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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Private companies to provide National Health Care. That is an Oxymoron!

My wife and I sat through the latest Democratic Debate. They jested back and forth mostly in agreement. Amnesty for illegal aliens. Border security without a fence. Better relations with Mexico? Applause erupted from the mostly Mexican crowd in Austin. It is a shame that candidates forgot they were running for President of the United States. Somehow they believe that Texas is Mexican. I guess us white folk do not count anymore. I am not really concerned about this so much since I believe the upcoming financial disaster will trump all. It will be a shame when America blames Mexicans for the problems and true unrest focuses on Immigrants, legal and illegal alike. The blame can only be placed on the politicians who do not have the balls to tell America the truth about the economy and the problems created by dislocations of resources.

The candidates believed they would score points contrasting their health insurance programs. They have given the private insurance programs the name of national health care. Both programs are nothing more the entrenching the insurance companies farther into government just like the latest Medicare reform. Just for the record the only way America can step into the world of equality for all is what they are calling the “one payer system”. That would cost too much! Quality of care would go down. We do not want to be France.

None of these statements are true. According to the World Health Organization (WHO) the countries with the best care in the world are “One Payer Systems”. They also offer healthcare to all their citizens at ½ the cost for the same care here in the US. Perhaps the cost would go up if we intend to give healthcare to all Mexicans. The idea that somehow the quality is reduced is false. I can speak of Europe where I lived for 20 years. The national healthcare was a bit slower for some exotic treatments yet the quality of care is significantly better in Europe across the board. If you are rich and you want to pay for private insurance your treatment is even better because all national healthcare systems also have a private sector.

The most important thing about the “one payer system” is that no family’s wealth is wiped out because of an illness. No family will go bankrupt. No children will have to live on the streets because a parent gets ill. No individual has to make the choice whether to eat or buy medicine. When I was young and had 4 kids the national healthcare system was very important. It allowed me to keep my family healthy while I worked on building a future. Italy lost a bit of money on me in the short run but over time I well paid for the services rendered. Once my family was stable I received all of my care from the private system while I still paid, as part of my taxes, for the public system.

I was glad to pay when I had the funds. Without the National Healthcare System I would not have been able to create the businesses I created and the successive wealth. All of my money would have gone to paying for this or that medicine or medical visit. Healthcare in the US is used to maintain Class structure. It is designed to make sure that those without money never make it. Only the most fortunate, who never get sick, even have the chance of saving money. Slavery has not been abolished in the US, the shackles have simply changed form. I guess it is appropriate that in a world of virtual fences we have virtual chains.

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US Values Special Interests more than Education

Why should the United States be concerned with providing education for its youth. The HB Visa program has taken care of America’s future. If we do not have enough Cheap University Graduates we can just import them from some country that provides free University Education to its citizens. Most Americans at this point are thinking this is crazy, he is just upset about something or that I am a Commie Pinko Fag (term from the 70s). Unfortunately, none of the above are true. The proof is in the legislation.

The Georgetown Voice writes:

The College Opportunity and Affordability Act of 2007, currently before both houses of Congress in different forms, would reform the corrupt student loan industry and make textbooks more affordable, among other admirable goals. Unfortunately, though, the bills also contain clauses that instruct universities to crack down on file-sharing on college campuses. While the Voice does not condone illegal file-sharing, Congress should not be roping universities into the fight against it, and Georgetown should not be diverting any of its limited resources into investigating students’ downloading habits.

If WE THE PEOPLE are interested in a strong and vibrant America then we must make education available to all no matter what one’s social status.

This is a bold statement. It sounds populous. It surely will upset those born into the Upper Class who enjoy a road less traveled. Thoughtful consideration instead leads us to believe that the strength of the United States in the future is best served by free University Education to all who desire it.

In any population there is a certain portion of a population that does well with manual tasks, others are thinkers, communicators, organizers or athletes. Rarely are the same genetic characteristics passed from parent to child instead they as the population mixes and mingles certain traits appear and go dormant skipping generations. Very complex children can be born to very simple parents and vice versa. Additionally science has found that mixing very different genetic characteristics produce better more adapt offspring.

The very mathematics of genetics teaches us that the best and the brightest will not come from the rich upper class. As a country interested in its future we should be facilitating the education of those least likely to fit the normal profile.

Our politicians are so corrupt and the collusion between business and politics is so great that our legislators have decided that it is more important to protect a corporation’s profits then to teach the greatest minds.

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The Fundamentals of the Economy are Strong! The Crisis is over!?!

Wow, I decided to write about the Border Patrol Agent killed by Undocumented Workers and the financial crisis is over. All of the economic problems of the United States have been solved. The financial institutions declared victory today and even told the EU FED that he had to get with the program and reduce rates in the EU. As one international analyst put it, “They are behind the curve.” This is another way of saying, “THEY KNOW NOTHING!”

Arrogance and Stupidity usually walk hand in hand. Most people believe that the US economy is the largest in the world. Different than what most Americans believe the US is no longer the world’s largest economy. The EU dwarfs the US in both GDP and Population. The EU has intelligently mandated that their FED has one job. Their job is to fight inflation. Yet when our Analysts and Experts talk about what the EU must do they are thinking that the EU political system is similar to that of the US. Fortunately for the world, Corporatism was banned in most Western European countries after WWII.

