Defending the Culture of Corruption

The application of Reaganomics has changed America. Our infrastructures have been neglected and are falling apart. Production has been shipped to third world countries where regulations on child labor, noxious materials and working environment are inexistent or without enforcement. Costs associated with production facilities in unstable states are pushed onto the US state department and our military. It only seems appropriate that Hank and Ben suddenly realize that the fundamentals of the economy are not sound, requesting that the US taxpayer fund a $ 700 BILLION bailout of financial institutions.

Business and Washington are unified in their cries that “Main Street does not understand that this is to save them!” They propose purchasing bad financial products at higher than market prices so the banks will lend to Joe Worker. Right… Banks will lend according to their current risk parameters. That is the way banks work. Buying these “assets” will only make the US taxpayer responsible for bad investment decisions made by greedy Wall Street dudes.

There is a much darker aspect to this plan. US banks are not the major holders of these securities. With a blossoming trade imbalance US dollars are held in the TRILLIONS of dollars by China. Many US corporations are shutting US facilities and investing great sums in China to take advantage of lax regulations. Perhaps, one day last week, Hank received a phone call from his Chinese buddies indicating that they did not intend to lose money on these bad financial instruments and held the US government responsible for lack of financial regulation. Perhaps they also reminded Hank of the value of US investments currently in China.

As one life insurance company’s advertisement states, “Hank got the message.” Suddenly the administration’s presentation of the US economy went from “We are number one”, to “Armageddon is upon us!” It happened so fast, the Republican candidate for president, John McCain, stated, “the fundamentals of the economy are sound” on the same day that Hank and Ben were telling Congress that end of the US economy is nigh.


This BAILOUT WILL NOT FIX ANYTHING. It will increase public debt. The real problems are serious. The US can return to wealth and prosperity but we must recognize and cure the real problems, not the symptoms. FYI the real problems are that 72% of our economy is consumer spending. We no longer produce a reasonable portion of the goods we consume. We confuse smoke and mirrors services with real assets. We have expanding income inequality and finally our government is corrupt. Our politicians and business leaders are pillaging the equity of this nation for personal gain. Do not fall for the talking points. This BAILOUT IS NOT FOR MAINSTREET.

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Boeing Loses tanker contract – Out come the Lobbies!

It is all about a contract worth thirty-nine billion dollars in about 10 years. A consortium of Northrup Grunman and EADS (Airbus) beat Boeing in a sealed bid process. Analysts were surprised. Boeing has been making the tanker for decades. Boeing has even set up facilities across the world to feed parts back to California and Washington for the baseline production. Wall Street is outraged. Even the most adamant supporters of offshoring US jobs were outraged. Nancy Pelosi, Representative of California, announced an investigation. The big politician on the Appropriations Committee said, “We [in the committee] hold the purse strings. If we do not like it then it will not happen!”

Therefore, it is ok to rip apart the basic US infrastructures, allowing millions of jobs to transfer to countries that allow slave labor and unsafe working environments in the name of profits but touch Boeing’s project and the world is coming to an end.

Why would Ms. Pelosi be so concerned about one contract, and the purported loss of jobs, and not care when Boeing is moving most of its production facilities to China and Vietnam?

The new production of the 787 will be executed outside of the US only to be “assembled” by US workers. Just because Boeing is incorporated in the US does not mean that it is a US company yet the rhetoric coming out of Washington DC is that the US military is giving US jobs to a European company.

Boeing has a long history of paying off politicians. They have been convicted of this several times in the past. It is obvious that Boeing is now calling in its markers. Some politicians have gone so far to say that it is a question of national security. These individuals indicate that given Europe’s disagreement with the warmonger policies of the Bush Administration that European suppliers will slow down the production of certain pieces necessary to make the tankers. “America will no longer be master of its own destiny!” is their fear based rhetoric.

It could be valuable to remember that Boeing is under investigation for sharing sensitive technology with China and the basis of their new facilities in China is the sharing of technology.

Our question should be, “Do we prefer to share technology and work with countries that have interests similar to our own or do we want to continue to send technology and jobs to a country that has shown and continues to show that they are not our friends nor do they share common future goals?”

Boeing is no longer a US company. China is not our friend. Politicians are corrupt. The choice of Northrup Grunman over Boeing is the best solution.

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Michael Jordan Supports Sweatshops with Child Labor

One of the ways professional athletes make big bucks is by lending their name and image to some company to sell products. These testimonials say, “I vouch for this product. It is good. If you use this product you can be like me.” In the advertising industry they call these endorsement contracts, “giving a face to the product.” Michael Jordan is the prime example. He has been so successful with Nike that Nike has split out the Jordan endorsement portion in a separate company called Jordan Productions.

We like Michael Jordan. We think he is a good guy. He made us feel good with his basketball prowess. He also seems to be a really nice individual. Any company Michael Jordan represents surely acts like Michael Jordan does. How could Michael Jordan endorse slave and child labor? The situation is so bad that the production facilities have been subjected to four strikes in the last 12 months. I thought Michael Jordan was a Christian guy. He has kids. Would he want his children working in sweatshops?

