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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Consequences of Things as Usual

I will be publishing only on Monday for the next couple of months. Corporate Greed, Excessive CEO Pay, and Corporate Loopholes seriously affect Joe Citizen. The world is changing as Washington DC and Wall Street slowly recognize that “Houston, we have a problem!” False prophets arise in the darkness proclaiming, “Lower Interest Rates, Bailout the Financial institutions from their ills and all will be well!”

The United States is suffering from Structural Dislocations. Tax Rebates, Lower Fed Funds Rates and other stimulus packages will do little more than slow the decline while boosting up foreign economies supplying the US. All this will come at the expense of our children who will be left holding the bag. The US government is acting like the homeowner who bought too much house for their earning capacity and then refinanced every year leveraging up each time. At a certain point the bubble bursts and the faux earnings come out of the system leaving the homeowner upside down in his house. This is where we are with the US economy. We continue to spend our nation’s equity without increasing our productive capabilities. The result is always bad.

In some areas the decline is breathtaking while other areas still do not show the perilous times ahead of us. When the US dollar traded at 1.44 Euro I said it would go to 1.75 Euro. I believed that to happen over the next year not the next 30 days. Continuing Unemployment Claims are at historically high levels as the Labor Department says that we will not see the 20% unemployment of the 1930s. I suggest we are well past that level when calculated with the same formula used in the 1930s not the faux calculations imparted after the beginning of Reaganomics.

Eliot Spitzer has been shown for what he is: a corrupt public servant that used his office for his own personal gain. Corruption is the only result that can come from collusion between unscrupulous business executives and lying politicians.

Bear Stearns, the financial institution, has to be bailed out by JP Morgan. JP Morgan will only do the deal if the Federal Reserve guarantees their investment. Yes your tax dollars are going to buy out Bear Stearns. All this while the government is trying to unilaterally reduce Social Security Benefits for which you paid your entire working life. This is just the latest example of why legislation must be passed to limit CEO pay. The CEO of Bear Stearns has received more compensation in the last five years than the entire net worth of the company!

Our politicians continue to squawk about the war in IRAQ, tax cuts, buying entire neighborhoods, relaxing regulations to allow companies to employ more unethical and illegal practices instead of looking at the real problem: The United States no longer produces a reasonable portion of its internal consumption.

Washington must go cold turkey. They must break all ties with business and lobbies. They must take a hard look at our economy, our culture, and our nation and create a framework in which hard work is valued and entrepreneurs can actually create businesses and not Ponzy Schemes. They must allow Americans to have hope for a better tomorrow for themselves and their children.

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US Economy shows Structural Dislocations – The Illness of Supply Side Economics

One percent of US population is now in jail. The number of Illegal immigrants is now above 24 million. Unemployment is at record highs. The US dollar is at record lows. The US Financial System risks collapse as numerous banks seen failing in 2008. Foreclosures are at record highs across the nation. The housing market is on the verge of collapsing. Over 33% of Americans are “Food Insecure”. Personal debt is at record levels. 1% of Americans are homeless including 250,000 veterans. Inflation on primary goods and services is above 10%. Americans retirement savings have lost 5% since the beginning of 2008.

These are nefarious indications of a pending crisis in America. Business lobbies continue to say, ”Stay the course, everything is fine.” Our politicians respond to these problems with patches and makeshift policies to calm the public. Anyone of these realities, individually, would require serious measures from our government but when seen as a whole point to Financial Armageddon and the end of the US as the primary world superpower.

Interestingly we continue to see these realities as single events instead of viewing them for what they are: symptoms of structural defects brought on by Reaganomics.

Defining the illness is easy. We must simply look at cause and effect. Everything we do. Every choice we make. Every law passed. They all have consequences. The alchemy of securitization (changing subprime loans into AAA rated debt) initiated to save the financial institutions following the Savings and Loan Crisis resulted in the current $1.5 trillion mortgage debacle. Free Market tax incentives resulted in moving production facilities offshore. Tax Breaks for the Uber Wealthy created the financial liquidity bubble resulting in unrealistic financial operations in publicly traded companies and CEO compensation based on a CEOs tendency to “return equity to shareholders”, better known as raiding the corporate coffers, instead of looking at the company’s capability to pay its debts and fund its future obligations.