The collusion between government and Corporate America is a bad thing. The FED panicked following the drop in world markets on Martin Luther King day. They believed that the the smoke and mirrors financial structure of the US had spread into the rest of the world. They cut rates by ¾ % in an emergency action. Their reasoning was that the drop in the markets, in itself, became a economic factor. In other words the loss of value on the US stock market is as important as the loss of equity in housing. The obvious solution is to create excess liquidity (drop FED rates) and not worry about rampant inflation. They also promised additional cuts at the upcoming meeting.

The politicians are also preparing a tax rebate plan. The idea is that by putting money into the economy that money will be spent keeping GDP above zero. They are targetting negative growth instead of understanding why the economy is contracting. That is like wiping the forhead of a soldier shot in the stomach. He feels comforted but will most likely die in any case.

These programs are bad. Not only will they not produce the desired results, they increase public debt and accelerate inflation. I do not think we have taken on the structural problems in our economy. Perhaps we can find another area to create a bubble that will carry us on for another couple of years but sooner or later we must pay the piper.

More importantly after the FED ran to save the financial institutions, Societe’ Generale announced that it had sold positions due to fraudulant trading by a broker. The stock markets tanked because of a rogue trader.

Government should never be beholding to business or financial institutions. This must be a priority if we want to return the US to a position of strength.

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Huckabee – Ignorant or an Outright Liar?

The title is a bit much but the question is accurate. It is highly improbable that Mr. Huckabee prepared his tax program based on a consumption tax. It is a bit unnerving that a man who heralds himself as a man of the working class would support a fiscal program that would significantly reduce taxes on the UberRich and significantly increase taxes on those who have lost their jobs, are retired or are in the lower tax brackets. Mr. Huckabee touts his plan saying that European countries have an unfair tax advantage because they do not pay Ad Valorum Tax on goods shipped outside their country of origin.

Mr. Huckabee then goes on to explain that America needs to eliminate Federal Taxes and take on the European Ad Valorum tax. This would make America competitive. Unfortunately, by supporting this argument, Mr. Huckabee is either ignorant of tax structure or is a real snake hiding in the cloth of his religion.

The Ad Valorum tax, in Europe 20%, is sales tax. Each country also has the equivalent of Federal taxes that increase based on how much one earns. Each country has a different scale but they are generally inline with US tax scales.

Mr. Huckabee is not talking about a “Flat Tax” instead he is suggesting a consumption tax. A Flat Tax would be a fixed percentage on all income including capital gains. A Flat Tax would eliminate all deductions and loopholes. A Consumption Tax would exonerate all income from taxation that is not spent. Supporters say this would encourage saving since all interest would be tax free. All capital gains would be tax free. The unforeseen consequences include decreasing investments in start up or small businesses since there would be no way to offset the losses. To offset the increased burden on the lower and middle class citizens the government would cut a monthly check reimbursing the individual for taxes. I do not think this statement requires any additional comment.

The thing that caught my attention about this program is the hypocrisy of Mr. Huckabee. He first states that he wants to give America back to Americans and then proposes tax policy that would significantly burden the lower and middle class (more than 75% of Americans) and reduce investments in small businesses. Small businesses are the main source of new jobs. Unfortunately this is just another example that what politicians say has little to do with what they intend to do.

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The Inevitability of the Destruction of the Middle Class – War on the Middle Class

A father opens the door in the early evening just as the family has finished dinner. The sharp explosions of gunshots break the peaceful silence in a quiet neighborhood and a normal family ends its existence. The police investigate and find no reason for the tragedy. No apparent enemies, a simple family with a simple life. Stories like these find their way on to the front pages of our newspapers with increasing frequency. An unknown killer choosing a house at random in places where “these things just do not happen!”

We discussed these events over a plate of Cincinnati Spaghetti. Incredulous, we wondered what is happening to our world. My profession requires that I study tendencies and perceptions. I am subjected to hours of financial programs and news services. Some interesting things have been published recently. Raw data that may explain what would drive a person to knock on the door of a stranger and kill a family in cold blood without a moment’s hesitation:

Over the last 10 years the increase in earnings of the top 0.5% was more than the total earnings of entire bottom 20% of the population.

Greenspan and others state that inequality in earnings has been going on for 100 years. It is inevitable and cannot be stopped.

Successful people say that they work harder or have sacrificed more than people who are less successful. This is a fallacy. Success, as measured by earnings, has a great deal to do with social status, education and opportunity (knowing other successful people creates opportunities).

Legislation allows financially stable individuals to take advantage of difficult times. Financial institutions are allowed to charge usury rates on loans on credit cards. This reduces the disposable income of the lower income or rising classes. The result is less demand for products that can then be purchased with cash at significantly lower prices. A simple example is that one individual does not pay bank fees, credit card dues or any other type of utilization costs while an individual with a lower salary will pay 50$ annual dues, 12$ monthly service fee, 18% interest which can accelerate to 30% even though the debtor is making the payments in accordance with the contract. These fees can be the difference between eating dinner and going hungry for many families.