Nike, a true success story, makes profits by using sweatshops and child labor. Their human rights abuses have been well documented over the past four years. Currently Nike is in a major public relations campaign designed to clean its tainted image. They say they have made great progresses but have a strict policy of paying market wages instead of paying a living wage. They also admit that their facilities, in communist Vietnam, use child labor.

Michael Jordan therefore not only supports but, endorses the use of sweatshops and child labor.

What does Michael Jordan’s lack of moral fortitude have to do with American Politics?

Michael Jordan is the perfect example of why Reaganomics must be eliminated and government given back to the citizens of the United States of America. A person that we consider good, in the name of a corporation, does culturally unacceptable things for money. He convinces himself that he is separated from the actual wrongdoing and finds solace in “not knowing” or not having the capacity to change what is going on. If he does not accept the endorsement then someone else will and he will lose a lot of money.

Companies have only one purpose. That is: make money. They cannot be expected to do anything other than greedily chase the latest money making scheme. If they can find a way to game the system they will. They do not care about humanity or the long term viability of a country. They will just move somewhere else and continue exploiting the system. They will fight tooth and nail to keep their end user markets open to the new junk they produce in some undeveloped country where they can use child labor or employ dangerous materials without safeguards. They do not care if children receive an education. They do not care whether or not people die from starvation or lack of medical care. They do not take any responsibility when people die working, producing their products.

Companies cannot be expected to express a country’s values unless the country’s values are greed and world domination. If companies do not have the same values as the citizens of a country then companies have no role in government.

I want to believe that Michael Jordan has not consciously decided to sell out his image to a company that employs child and slave labor. Just as I want to think that Mr. Jordan just has not thought about the correlation of Nike’s actions and his image, I believe that most Americans do not realize that the actions of Coca Cola, Dow, GE, Exxon, and McDonalds represent America.

Extremist groups that hate America or plot against America are not really upset with Joe Worker. They are upset with the immorality and greed expressed by US corporations. Whether we like it or not, America defined by what these corporations do.

Our government talks about using the military to protect US interests across the world. Our soldiers die and the treasury is depleted to guarantee that Nike, Walmart or Exxon can exploit world poverty. I see no difference in the actions of companies moving production facilities to China than Sex tourists who travel the world to find places where they can indulge any desire that may be prohibited in the US.

Michael Jordan may offer his image to a sex tourist but I believe that a majority of Americans do not want to be associated with child prostitution, child labor, slavery, unsafe or deadly working environments.

Since companies, by their statute, cannot encompass these values it is our responsibility, as Americans, to conform corporations and their executives to the values of the nation. Companies must be regulated and controlled. They must be held responsible for their actions and their movements controlled and limited.

Perhaps the best response to a global unrest would be restricting US corporations instead of threatening military action.

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China Uses Trade Surplus to wage Economic War for Natural Resources

BHP Billiton, a publicly traded company, made an offer to buy competitor another publicly traded company, Rio Tinto. These two companies own and operate mines across the world. They extract raw materials necessary for sustained economic growth. Most government’s around the world want to look at the merger to address anti-trust concerns. China decided to take another road to guarantee access to raw materials.

The Motley Fool reports:

You can't call Aluminum Corporation of China (NYSE: ACH), a.k.a. Chalco, a piker. Late last week, Chalco, in partnership with Alcoa (NYSE: AA), threw a monkey wrench into BHP Billiton's (NYSE: BHP) unsolicited offer for Rio Tinto (NYSE: RTP) by paying a shade more than $14 billion to take a 9% stake in dual-listed Rio.

Both houses of Congress are looking at investments by foreign governments in U.S. assets. The world’s largest Souvern Fund is Norwegian. They publish both their rules of investment and their current portfolio. Their rules include that they never take more than a 5% position in any company. They never take a management or advisory role. Most of their investments are less 0.5% of a company’s stock. The Norwegian fund also prohibits itself from making alliances with other funds for strategic purposes. To their credit no questions have ever been raised about their motives for investing in a US asset. They are truly passive investors.

China has shown that its concern is not making a financial return. Their intentions are clearly to wage economic war over resources to guarantee their future dominance of world markets. The Middle Eastern and Russian funds should be seen with the same perspective.

Henry Hank Paulsen is meeting with the G7 this month to discuss voluntary guidelines for Souvern Funds and the way they invest. I believe that the U.S. should automatically block any investment from Souvern Funds that do not adhere, in totality, to these guidelines.

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Gap Production facility buys children slaves as young as 10 to work sewing jeans

Authorities uncover Gap, the US retailer of jeans and young teen clothing, buying children from impoverished families in India to work as slave labour sewing jeans in their production facilities. As I read this article to my wife she fought back the tears and asked me to go on to something else. In a quiet and slightly trembling voice she asked me to talk about something else. We have travelled the world and lived in various countries. Both of us have run companies, not big by US standards, but big enough. We are not naïve. Poverty exists, human tragedies occur every day in every country in the world including the US. We cannot stop them.