No matter what actions we take, including doing nothing, the future will be tough. There are no free meals. Sooner or later the piper will be paid. The questions we face today will determine if America will be better for our grandchildren. We must ask ourselves if we are willing to fulfill the promise of America immortalized in the words of JFK:

“Ask not what your country can do for you, instead ask what you can do for your country!”

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Don’t Worry, We Know Better!

In one of my previous lives I was a turn around artist. I would go into either just before bankruptcy or just after bankruptcy and attempt to “save the savable”. On several occasions I helped long time friends. Once I got comfortable with the situation and saw how close they were to failing I would ask why they did not call me in earlier.

They would invariably respond, “I have seen what you have done with other companies. I knew you would cut the company and change it from what it was. I did not think our situation was that bad. I was sure we could turn it around with just a little more time.”

This morning current data indicated further deterioration of the US economy. Inflation is registering at a 12% annual run rate while consumer confidence is down. The FDIC announced that credit delinquencies in mortgages, car loans, credit cards and commercial paper are at the highest level in 30 years. The Vice Chairman of the FED came out and said that there is greater risk of recession than inflation. For some reason he sees the two as exclusive events.

The international markets interpreted this as the FED’s tendency to continue to lower FED funds rates. The dollar dropped to its lowest levels ($1.49 to buy 1 Euro). Oil increased to its highest level (over $100). Wheat, corn and all other commodities priced in dollars increased proportionately to the fall in the dollar.

This time it is different. Our economy has changed. Commodities are no longer the center of our production costs. We are the silicon tech economy where ideas are more important than physical goods.

This type of wishful thinking keeps us from taking the necessary steps to fix our economy and move forward for the future. Einstein’s theory is that mass cannot be created or destroyed. It can only change form. Energy is catalyst or the byproduct. Mass is the commodity. Our economy will be different when we change the source of energy at the base of transforming mass from one object to another. As long as Oil is our energy source it is the same old economy that Henry Ford took on.

If we continue hiding our heads in the sand hoping that our economy will fix itself things will only get worse.

The talking heads blame Ethanol for the rise in commodities. They blame the drop in the dollar on the European Union’s holding interest rates to fight inflation. They blame the loss of jobs on lazy workers. They blame the high cost of agricultural products on the Congress for not passing Amnesty legislation for slave labor.

At the same time our “compassionate” President says that he will veto the new bankruptcy legislation because courts should not tell business what to do. The Presidential candidates are just now realizing that “It’s the economy stupid.” For some reason they thought that people were more concerned about the war in Iraq instead of feeding their family.

Our leaders are hiding their heads in the sand. They refuse to accept that we need structural changes to eliminate the policies of Reaganomics. We need to eliminate our public debt and force financial institutions eliminate their unethical and immoral practices. We need to raise taxes and reduce our presence in the rest of the world. Remember we cannot take on the world’s problems if our own country collapses. We need to regulate business and eliminate illegal immigration. Most of all we need to return the United States government to the people of the United States removing all influences of business in governmental policy.

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California and New York want funds for their Illegal Immigrants

New York and California are feeling the negative effects of illegal immigration. California, for example, has just reduced its statewide spending by 10% and has announced that it will have to further reduce governmental expenditures to remain complaint with state law. New York’s governor, Eliot Spitzer, is talking about the same difficulties. Both states are sanctuary states favoring illegal immigration. Spitzer recently attempted to allow illegal immigrants to have driver’s licenses and, in fact, to vote in the elections. California has openly declared that it follows a sanctuary policy.

Over the weekend the two governors got together to encourage the Federal Government to invest in major infrastructure programs that they have drawn up. I agree that the Federal Government must stop investing in the rest of the world and start rebuilding the US. These funds must not go to states with immigration policies that thwart the Federal Government’s attempt to enforce our borders. More importantly, if the Federal government approves funds for these states they will, in fact, supply jobs to illegal immigrants or will be assigning projects to companies that use illegal immigrant slave labor.