Rich people get bailouts from government when they make bad investments while working class gets bankruptcy.

The US working class mentality sides with the rich on policy because they believe they will become rich (the lottery syndrome).

Government uses tax dollars to protect America’s interests (only rich people). The latest example is the mortgage bailout. The only people helped by the various plans suggested will be the investors in bank stocks.

Government allows powerful individuals to close US production facilities and move their facilities to poor countries to avoid health and safety standards. They will say it is to reduce labor costs but the only real reason to produce outside the US is to avoid regulation.

It seems that the world is stacked against the working class. It is tough to make it to the end of the month much less think about the future. Should this individual get sick they are hit with a double whammy, healthcare costs they cannot afford and must go into debt just to stay alive and loss of wages since sick leave has been practically eliminated. God forbid that an individual should become part of the 35% of Americans who are not employed. They will be homeless in a few weeks and left to die.

With this type of future, always present in the mind of 98% of Americans, the pressure is intense. It is a short road from despair to anger against the world thus any door in quiet neighborhood is the perfect place to express that anger.

Free Markets work under enlightened self interest. They can last for centuries but take away the enlightened part and free markets bring their own type of enlightenment. We have seen it over the centuries with all great empires. The French Revolution, the fall of the Roman Empire, Macedonia, Egypt, Napoleon all learned why all members of society must have hope for a better future for themselves and their children. Perhaps the US is simply another fallen empire learning a lesson in humanity.

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Opening the Debate: Renouncing Reaganomics!

The recent problems and the current recession have created the environment for a discussion about US economic policy. There are numerous positions and suggestions about what needs to happen. While the “Goldilocks campers”, better known as Cowboy Capitalists, have been talking about how the FED made mistakes by not intervening in a way to make stocks go higher the more serious economists are talking eliminating, or regulating, the FED, returning to a gold based economy, eliminating tax breaks for large corporations, creating barriers for goods produced with child labor and enforcing US product safety laws. Just as a side note, I find it most interesting that the Cowboy Capitalists are the ones crying foul for the government not intervening in the economy.

I am pleased to see that this discussion is taking place. Strangely enough it seems as if some legislators have begun to listen to you and me, “WE THE PEOPLE.”

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Whining Babies do not make good FED Policy

I do not agree with the stance to reduce interest rates taken by the FED. I think they should have stayed pat. I do understand that with the current administration so close to corporate America they had to give something to the whining crybabies on CNBC. For some reason they associate Wall Street’s gains with Main Street economy. Unfortunately this is not true otherwise I would not have anything to write about on my blog. Wall Street is still at historical highs while the economy is in the tank due to the disastrous policies of Reaganomics forced on the American workers for the last 30 years.

I am impressed. The FED did not do exactly what the financial institutions wanted. The FED did cut rates in the face of skyrocketing inflation but it was not enough. The market sold off. We should remember that the market is within 5% of all time high levels. The problem is not the sell off. The problem is that these bubbleheads have euphoric predictions for 2007. If the market does not meet their forecasts they lose credibility. Poor babies!

The FED put together a worldwide program to increase liquidity to solve a problem created by bad speculative investments made by the greedy financial institutions. How else could they justify paying some Knumbnutt CEO $200 million? The FEDs program primarily creates a temporary bailout by worldwide governments to allow the financial institutions time to get their books in order and buy back this crap.

Wall Street is in an uproar! “THEY KNOW NOTHING!” is shouted by monkeys who think the FED’s job is to protect financial institutions from their bad investments. Traders across the board are calling for Bernanke to resign. How dare he not do exactly what they wanted? The financial institutions have criticized the timing of the announcements. This clearly indicated that the Fat Cats in Wall Street think that the FED is at their beckon call.

I think the FED was too lax and should not have eased. I have called for the elimination of the FED. I have done this because I do not think that the working Joe should be guaranteeing Wall Street’s $100 million dollar salaries. With this premise, if the FED must remain, we need a Bernanke who can think of ways to save Wall Street’s buttes without destroying the dollar and sending inflation to 1500% a year.

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The Season of Hope – Saving the US from economic collapse

Reaganomics has destroyed the basic foundation of the US economy. The smoke and mirrors “Service Economy” has more leaks than a sieve. The Housing crisis and current credit crunch are just predecessors of other and more serious symptoms of failed economic policies forced on the United States over the last 30 years. Those in the Ivory towers are yelling, “Everything is fine, go out and buy more this Christmas.” When asked why so Polyannesque in chorus the words resound, “because I love America!”

Thus to love America is to turn a blind eye to the problems facing Americans. To love America is to rape and pillage the working class to favor the “institutions.” To love America is to allow our children to be poisoned and our troops to die in the name of corporate profits. To love America is to allow our fellow citizens to live on the streets or die of curable disease. To love America is to dedicate our existence to furthering the true masters of government, the financial institutions.