We have always treated the employees of the companies we were responsible for, with respect and dignity. Many of these same employees would not agree and many did not give a fair return to the company but this is part of running a business. We understand the pressures a CEO and Board feel to secure returns for investors however there must be a line. There must be a boundary that no CEO will cross for financial gain.

The company responded on Sunday that it:

“launched an investigation after it was told earlier this week about an allegation of child labor at a factory in India that was working on one product for GapKids.
The company said a very small portion of a particular order placed with one of its vendors was given to an unauthorized subcontractor without its knowledge, which violated its agreement with the vendor.

The company said it stopped the work order as soon as it was alerted and prevented product from being sold in stores.

It said it strictly prohibits the use of child labor.”

This evokes memories of Mattel CEO whining before Congress about how they did not know about lead in all their toys for children and that it was limited to just a “few and isolated, unauthorized facilities” and that the company had no prior knowledge. All this just days before Mattel went to the Chinese government and apologized publicly for the outrage in the US over shoddy Chinese workmanship and unhealthy materials.

These Multimillion Dollar CEOs are lying to you, me and Congress. They know full well what is going on. They are willing to poison American children in the name of profits, why does it seem so strange that they would buy children slaves for profits. These CEOs cannot hide behind guise “Don’t look, Don’t tell”. They know full well what is going on, they just do not care. A prominent promoter of Reaganomics recently asked why CEOs are always portrayed as crooks, dishonest, lying bastards in films. The answer is simple, while there are exceptions, CEOS are mostly very bad people. How can you tell if a CEO is bad?

A CEO is bad when he makes millions of dollars a year and has people on his payroll who do not make more than the poverty level. A CEO is bad when he moves production facilities offshore so he can use child labour, not clean up the pollution generated by his production process, and/or utilize chemical, elements and materials banned from US production facilities. In other words just about every company listed on the US exchanges.

The American consumer is caught in the middle. Very few Americans approve of using child slavery. Americans have already banned dangerous pesticides, lead in paint, and created legislation requiring production facilities to clean up their pollutants but our corporations have found a way around it. Just move the facility to some poor country where these things are not prohibited. They indicate that Americans are not required to purchase their goods. No one is twisting the consumer’s arms. No one forces shoppers to go to Walmart or Target or to buy Mattel’s and Disney’s toys however when the US only produces 18% of what it consumes onshore there is little choice.

Unfortunately we must depend on our elected officials to regulate, control and verify what corporations do. We must trust the same politicians who receive millions of dollars in kick-backs and contributions to make corporations live up to US standards. This is a losing battle. All that remains is for each American to shed a silent tear as we enjoy that new pair of jeans our teenage daughter just had to have and remember, “there, but for the grace of God, go I.”

Tags: Government Politics Recession Corporate America Finance Child Labor Economy Reaganomics

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Reaganomics – A Lesson in short-sighted Stupidity

Most economists today will tout the values of Free Trade and open markets. This is the equivalent of Federal Reserve Chairman Ben Bernanke flooding the financial markets with additional liquidity and dropping interests rates to fight inflation. Oh well, at one time the smartest people in the room believed the world was flat. Another day, another recall, is the morning wake-up call. There are so many, across all product lines and quality levels that it would take less space and be more efficient to list the products that are not being recalled. The sad thing is that even with all of this attention, the products available in stores for the holiday season will be the same products, the recalls for these versions will occur after the retail stores have made their end of year bucks. “What do you want to do? Recalling all these products would send us into a great depression and cost jobs.”

It is somewhat interesting that the same people trying to make it easier to send jobs offshore, by decreasing our controls and regulations, are justifying the sale of dangerous goods to children to save jobs.

Some will say that CEOs do not knowingly put the public at risk. These are good people, “right… and the Yankees are going to win the World Series in 2007.” Turns out that the management of Mattel, the same guys who prostrated themselves in front of Congress, indicating how they took control of the situation as soon as they were aware, and this would never happen again, knew about the lead and design defaults in their toys over two years ago. They began programmed sale of stock and when a child died they increased their sales to the maximum allowed by law. Oh well, so much for good people in corporate America.

It is not necessary to have these scandals to know that these guys are all corrupt. A good CEO will not take a $ multi-million salary while any of his employees do not make enough money to live on. A good CEO will not do it because it is bad business. A company that has this type of structure will go bankrupt. They just have not received the papers yet.

No matter what you hear about wages, companies shift production offshore because they can produce a lower quality product with lower raw goods costs. These costs most importantly are products that are regulated in the US, paint and lead is one example, DDT and fruit is another. Did you know that 100% of Apple Juice in the US comes from China and that pesticide levels in the juice are higher than US law allows?

Free trade can be a good thing but it must be controlled. The country that imports goods must verify that the imported goods meet all existing quality and regulatory legislation. This is not the case with our modern society. If it is made in China, Korea, Taiwan or anywhere else, where “labor costs are inferior” what companies are really saying is that they do not care about the quality of the products they are selling. They are saying that their bonuses and bottom line are more important than the life of your children.