The budgets of these states are severely stressed by the costs of illegal immigration. California and New York have decided that the Federal Government should subsidize their budget shortfalls instead of asking employers who benefit from illegal immigrant slave labor to pay the additional costs. It should be remembered, States with sanctuary policies are prohibited, by law, from receiving Federal funds. Congress, by dedicating funds to these states, is breaking the very laws they passed.

This will not stop Congress from pork projects in California and New York. The great dames of Congress, Hillary Clinton (Senator New York) and Nancy Pelosi (Representative California and Speaker of the House), will disregard legislation and pump billions of dollars into their local economies making the whole country pay their irresponsible amnesty policies. It will be interesting to see what Barack Obama (Senator of Illinois), another Sanctuary State, will do. He has stated that he will eliminate pork. I truly wonder if this is the case. I believe that our future President of the United States (whether it be Clinton or Obama) will violate Federal Law and dedicate funds to sanctuary states to cover budget deficits caused by illegal immigration.

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Why are CEOs portrayed as Corrupt and Greedy?

In today’s literary world CEOs are rarely portrayed as compassionate individuals. The lobbies for corporate America and the news agencies pandering to big business often defend CEOs as morally and ethically sound individuals. They ask, “Why are CEOs always portrayed as bad people?” To the average individual this question seems reasonable. Most reasonable people will agree that things are never black and white. Not all Muslims want to kill Americans and not all CEOs would sell their mother’s kidneys to buy a better cigar.

You are now thinking that I am exaggerating. No one would sell both kidneys for a cigar. Maybe a liver for a new Mercedes would be a better analogy.

CEOs are portrayed as greedy, ethically challenged, snakes because they are. These individuals have forgotten or never learned the concepts of honor, word, or compassion. They are the equivalent of slave traders. They do not care about the consequences of their actions as long as they make a buck. The primary justification is, “If I do not do this someone else will.” This is not just an opinion. I always view the world through actions. Words mean little to me. If a tree bears apples, it is an apple tree. The CEO can say all he wants that it is a pear tree. He can run huge marketing campaigns and even show his passion for the apple bearing pear trees but it is still an apple tree. This strong characterization is evidenced by corporate America’s actions.

Liz Moyer with Tatyana Shumsky of Forbes.com writes:

Bank of America told thousands of its cardholders in recent weeks--even those with good payment histories--that they faced a rate hike from 9% to as high as 28% if they didn't pay off their balances at the old rate and stop using their cards. The bank, the largest credit card issuer, since its 2006 acquisition of MBNA, says it's all part of its "periodic" review of customer credit risk.
...
Bank of America (nyse: BAC ) gives card holders the chance to opt out of the higher rate by paying the account off, but such a request must be made in writing.

This is wrong. This is the reason why we need greater regulation of the financial sector. If Bank of America wants to change its rates on a revolving account it can do this but it cannot change the contractual rate for previous purchases. It also cannot require those in financial difficulty to pay off the entire amount to avoid the higher rate. For the rich, paying off the amount will not be difficult. For the family, massacred by the disastrous policies of Reaganomics, paying of the amount is just not an option. This means that they will now pay usurious interest rates even though they have been regular in their contractual agreement. This operation, to be followed by all of the institutions, will create a new group of slaves in bondage to the financial institutions.

Most of these debtors are good, hardworking people. Whether or not they have met their contractual obligations is not important. They will find themselves in the position to work indefinitely for the financial institutions or declare bankruptcy. We should not be surprised that the new bankruptcy laws will not allow credit card debt to be written off entirely.

These immoral and unethical actions are the fruits by which we can measure the moral fortitude of our business leaders. We cannot allow these individuals to hide behind corporate structures. It seems that today the outrageous is widely accepted. We raise independent thinkers and those who stand out to the highest pedestals. Raising the mignons of corporate America to star status undermines our country and destroys the hope that is the American Dream. These individuals must be set apart and publicly ostracized. No matter how much money these corporate elites have or command they must be put in the streets and locked in stocks and pillory so that those whose lives are forever maimed by their actions can show their displeasure. Perhaps after a thwacking CEOs would learn why the good of the many is more important than the needs of the few.