Those who love America will further cut interest rates in face of raging inflation and a falling dollar. They will bailout the speculative positions of the financials institutions with our tax dollars and they lead us into collapse. They will pass legislation with tax breaks for oil companies to keep us dependent on fossil fuels. They will fight every law to clean up tax law and eliminate the special treatment for the rich and powerful.

I guess I am not a good American. I want hope. I want a brighter future where individuals are respected and every child has the opportunity and the education to become what ever he wants, whether that be a plumber or president. I want a government that represents the people. I want a government that tells us the truth and takes on the real problems we face. We Americans will make sacrifices. We will use our ingenuity to find new fuel sources. We will gladly work in the fields on family farms. We will innovate and find ways for all to have healthcare.

While those in the Ivory Towers shout their rhetoric I listen for an alternative. We need change. It cannot come from the existing institutions. It can only come from the people. We must do this before we have a new version of Hooverville. Every city will have Reagan County with Bush1town, Clintontown, Bush2town, and Reagan Central. If this happens it will be too late to make changes. After years of dominating the world the world will attack our weakness and we will risk speaking some other language.

The voice of hope is silent. The voice of America has been gagged. This is who we are. This is our genetic makeup. We are not cattle for the slaughter. Christmas shopping is not the most important thing for us. We will prevail!

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Free Market - Only applicable for the working man

US Treasury Secretary, Henry “Hank” Paulsen, today announced the administration’s plan to fix the massive foreclosures a direct result of speculation by financial institutions as they greedily chased an expanding market completely ignoring the bare basics of lending. Loose lending standards propagated by greedy institutions have created serious resource dislocations and allowed consumers to access credit for homes they cannot afford. This is a serious problem with most major US financial institutions hiding losses that would result in their bankruptcy.

In traditional Reaganomics fashion the Secretary of the Treasury announced a bailout for homeowners in foreclosure. The unusual thing about this plan is that it will not help homeowners. Paraphrasing:

“The US economy is strong… blah, blah, blah … This is not a bailout… blah, blah, blah … We want to help American homeowners… blah, blah, blah … Three part plan… blah, blah, blah … Freeze interest rates for a period of time… blah, blah, blah … Only homeowners with good credit… blah, blah, blah … Only homeowners who can make future payments… blah, blah, blah … No homeowners that can afford higher rates… blah, blah, blah … Congress will authorize new tax free bonds (No opportunity is too serious not to propose a tax cut for the rich)… Fannie Mae and Freddie Mac will be an important part of this program … Whoa Nelly!”

Hidden in 30 minutes of political mumbo jumbo the bailout for financial institutions. Freddie Mac and Fannie Mae will have their loan limits increased, their reserve requirements relaxed and be forced to take on all of the junk. It is obvious that the implied US governmental guarantee will become a real guarantee. The $1.5 trillion speculative hole will weigh on the US taxpayer.

This is just another example of our corrupt and decadent mentality. We spout words of personal responsibility and adaptation. We pass legislation that eliminates the possibility of a new start for the individual. Free Market is our cry yet as soon as the disastrous consequences of Reaganomics show their ugliness we call for the government to bail them out. Cowboy Capitalism is only valid to rape and pillage the working class. Reaganomics exists only to protect the corruption of family dynasties.

The housing crisis is serious. The solution is simple. All those who created and profited the leverage in the mortgage industry should have their ill gotten gains sequestered. The future of Citicorp, Bank of America and Goldman Sachs is not more important than the future of our nation. Tax revenues must not be used in any form to bailout the financial institutions no matter what the cost to their balance sheets. We cannot afford to care for our sick, we cannot feed our hungry, we cannot house our homeless. We surely cannot protect the McMansions of Wall Street.

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America Changes – What is the real debate?

Over the last year I have explored the changes that the United States is undergoing. Rampant unemployment (while official data indicates the lowest unemployment in history), inflation at third world country levels (while the government’s Ppi indicates less than two percent), 1 % of the population homeless, 33% of the population food insecure, 50% of the population that cannot afford a major illness, University costs inflating at 50% a year while young college graduates see salaries decreasing when adjusted for inflation, identity theft rampant, public budget deficits at historically high levels while national infrastructures fall apart, and personal freedoms completely usurped by corporate America and the big brother style of government.

When speaking with people I know well I am often surprised at the position they take on the issues. I am not surprised because of the views are strange instead it is because I know their stated values. The ones who surprised me the most are members of my own family. Actively religious they grew up with the same teachings and values that have defined my defining principles yet they easily do what is financially advantageous instead of what is ethically right. I am always thrown by the statement, “I am not doing anything illegal.” They knew well that ethically their actions were very bad but the fact that law did not prohibit it made everything ok.

All of the issues are merely symptoms. They are the result of the way Americans see right and wrong. The debate that is raging, without a single word spoken about this specific topic, is very simple. It is our vision of the future. The opposing and contrasting views are:

1. The individual is more important than the whole of humanity
2. Progression of the whole of Humanity is more important than the individual.