The current US culture is one of extremes. There is no excuse for the actions of unscrupulous managers and boards of directors. We should not be amazed that corporate profits are more important than principles and human life. How many of our stalwart companies have operations or investments in countries hostile, or even at war, with the US? We serve our country, our children die to protect it and these companies actively support hostile regimes in the name of “the bottom line.”

Reaganomics has not made America stronger. It has eliminated quality producers and artisans. Reaganomics has brought our country to the brink of disaster. We only produce 18% of the goods necessary to keep the economy going. The FDA estimates that over 50% of medicines sold in the US are made in China. Proponents of the unregulated new world will say that Americans must adapt to the smoke and mirrors “service economy”. They contend that any manual labor is something that Americans should not do. Hard work, quality and a fair day’s work for a fair day’s pay is no longer valued.

Free trade can be a valuable tool in increasing the wealth of all nations but it must not be left to corrupt corporate managers to decide how and when. First we must guarantee that products entering the US meet US standards both in the materials and the way things are produced.


Tags: Government Politics Recession Corporate America Finance Illegal Immigration Economy Reaganomics

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Walmart Fights in the court of Consumer Opinion

I have long sustained that business models based on the cheapest price are failed models. Walmart has long touted this model although it was not part of the original model. Walmart was created with a model based on offering local products at a reasonable price. Their differentiating factor was that they would eliminate the middleman and allow local producers and farmers to sell their products directly in the store without having to share their earnings with distributors and wholesalers. This model allowed the producer and Walmart to have greater margins. Somewhere along the path to becoming the largest retailer in the world, most likely when Wall Street became involved, Walmart modified its business model and went for low prices at any cost.

Walmart began expanding and decided that its business was to offer the lowest price. They forgot the premise of their success, quality products at a reasonable price by eliminating middleman and transportation costs. They embraced the traditional distribution and wholesale model and decided that the low price was their model. This was the beginning of the end of Walmart. As soon as Walmart started down this road they became the Kmart, Sears, and so many other low cost retailer who first grow and then die.

Since Walmart now had the same cost structure as other retailers they had to cut costs from other areas. They went in two directions. They massacred their employee compensation and started buying products produced in other parts of the world. The result was the complete abandonment of the original successful business model. Since quality and price at the point of production are relatively stable the only way to compensate for higher distribution and transportation costs was to reduce quality. Today, over 70% of products in Walmart come from Chinese producers. The shipping costs now account for almost 30% of the price of anything found on the shelves. Walmart sales are now stagnating. Since they no longer are quality products at a reasonable price they have no loyalty from their customers, just like what happened in Kmart with the blue light special.

Walmart realizes they have a problem. In the last year, under vicious attacks from employees and labor advocates, they began paying their employees better. In fact the typical employee, in any geographical area, makes 10% more money than a Target employee. They have eliminated their slogan about low prices at all costs. They have also begun an institutional advertising campaign to tell the US market how they are involved in giving their employees health insurance. These are not things a company does because they have had a prophetic vision. They have finally realized the fallacy of the low cost model. They have seen the light; there is always someone else who can find a way to sell your product at a lower price.

Walmart attempted to go after the high end market but failed. It is almost impossible for the crappy low price leader to sell into the quality conscious segment. They have no credibility. If Walmart wants to survive it needs to go back to the original model. Eliminate shipping costs, pay their employees a reasonable amount and sell a quality product at a reasonable price. This is the only model that will be successful. It should not be difficult for Walmart to do this; it is part of their DNA. They will have to go against the grain but their future depends on it. If they do not there will always be an Eddie Lambert out there looking to pick up retail locations.

Tags: Walmart Politics Recession Corporate America Economy Reaganomics

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Corporate Greed Endangers US Children – The Never Ending Story

Another recall, another story of US corporations putting US citizens at risk to make a few bucks. Target just announced the recall of hundreds of thousands of gardening toys. Obviously these products were made in China. I think we see a pattern. US corporations knowingly commissioning the production of products, in places where US style regulations do not exist or are unenforceable, destined for the US market. Children’s toys are the current products. Tires that fly apart while driving down the expressway, dog food that poisons dogs, and foods for human consumption laced with poisonous hormones and fertilizers.

Surely we will see a remorseful CEO tell of how he did not know. He will go on national television and tell that his company found the illegal toys due to Target’s commitment to quality and service. We will believe him. Just like we believed Disney and Mattel. These products have been on the market for years. They have been poisoning our kids ever since they figured out that they could produce goods in places where labor was cheap and people are more concerned about survival than health or safety hazards. We had this attitude in the US well into WWII. Just think of how many men died building the Empire State Building and the Hoover Dam. Perhaps the falling testing scores of our youth should be researched in level of the lead in their blood and the residual brain damage and not in the scholastic system.

