non-value based activities like paying interest, or for goods and services where the bulk of the effect of the capital is being transferred to those countries manufacturing the goods. These are the same countries where the components or primary materials yield high margins due to their significantly lower costs.

I am starting to wonder if this process is causing that WOOOSSSSSSHHHH’ing sound I am hearing? Or maybe it’s just the semantic wind, whistling though the solar panels.

If you are starting to find the overall situation increasingly frustrating and perhaps scary come check out http://www.mugwump.co (yes that’s CO not COM)

Be A Mugwump Site is Live

Ever since I read Mark Twain’s Autobiography, I have come to realize that the form of political activism he and others of his time practiced is needed now more than ever.  Nothing is a better indicator of that need than the actions of congress in the past two years on both sides of the aisle.

I have yet to speak to anyone, in any are of the political bell curve who is not disgusted, and even more concerned with what is transpiring.

I invite you all to come take a look at the site and if you find your frustrations and views in line with mine – please join. You can choose to join and not have your name listed (you will still receive updates from time to time on interesting articles related to true political independence) . What I am hoping is you will list your name and we can build a groundswell.

This is not a political party, and it is not driven by one candidate or ideology. Find out more and come visit the site: http://www.mugwump.co(yes that is CO not COM. Someone has the dot-com name already but does not appear to be using it. Maybe one day I can get that and make it easier.

I hope to see you there soon.