As I was a child I was inspired by the words of John Kennedy, “Ask not what your country can do for you instead ask what you can do for your country. “ and Martin Luther King’s dream of the equality of mankind, and, even, Startrek’s Spock sacrificing his life for the crew with the words, “The needs of the many outweigh the needs of the few.” As a child I read avidly books recounting the heroic actions of WWII. I am an Eagle Scout with respect for flag and country.

I thought the principles that guide my actions were a result of my family’s strict religious adherence. I could not understand how religious people could be individual oriented in their reasoning. Recently I realized that who I am is not a product of my religious upbringing instead I was influenced by those leaders who spoke of unity, by the selfless actions of soldiers in difficult times and public service contributing to our nation.

Often I have been ridiculed as the “idealist” looking for the Utopian existence. Other times I am labeled as a socialist, populist or even pinko commie fag. What can I say? I believe the progression of humanity, the future of our children is more important than me having a newer, bigger, better car. I believe that long term stability is more important that instant gratification. These basic principles guide my every decision

This is the basic discussion in the US political debate yet candidates are fighting over the symptoms. Fighting over the symptoms will simply divide our nation. We need candidates who will talk about the real issue. We need candidates who can unite Americans around the future. This is leadership. Where are the leaders who can honestly talk about the future? Where do they stand on these basic issues? Dear candidates, please tell us, where do you stand on the basic principles that I was taught are, the who America is?

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Divided We Fall

I was reading an article about the anti-war protests in San Francisco. One of the promoters stated, “Where's the outcry? Where's the horror that almost 4,000 Americans have died in a foreign country that we invaded?" Robbins said. "I'm almost as angry at the American people as I am the president. I think Americans have become apathetic and placid about the whole thing.” These words hit me with astounding force. They did not hit me because I think we should be demonstrating against the war in Iraq or that we should hightail it out of there. No, they hit me hard because this individual strongly believes in what she is doing and is pissed off because other Americans will not support her quest. I do not get upset with other Americans because they continue to buy Chinese goods putting their children’s health at risk or because they will not push for alternative energy sources but the seeming apathy does affect my consideration of my fellow Americans.

Last night I was chatting with my cooking buddies. Among the topics of conversation were “the land of fruits and nuts”, the apparent conflict of “why someone can die in a war but not drink a beer”, the fallacy that “illegal immigration cannot be enforced for lack of manpower while we actively throw teenagers in jail for breaking local curfew laws”, and “prohibiting smoking while air born pollutants skyrocket.” I thought about “our dreams”. As college students, we talked about changing the world by eliminating poverty, making education available to all no matter what their social class, and world peace. That was a time when social movement rallies had as many student participants as football games (well maybe not as many but it was acceptable to be socially involved).

Some time ago these same cooking buddies expressed how our political machine had been so successful in dividing the nation. We can no longer act as a people because it is now thousands of specific “us and them”. The religious right believes that abortion and gay marriage are the most important questions, others believe we must “save the environment from humanity”, still others believe that we must “protect ourselves from the evil Muslims.” So here we are, the most informed and financially capable segment of American society, divided, fighting this or that symptom of the greater illness. We are not getting at the cause. We are unable to come together to fight for what made us see a better future because we are heads down, concentrated on the minutia. Our politicians have one. World order is safe. Poverty, wars, despair will be with us for many generations because we are divided and Divided We Fall.

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

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Hugo Chavez American Citizen’s best Friend?

It appears that Hugo Chavez is really American Citizen’s best friend. As preposterous as this may sound this became evident during Larry King’s interview with Vicente Fox. It seems that our President and Vincente Fox have put together a plan to create a country of the Americas. This was already coming to bear when Hugo Chavez stopped the entire thing with his nationalist agenda.

NAFTA was just the first step toward a union of the Americas similar to the European Union. The first step is the free transit of trucks (we already have that). The second is the elimination of borders, labor laws and finally a single currency. When asked why Americans would ever accept this type of union, Mr. Fox indicated that America is so in debt that continuing down this path will result in a complete devaluation of the dollar. Quoting Mr. Fox, “With America’s debt citizens will be begging for a stronger currency!”

This explains many things. It explains why Mexico’s Parliament lobbies Congress. It explains why the Mexican government has created political parties here in the US. It explains why Mexico can interfere in Texas Judicial system. It also explains why our politicians listen to them.

An Americas union may be something US citizens want. It should not be done in secret by corporate America. When the European Union started way back in the late 60s the entire program was put to national referendums. As each piece of the puzzle went ahead it had to be approved again by referendum. The countries we call stupid, lazy, commies wanted their citizens to approve what the government was doing. I call that a democracy. You know, a government by, of and for the people.

This must be what our President was saying when he said that Congress must show leadership. Translated, “who cares what the American citizen wants? Just do this thing!”

Reaganomics has brought our country to the brink of disaster with the loss of our freedom and those things that made America great. It is no longer possible to take on every attack. It is time that we shut down the government. We need time to see the truth and understand what all of the challenges are. I have never sustained a pulling out of IRAQ but the enemies we face here at home are so insidious that all of our attention must be hear in the homeland. Our “leaders” are out of control. They have forgotten who they work for. We must clean house. Get rid of everyone and start over. We must amend the constitution to give final authority on all major issues to the people. It will be a pain having a referendum with a series of questions every month but desperate situations require desperate solutions.