Some of you are old enough to remember what Made in Japan, Made in Taiwan and Made in Singapore meant. Made in China is the same thing. Poor Quality, faulty controls and illegal production processes are synonyms of Made in China. As our politicians have so aptly stated, “Buyer Beware, Purchase at your own Peril!”

Tags: Government Politics Recession Corporate America Finance Illegal Immigration Economy Reaganomics

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Congress Spews Words of Wisdom – Buyer Beware!

Recent recalls of faulty and dangerous products and food are too numerous to list. People have died, children have been poisoned and pets have been killed. While congress runs around talking a lot and doing very little, words of great wisdom arrive from our hallowed halls, “Buyer BEWARE!”

Perhaps these are the most truthful words we have heard from our elected representatives in a long time. It seems that the numerous products recalled is simply the tip of the iceberg. Watchdog groups suggest that there are thousands of product lines that do not meet US safety standards sitting in warehouses waiting to hit the shelves for the holiday season. Yes our government knows about the problem however because of the trade agreements signed by the Whitehouse and ratified by Congress we would be held in breach and subject to fines under the WTO. Incredible as it may seem, our country must reduce its safety laws to conform to China’s laws under the trade agreements.

I am always impressed by the lack of intelligence or scruples expressed by corporate America and our elected representatives. Unfortunately what is done is done. The US government cannot, or will not, do anything to resolve the safety and quality concerns. You do have a choice. Perhaps you, as the consumer, are the only one who can really change anything. Be careful about the products you choose this holiday season. Remember every company (even the ones like Mattel and Disney) produce their toys in China where safety and quality standards are significantly lower.

The US only produces 18% of the goods is consumes. That means that only 1 in 5 products available in US stores actually conforms to legislative standards. I do not know what to suggest for gifts this year, perhaps fewer things of higher quality is a reasonable solution.

This is an important problem. The health and well being of our children has no price. Corporate profits are not worth the life of future our kids. Take a stand. Let these unscrupulous Corporate CEOs know that we are not as stupid as they think we are.

Tags: Government Politics Recession Corporate America Finance Illegal Immigration Economy Reaganomics

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China’s Ambassador – America’s stink about Food and Toy Product Quality is Ridiculous!

I am always surprised when smart people say really stupid things. I guess globalization is not just about producing goods and services around the world. In a speech to explain why the US needed illegal immigration, the US Labor Secretary, Elaine Chao, indicated her disdain for US workers. I guess it must be an Asian thing because Mr. Zhou Wenzhong, Chinese Ambassador to the US, in an interview with Maria Bartiromo of CNBC, said, [paraphrased] American’s obsession with product and food safety is ridiculous.

China has no concerns for the health and welfare of its own citizens. I am not amazed that they have no concern for our concepts of product safety. I am amazed that he said it. This reminds me of the Japanese Minister talking about how bad Americans were back in the 80s just before Americans stopped buying Japanese products and Japan’s economy went into a 30 years period of stagnation.

I guess this is why we praise the CEO of Mattel for coming to congress and telling politicians how they had no clue and would do a better job in the future.

To take this to some positive action we can peel off the spin. US corporations have knowingly moved production facilities to places where they can produce goods and services without US regulation. Current legislation also isolates them from litigation since they have become no more than a marketing arm. If a US citizen is harmed they must sue in a foreign country. In reality the company that puts the product into the US should be held accountable. This means Mattel, Disney and others.

I do not know if there are any US toy makers left but purchasing products produced in third world countries without US style regulations places you and your family at risk. Even the simplest of things seem to have problems. There are people who suffer unexplainable rashes with socks while tires fly apart while you are driving down the expressway. Pet food is poisoned and toothpaste is laced with antifreeze.

Tags: Government Politics Recession Corporate America Finance Illegal Immigration Economy Reaganomics

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America under Siege – The ills of Collusion between Corporations and Government

US corporations have knowingly flooded the US market with unsafe products. The latest are Mattel and Disney. Their mega salaries are more important that your child’s life. Congress was outraged! They called hearings to bring to task these bad corporations. Humbly the leaders of Mattel and Disney testified that they had no clue that the Chinese did not follow the same safety procedures that a US manufacturer would employ. They used fancy charts to explain how they would do better in the future. It reminds me of the little boy who throws his sister down the stairs and when questioned by his parents he responds, “You say she’s an angel. I thought she could fly.”

The US dollar is tanking on its way to $ 1.50 against the Euro. A falling dollar is inflationary since our economy imports 72% of the goods it consumes and run a $ 1 trillion annual trade deficit. The dollar is falling because we are using our national equity to fund purchases, spending money like drunken sailors in some far away port. Inflation is high even though governmental data has decided to remove food and energy from their data points. Unemployment is estimated somewhere around 12% even though the government only counts people unemployed for 4 months then they simply disappear.

In this scenario, because greedy corporations have made bad loans corporate America has called for reduced interest rates and it seems that the FED will accommodate them. This is a really bad decision. First of all, companies should take their licking. They made bad business decisions. I have not seen the government offering to replenish citizens savings lost during the period of irrational exuberance. Most importantly the reducing the FED funds rate will make investments in US securities less attractive. This will further pressure the dollar in its downward death dive. Lower interest rates will make money more available for bad investments by companies looking for their million dollar bonuses. More money supply will create greater internal inflationary pressures.

I will not even talk about how US unions, since they have falling membership rates among Americans, are filing proceedings intended simply to stop ICE from enforcing immigration. Because corporations want cheap slave labor we have jailed agents who simply are doing their jobs.

We have gone to war to fight an invisible enemy. How about a war against real enemies? We say we do not have sufficient law enforcement personnel to take on illegal immigration but we have sufficient law enforcement to send 30 police cars from two cities to break into a private home during the 18th birthday party of a teenager. The house had about 20 dangerous criminals sitting around the living rooms chatting and drinking beer.

There is something wrong with our country when we think that someone is old enough to fight and die for their country but not old enough to have a beer. There is something even more wrong when we dedicate law enforcement personnel to enforcing religious legislation and we totally ignore criminals.

Tags: Government Politics Recession Corporate America Finance Illegal Immigration Economy Reaganomics

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Parents should not look to the government to protect their children from unsafe toys

The war wages on and the US government surrenders to the Chinese. The current administration has reached an agreement with the Chinese to eliminate the recalls of Chinese goods. Did the Chinese agree to implement laws and penalties to enforce US product safety laws? No. The US just eliminated our capability to check the incoming goods. WTF?

We must not get upset with the Chinese. They are doing their own best interest. They do not care if their population dies from unsafe products or that child labor is rampant. They have too many people. You can go to jail if you have more than one child. Just to put this into perspective. A Chinese couple will abandon in an orphanage or kill a female child born because male children have greater value. Why would you think they are interested in providing safe products for American children.

Most Americans will say, “you cannot buy toys without purchasing Chinese products.” Translated, “Who cares if my child will suffer brain damage from lead paint. They want this toy now.” We cannot expect our government to protect us. They are all in bed with Corporate America. Corporate America does not give a rat’s ass about the individual. Just look at their $100 million salaries while the employees are making barely above minimum wage and have no insurance.

If you care about your children it is your responsibility to purchase products that are safe. You cannot say I did not know. You cannot shift the blame later to someone else. If you choose to purchase a product from China, you know that it is not made to US standards. That includes safety. I am not saying that someone should boycott products. I am saying you are making a choice to compromise your child’s health to save a few bucks. Do what you like. If our economy continues changing its structure we will need an ever greater number of brain dead youth to fill the menial jobs that will remain.

Tags: Government Politics Recession Corporate America Finance China Economy Reaganomics

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US-China Trade War is on – Are you ready to fight?

Have you heard? Not only does your government think that Americans lazy, unkempt and uneducated but China says that we complain too much. Endless recalls of products produced in China that violate US consumer protection laws have pissed off China’s government. In retaliation, China is slowing the flow through of goods. The US retailers are desperate! The very reasons why I have been suggesting that America needs to produce more of its goods locally are coming to pass. Ludicrous you say. China cannot afford not to export to the US.

Let’s look at this in a different light. During the bubonic plague there was a great change in the economic system and the powerful fell to poverty while the working man became the new lord. Before the plague there was too much labor and too little work. The plague reduced the labor force by about 30%. The rich dudes, much like our $100 million CEOs, who could not screw in a light bulb if their life depended on it, no longer could find slave labor to work their lands. They began selling their properties to buy food and those who actually produced something became the new landowners. In less than two decades the face of the economic world had changed.

We can see ourselves as the rich dudes. We only produce 18% of what we consume. Everything else is dependent on slave labor. This is why Corporate America and the traditional politicians all want amnesty. The Chinese are the poor laborers. A Trade War is the plague. The Chinese will do just fine. They may grow at a slower pace but the people without goods, services and food are the US citizens.

It is shameful for our government to talk about national security when it clearly does not give a rat’s ass about the security of our nation. We are in the weakest position we have ever been. We are simply hoping that somehow things will blow over. That everyone in the world will understand that it is in their best interest to make US corporations richer.

The war we should be fighting is not about capitalism. It is about survival. This is our Alamo. We must defend our nation from the real enemies not those that Corporate America says are our enemies. We must fight against outsourcing of the production of goods and services necessary to our survival. We must fight against open borders and amnesty for those who have broken the law. We must fight Collusion and Corruption between our politicians and Corporate America.

If we think that China, North Korea, and/or Iran are our enemies we must see Corporate America as their facilitators. Let these countries do what they will. We can resolve this problem by eliminating the power of the facilitators. Stop Corporate Lobbying now!

Tags: Government Politics Recession Corporate America Finance Illegal Immigration Economy Reaganomics

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Will The US Government Bailout the Chinese Banks on Sub Prime?

Bad economic policy by the US Government, corporate cronyism, comprehensive financial incompetence, and 30 years of disastrous interior and trade policies of Reaganomics will force you and I to bailout the Chinese Banks for about $ 300 billion. Impossible? On August 23rd the major Chinese Banks announced their exposure to US Sub Prime mortgages. The Chinese banks are in to the US homeowner for about $300 billion. That is more than any group of US based banks.