We must also thank Hugo Chavez for stopping our government before we even knew we had a problem.

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

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Republican Presidential Debate – Candidates say 1930 like Depression Imminent

On the day of the Republican Debate for Presidential Candidates, the FED released the minutes of the most recent meeting where the 50 basis point cut in interest rates was decided. Oddly enough no reference was made to increasing inflation. Even more interesting is that the discussion about the labor statistics were surprisingly missing. Unanimously the entire board decided to drop the FED reference point by 0.50%. Hmmmmmmm. No inflation, no referral to labor data and the entire board decided to bailout the financial institutions for billions of dollars of speculative losses.

While the debate was going, Alcoa announced its numbers. Alcoa makes aluminum products and sells goods across the world. Alcoa missed its earning numbers by about 4%. Total revenues were up but strangely enough cost of goods sold increased and they were unable to pass on the increases to their customers.

We know that a weakening dollar makes commodities increase in price while they were unable to sell their goods at a higher dollar price. So not only do we have inflation across the US economy but we have exported it across the world through our irresponsible interest rate policy.

Politicians are comparing this period to the 1930s. They are saying that “protectionism” will result in another great depression. Protectionism, as they call it, cannot do anything. We are heading for the greatest depression the US has ever known because of the disastrous policies of Reaganomics and the wholesale auction of America’s equity. The candidates are convinced that Americans are not intelligent enough to understand jobs, economy or finance. The same people who are advocating that the US government not respect its contractual agreements with the American people think that US citizens are not educated enough to know about how to run a business or spend their money.

The reason Americans are upset with the economy is that the economy is bad. Inflation is incredibly high and families cannot pay their bills. The Pollyannesque view that politicians are presenting does not correspond to what we are experiencing. It’s the economy stupid! Politicians think that we are jealous because some people are making a lot of money. This is not the case. We do not like people making a lot of money when they do not deserve it and our investments suffer. We do not like spending $ 2 billion a week on a war to protect corporate interests and then hear that we do not have enough money in the governmental coffers to pay for social security. Social Security is a contract. If the government cannot respect its responsibilities then the government must liquidate its assets and it cannot take on new financial responsibilities.

Dear Presidential Candidates,

we are not as dumb as you think. Most of us understand financial responsibility. Many of us are enticed into the stupidity of Wall Street speculation because if we do not take these risks we are unable to compete in today’s “service economy” where quality and hard work no longer mean anything. If we do not play the games we are unable to feed our families. This must stop. Americans can handle the truth. Give us real information. Tell it like it is. Let the greedy traders in the financial institutions go bankrupt. Perhaps we will then be able to value skilled labor, hard work, and sacrifice for our future.

Smoke and mirrors eventually dissipate. The piper must be paid. We know how to work hard and make a better future but we must have a true vision of today’s reality. It is not by chance that Americans do not trust politicians. Show some balls and tell it like it is.

One Citizen.

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

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Reagonomics vs. The People of the United States of America

“Get off your lazy butts, stop whining, get a job, and invest!” Words of wisdom from the mouthpiece of the Republican Party and most vocal supporter of Reagonomics vehemently stated in response to the recent poll that found that 60% of Republicans thought Free Trade is not a good thing. He reiterated his remarks when he found that 50% of Republicans think that the US economy is going to get worse in the near future. As he spouted off against the American worker he made a few remarks that explain why our politicians do not understand what is going on in America.

The first, and most obvious, is that the DOW Jones Ind. Average is at historically high levels. He was equating the level of the stock market with the economy. This is a gross error for several reasons. Just as oil has gone up as the dollar has weakened so do stocks. Stocks are commodities with a limited addressable market. The price is usually some multiple of earnings. Since 50% of the earning of companies in the DOW are earned outside the US they return at a higher nominal value (simply 1 Euro now translates to 1.42 Dollars).

As we send more of our equity (dollars) to countries supplying us with goods and services these countries must have something to buy. Since we no longer make anything they buy stocks. Recently they bought mortgages and real estate but today they buy stocks and US Treasuries.

Finally, on an inflation adjusted basis stocks are just now at the levels of the 2000 crash. It is inappropriate to equate nominal gains in the stock market without adjusting for these levels. Should this be done most likely the stock market would be following the US economy in its downward spiral.

This same Republican Reaganomic’s mouthpiece stated that he could not understand why Americans did not feel great about the economy. After numerous years of losses in real income, Joe Worker finally had a 2.5% gain last year. He then indicated that with Core Inflation at 2% the average American gained 0.5%. He forgot to indicate that while the economy may look at long term inflation tendencies through Core (CPI) the family pays the real inflation immediately. Energy now costs twice that of just 24 months ago and food has risen over 50%. Most families are not able to survive just buying refrigerators, they must also buy food, have heat and put gasoline in their cars.