The banks immediately explained, “Standard & Poors, the US debt-rating agency, rated these loans within our statute parameters."

This sounds like a threat for future legal action to procure retribution. China also owns a great portion of US governmental debt. China has threatened to sell their holdings of both US currency and Governmental paper over much less important things. The US economy only produces 18% of consumption. A trade war would result in public panic, hoarding and empty store shelves.

The US cannot allow the Chinese to get upset about their loss. The politicians may determine they are less scared of the US voter than the Chinese government and intervene directly. It seems more likely that the US government will act more covertly. Today the Federal Reserve weakened its requirements even further. The FED is now allowing banks to provide “commercial paper” as guarantees and significantly increased the amount of money these banks can borrow.

Yesterday, it seems, the FED bailed out Countrywide Financial. Today it started financing the repurchase of Chinese owned Sub Prime debt. Nice to know that our government is using our tax dollars to take care of the US citizen instead of protecting greedy financial operators from losses. Justification for the FEDs action came so ingenuously truthful from a primary economic analyst.

“What did you want the FED to do, allow the country to enter a prolonged period of depression that will make the 1930s seem like an economic boom?”

The financial, economic and internal production situation in the US is precarious at best. Our Government must stop playing games and come clean with the American people so we can take on these problems. We are not talking about protecting America from a few terrorists who want to blow us up. We are talking about protecting America from the destruction of our economy that will leave hundreds of thousands dying of hunger. Come to think of it this may be Bush’s legacy. The only President except Hoover to reduce America’s waist size.


Tags: Government Politics China Corporate America Finance Economy Reaganomics

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Regulating Imports and the Free Market

Free Market theory is based on producing goods in the area where the total costs associated with that product are lowest. The idea is that dislocation in resources will move production to eliminate excesses. Today many economists and Reaganomics supporters tout Free Market policies. I believe that these individuals have translated lowest cost of production to highest corporate margin. In a Free Market economy all costs, direct and indirect, are associated with each product produced.

A simple example of this concept is the production of a widget. The direct costs are raw materials, labor and infrastructure depreciation. The indirect costs are environmental costs, security, lost opportunity, quality control and any other costs that arise as a result of using this product. If a head of lettuce produced in Mexico costs $1 and a head of lettuce produced in Texas costs $1.50 one would say that the Mexican product costs less. This may or may not be true. If the head of lettuce from Mexico requires additional controls or has some bacteria. All of the costs verifying the head of lettuce and any health costs to individuals plus lost productivity while the person is in bed instead of working are all part of the costs of that head of lettuce.

Free Trade agreements strictly define how many controls may be made on an imported product. This is based on the concept of equals. Products produced in China or Mexico, under free trade agreements, are exactly the same quality. Most recently we have proof that this is not true. We have also found that the regulators responsible to control these products are not properly staffed to do their jobs. This is because these agencies are paid with tax dollars instead of charging the companies importing goods with the costs associated. We are in fact subsidizing imports.

Why should I, as a consumer and tax payer, be required to pay for an agency that controls quality of imports if I only use US made products?

More importantly why should US based production facilities be forced, not only to compete with subsidized imports, to pay the costs of those subsidized products?

I am all for Free Markets. I am also for each company paying for all costs associated with the production of those products. This means that oil companies should pay for international security in the Middle East. This means that every product imported must be inspected and the company importing that product must pay the costs associated. The companies importing products should also be required to verify that the product is made in a country where environmental costs are not superior to those in the US otherwise they should be required to pay a cost tariff to truly represent cost of goods.

The recent recall of toys with lead paint is a perfect example. It just so happens that my father drafted the legislation to remove lead from paint and spent the latest years of his career at CDC heading the Lead Poisoning Prevention program. This is a big deal. The damages from lead in paint are serious even at low levels. We can only assume that in China paint may contain lead. This means that the playing field is not equal and that every painted product entering the US from China should be tested for trace lead. The importer should pay the cost associated with these controls.

We can talk about tires from China, fruit from Mexico or South America, Oil from the Middle East. The facts are the same for all goods, imported goods receive direct and indirect subsidies. To have a true Free Market we must create an environment where the Free Market can exist.

Tags: Government Politics China Corporate America Finance Economy Reaganomics

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The Smartest Guys in the Room – Hank Paulsen & Corporate America

Are Governmental officials and executives of Corporate America stupid or just really bad people?

Globalization, unregulated free trade, open borders, resistance to eliminating an oil based economy are all parts of the disaster known as Reganomics. Larry Kudlow calls it Cowboy Capitalism. All of the supporters say this is the free market. That is like saying that a Volkswagon with Rolls Royce body kit is actually a Rolls Royce. Free Market requires that all costs, direct and indirect, are included in production costs. What we have today is the US taxpayer’s money being spent to subsidize foreign goods to increase corporate profits. Just think if all the costs of a barrel of oil including State Department, Department of Defense, and others were actually included. We would find that other sources of energy would be considerably cheaper. However that would hurt Big Oil’s bottom line.


In the last couple of weeks we have had numerous examples of inappropriate cost accounting. One of the primary reasons why Chinese goods cost less than US produced goods is that corporations can produce goods without controls and use ingredients that are illegal here in the US. Why are they illegal? They are illegal because they kill people. Just think about the Colgate toothpaste.




When price is the only concern the quality of products is reduced. Look at the most recent tire recall. You just changed your tires because you want to take care of your family and those around you. You are traveling down the expressway at 70 and pop. The tire disintegrates!



If a dummy like me can understand the cost of producing goods these people who have been so successful in their lives must know everything I know. I cannot believe that these Harvard grads cannot see past the end of their nose. This leaves only one conclusion. They do not care how their actions influence those around them. In my book, since I do not think they are stupid, I can only assume they are bad people, without principle or scruple. They are willing to exchange human life for their bottom line.

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China Invests in the US – What is the real story?

Earlier this year there was much concern about the US trade deficit and the amount of money China invests in the US deficit spending. I wrote about it, as did many others, but those of us, who see this as a problem, were written off as complainers and fear mongers. Our internal consumption has not changed nor has our national policy to make things abroad and reduce US production capabilities to make what we consume. In other words we continue to spend the equity built up by those who came before us. The Reganist’s call this globalization. A rising tide raises all boats. I say high tide in China means low tide in the US. It is the nature of things since the volume of the water does not change as the moons gravity pulls the tide to one side invariably it lowers the level of the water elsewhere.

A rising tide in other areas of the world may be good for business and we may get a bit of over pray particularly in the financial institutions. We are no longer amazed that corporations and financial institutions are the biggest contributors to politicians and dedicate huge amounts of money to lobbying. For them, a rising tide in China and a reduction in the US may actually be a short-term positive to the balance sheet. To the US citizen it is only a disaster. The short-sighted policies of our government and businesses is about to come home to roost. China, during the current visit, announced a $3 billion in Blackstone, a private equity firm. This action was touted by the administration as a great thing. The financial markets say, “look, China is capitalist, this is a good thing.”

The reality is more ominous. This is a way for the Chinese government to divest from US Treasuries (that means sell, sell, sell) without the backlash. I have always said China will do what is in its own best interest. It does not care about what is good for America. It will continue to divest from treasuries, skyrocketing interest rates and tanking the dollar. The United States then find itself with rampant inflation because we only produce 12% of our consumption internally. Money will dry up and we will look back at the 1970s stagflation with longing for better times.

I am not saying that China is bad or good. I am simply saying that China will act in its own best interest. We should do the same.

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The World is one big happy family!

Our government has just sent a full scale high level delegation to China to discuss trade, international finance and, while not publicized, most likely China’s position as a primary holder of US debt. North Korea has come back to the forefront. Now that they are in the Nuclear club they want things from the US otherwise they will continue developing nuclear weapons. Obviously these things all translate to money, money and more money. Iran has quieted down a bit in the last week but most likely will jump back to the forefront with some nuclear threat of its own. Finally, Saudi Arabia informed the US that should the US pull out of Iraq the Saudi Government will provide support to the Sunni militants in Iraq.

These questions are discussed to nausea by the media, each taken individually as if they are different problems. The way I see the world instead says these are all symptoms of the same problem. The problem is that each country has there own interests while the US is attempting to create one big global market. The position of the US seems to be a noble objective and perhaps the first President to actually accomplish this will be remembered as a great President.

The problem is that our government seems to see the world through rose-colored glasses. Since each country will act in its own interest, they have little concern for a worldwide market. Additionally there is the perception that the US is rich and the other countries should get a piece of the American pie. This attitude is found in every aspect of international dealings. The Mexicans believe that the US should accept all of their poor and hungry. North Korea wants billions of dollars in aid and additional technology just to come to the table to talk about talking. China believes that they should be able to purchase US corporations without allowing the US to purchase China’s infrastructures. For the Chinese it is obvious. Why should they be excluded from purchasing US assets since everyone else can?

Perhaps it is time for the government to consider a change in policy. China does not see either Iran or Korea as a problem while they do see the US as a major threat to their economy feeling the necessity to threaten the US, during the most recent visit, not to do anything that they would perceive as protectionist. They also feel that the US does not understand China. Well, I agree. I do not understand China, I do not understand Iran, and I do not understand North Korea. China does understand these countries. Since our government feels that an intimate relationship with China is in our best interest how about we let China take care of these problems.

While many Americans are rich, many Americans are very poor. Many Americans are homeless even with a job and a college degree. Many Americans are scared to death to lose their health insurance and their jobs. We have serious problems here at home. We need to be concerned with the security of our borders before we think about Iraq’s borders. We do not need to be protectionist. We do need to act in our own best interest, just like everyone else in the world does.

Tags: Politics Iraq China North Korea venezuala Border Security Port Security Iran Illegal Immigration

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