It is always valuable to tune out the rhetoric and look at the fruits when judging if something is good or bad. Economists will tell you that Free Trade is always good. The facts are that Free Trade requires enlightened self-interest. When enlightened is gone self-interest is only greed. When greed is the primary motivating factor for trade then the results are disastrous because goods are not produced with the best cost-quality relationship. They are produced where they can eliminate or move costs onto someone else.

The case is lead in toys. It is not necessary to test for lead in toys made in USA given our legislation lead paint is no longer produced. Our lead free paints cost more. China does not have this legislation therefore their paint costs less. The producer saves money. He cannot control the quality of workmanship because that would eliminate his cost advantage.

Simply said the Reaganomics, Free Trade, Open Borders HB1 VISA and Amnesty supporters are all talking the talk. They are trying to present a case without facts using talking points and buzzwords like protectionist, lazy American workers, populist, racist, etc. Tune them out and think about what is really going on around you. This is the only time that the politicians may listen to WE THE PEOPLE. Your voice must be heard.

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

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Spinning Recession – Redistribution of Wealth from the Working Class to Corporate America

Unfortunately, we have another example of the US government spinning the data to give billions of dollars to financial institutions. About 3 weeks ago we were at the pinnacle of the credit crisis. Countrywide and other lenders were insolvent. Major banks would not lend money to each other because each bank knew they had significant exposure to bad debts but no one else knew how bad the situation was. The banks were thinking, “If I have this type of exposure who knows what is on the books or the bank that wants a loan?”

Since banks no longer keep sufficient reserves to cover the deposits the banks were facing runs on the bank. The banks only keep a very small percentage of their client’s money. Over the years the US Federal Reserve has reduced the required deposit reserve allowing banks to leverage their positions to ever greater amounts. If all the clients ask for their money in a short period of time the bank would have to liquidate their investments to raise cash. The investments would be sold at current market value (much lower than the amount written on the books since these are illiquid assets).

In this situation, the banks would stop repaying deposits, close their doors and declare bankruptcy. This would cause other banks in the world to have less faith in the US system and the ongoing reallocation of resources would favor the EU over the US. This would in turn eliminate 40% of GDP generated by the smoke and mirrors “service economy”.

The FED needed to do something however the people, rightly so, wondered why the US economy should pay for the speculative mistakes of the financial institutions. Strangely enough, out of the blue yonder, four days before the FED meeting on interest rates the Payrolls report showed a loss of 4,000 jobs during the previous period. Even more unusual was the drop in government employees and teachers. Somehow, just as schools were hiring new teachers for the opening of the school year the government lost 28,000 employees? The Wall Street Journal reported that the data was fishy. Adding up all of the States data the national data should have increased government payrolls by 88,000 instead of losing 28,000.

Again, strangely, the revised data present on Friday October 5, 2007 for the month of September increased the number of government jobs upward by about 50,000 employees. So the FED decreased the FED funds rate by 50 basis points based on the government employment data showing a loss of 4,000 jobs driven by losing teaching jobs at the beginning of the school year. The drop in FED funds rates allows financial institutions to get rid of speculative positions. The dollar drops 3% creating a 36% inflation rate for the month of September and costing all Americans 3% of their total wealth in one month. The next month’s payroll data shows that the very data that allowed the FED to lower rates was tremendously wrong. If it smells like a turd, looks like a turd, feels like a turd, do you need to taste it to know it is a turd?

The same institutions that are taking billion dollar handouts from your tax dollars and devaluing your savings are promoting personal responsibility for the average citizen. You must lose your house to foreclosure yet the companies can make bad decisions, speculate and get bailed out by the government using your money. This is just wrong. It is time to let your government know that you will not stand for this. Congress must investigate the FED and the way this information was compiled and presented and in the case of malfeasance ask Federal Reserve Chairman Ben Bernanke to resign.

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

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Another Day, Another Recall of Children’s Toys

Numerous toy recalls, Mattel, Disney, Target and now Dollar stores are just a few examples of the unscrupulous outsourcing by Corporate America and the ineptitude of our Government. Children have died, been poisoned by lead, and this is just in the toy sector. There is not enough space or time to talk about food poisoning, tires blowing apart and other design and manufacturing infractions of US law. One might say that Corporate America is trying to clean up its act. I believe that the number of products that do not conform to US law is so great that shelves in US stores would be empty should we actually control everything.

Who cares if Americans die? We can always get new ones through illegal immigration. Long live the donkey, oops, I mean the consumer! Our government and Corporate America is working very hard to return the US to the days of the cowboy. No regulations, no respect for laws, and no advancement of society are the common goals. Many seem to like this scenario. I think they believe that they have sufficient money to enforce their lifestyle. A return to the days of the cowboys would strengthen the class structure in the US. Those who have and then everyone else. Working Joe must take responsibility. He must work 3 jobs, live in poverty and succumb to the whims of the haves.

Perhaps this is not a bad idea. The days of the cowboy meant small government and primarily no laws. If a company ripped you off, you could get immediate retribution. Your six shooter and rifle in hand you could walk up to the CEO of the scam company and shoot him in honor. Just think about how the financial markets would look today under that scenario. If your elected official lied to you he lost his word, the only thing of value, and you could give him a good lickin’. Perhaps people would think more about the consequences of their decisions.

The fact is that what is called globalization is not true free market. It simply moves the costs to produce goods from one segment to another. We have banned lead in paint for a good reason. It is a poison. Lead paint will last much longer than non lead based paint. It is cheaper purchase. Under today’s Free Trade concepts Americans are stupid for not using lead based paint. So what does corporate America do? It shifts production to a place that can used lead based paint and then sells the products to the dumb Americans. They then tell Americans that they have lost their jobs because Americans are stupid, unkempt and do not want to work. Americans are surely stupid for banning lead in paint. The production of toys would still be here in the US if a bunch of left winged radicals had not pushed to eliminate lead from paint.

Your congress and corporate America do not want you informed about where the products are made and the safety of those products. They are spending Billions of Dollars fighting labeling requirements indicating point of origin (where the product is made). An informed consumer is most likely going to purchase a product made where health and safety regulation are followed. This would mean that the $ 100 million CEOs could no longer get there bonuses because they know their products are not safe. Informing the consumer is a direct attack on their scams, I mean business model.

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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Why are politicians so adamantly pushing illegal immigration? Could the supporters be Racist?

Why would our politicians support illegal immigration? What are their motives for creating amnesty? Supporters will say that it is the humane thing to do. They do not want to separate families. Under this assumption we should no longer imprison mothers or fathers who commit crimes. We should not imprison sons, daughters, brothers or sisters. If we apply the entire immigration debate we should not imprison cousins, aunts or uncles of US citizens.

Some will say these illegal immigrants are only looking for a better life, doing jobs Americans will not do. This argument holds as much water as pasta colander. There are no jobs Americans will not do. Perhaps they will not do some jobs as slave labor or move to an area for a short period of time to work for minimum wage but all jobs have an equilibrium price. More importantly, why have we decided that illegal immigrants from Mexico and South America should get these jobs? What about the millions of refugees from around the world? How about the famine stricken African countries? Would these people not do the same jobs, perhaps for less money?

Politicians are not the brightest tools in the shed. They see that numerically the US is losing the battle of numbers. The European Union now counts 30% citizens and a larger GDP than the US. China’s population dwarfs the US. India is moving quickly up the “number of citizens” totem pole. US politicians believe that allowing savage immigration will help them remain important on the world stage. Even China understands that there must be balance between population and resources. China has enacted strict 1 child per couple laws in order to reduce its population.

That still does not answer why politicians want Mexicans and South Americans. Poorly educated people have more children and are easier to influence politically. Our neighbors to the border are primarily Christian. Our politicians think this is manna from heaven. Hispanics are preferable to Arabs, Slavs, Orientals, Africans and Europeans. Our politicians believe these are the perfect slaves to be preyed upon by the corporate and political machines without creating significant cultural changes. Simply said they are racist. All of those promoting amnesty without supporting free open borders from all nations are racist. They believe Mexican and Southern American Immigrants are better than anyone else.

Every time you hear that comedian knocking on the anti amnesty groups ask yourself if he makes the same type of statements supporting the refugees from Africa. Whenever you hear the LULAC or ACLU speak ask yourself, “Are they doing the same thing for immigrants from Burma or Darfur?” If you cannot say that they would support these other peoples then they are RACIST.

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

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GDP, Unemployment and Inflation – What the Government will not tell you

We have found such a nice way to talk about Lying Politicians. We do not say they are lying, we say that they are “Spinning”. Government’s falsehoods have become so acceptable that we now have many news organizations that check the facts from the spin machine. Instead of saying to a politician stop lying we gently, with a smile on our face, say this is a “no spin zone.” We are so clever because we caught them spinning.

I thought spinning was something you do on a stationary bike at the gym to increase your cardiovascular capacity. Without a doubt my heartbeat does rise every time I hear the bald faced lies coming out of these pious asses. If it looks like a turd, smells like a turd and feels like a turd I do not need to taste it to know it is a turd even if our government says it is Pate’ du Merde.

The Pollyanna camp you will hear arguments like, “It would be impossible to coordinate false information, there are too many agencies involved,” or “Why would our politicians want to skew our view of the country’s economic situation? You are just too negative.”

The answer to these questions is relatively simple. The way we perceive information is based on how it is presented. A simple example is inflation. We no longer look at the increase or decrease in products normally purchased by Americans instead inflation is based on the purchase of televisions and washing machines. Basic items, like food and energy, the things we buy everyday, are too noisy to be counted in inflation.

The “why” is more important. If we start counting the number of Americans who do not have a job in the unemployment figures then the Free Trade and Open Borders policies would be crushed. Many Americans will say, “I have a job, everyone has a job.” If that were the case then we would have seen a significant uptick in unemployment numbers over the past 12 months. The US economy needs 300,000 new jobs a month to remain job neutral. We have lost about 3 million jobs in housing and new job creation has been averaging about 100,000 a month. We should have seen an uptick in unemployment of about 2 percent. Instead it is ticked 1/10 of 1 percent. Somehow the numbers do not work.

We come back to old adage, “Perception is reality, the Truth is only the Truth.”

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

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