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NAR Lobby suspends funds to Congress

FED Chairman Ben Bernanke and Treasury Secretary Hank Paulsen spoke before the Senate Banking committee today to talk about the credit mess and the ensuing recession. Eliot Spitzer, Governor of New York, along with his Insurance Regulator, Eric R. Dinallo, addressed the U.S. House of Representatives’ Financial Services Committee’s Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises. They also talked about the ensuing recession and collapse of the US financial system. The Congress is now involved because years of corruption and unbridled greed created “complex instruments” that magically transformed junk grade investment paper into AAA top grade paper.

It would be reasonable to think that this was the most important thing going on in Washington. News Services ran continuous real time coverage, without advertising, for several hours. A small headline on the newswires instead caught my attention. It received no major coverage. Not even Lou Dobbs picked it up. The title read:

NAR Lobby suspends funds to Congress

The press release (yes, they sent out a press release) states that the NAR will not contribute further funds to politicians for their lack of action to resolve the housing crisis.

A fantastic watchdog group, The Center for Responsive Politics, puts this into context. During election years the lobby contributes about $ 4 million to politicians. This means that this year the lobby will not donate the expected funds to campaign coffers unless Congress passes some law that lobby feels is beneficial to the NAR. This press release interestingly occurs just 1 day before the EARMARK pork season begins.

These funds from the lobby are clearly kickbacks and should be identified as such with criminal prosecution. We have serious problems with our country. One of the most important is the public debt. The US government’s insolvency is so pronounced that the government must break its contractual agreement of social security and reduce benefits to working men and women who have paid into the system for 20 to 50 years.

Let’s talk clear. This is corruption.

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Bailouts and Reaganomics

Tax cuts, FED rate decreases, and government bailouts have little impact on the US economy. The unemployment data showed another increase for January and corporate profits are down do to inflationary pressures on raw materials. The dollar continues to make new lows. Inflation, even as calculated by the FED’s skewed prism of life without food and energy, is now well above 4.5%. America is not ready to look at the real problem. The experts are convinced that the tax rebate plan will save the US economy.

I do not mind the idea because it will be the first tax cut for those who make less than $ 250k annual. Most likely the rebate will not have the desired results. Hopefully a significant portion of the recipients will pay down debt. The rest will spend money at Walmart or other distribution chains for Chinese manufacturers. Our current production structure will cause the primary benefits to be felt in China. Perhaps this is inline with the Chinese government’s recent announcement that a stimulus program is on the way following recent weather events.

Unfortunately this program will be very expensive. Although it is said to be %1 of GDP these funds are not coming from surplus revenues. Instead this program increases the irresponsible debt levels of the federal government. Recent, and proposed future, FED rate cuts will further weaken the dollar without providing benefits for working America (known as the consumer). These cuts will directly benefit financial institutions as their working spreads increase (the difference between what they pay on deposits and what they receive for loaning money). This policy is directly related to Reaganomics (Corporatism) where government’s primary concern is to make business more profitable believing that the rest of the nation will benefit from the trickle down effect.

If we are looking to improve our economy we need to think like the salt of the earth workers. You do not spend more than you have. You eliminate debts before buying new things. You make quality products and treat your customer (who is also your neighbor) with respect and give them a quality product at a fair price. You buy things from those you know and trust. You repair your house before you buy a new car.

These concepts may seem to be those of a simpleton but I have found they are valid rules to build true wealth. The old adage “the simplest ideas are usually the best” may have new value in a world that is constantly changing.

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Reaganomics causes Recessions – Economic Stimulus Needed

Secretary of Treasury Hank “Henry” Paulsen finally acknowledged that the US economy sucks. President Bush meekly accepted that there are mixed signals but the underlying economy remains strong. Perhaps he is talking about the Chinese or other third world economies that supply the 82% of US consumption because he cannot be talking about anywhere in the continental US. President Bush and Hank Paulsen spoke of stimulus packages for the US economy. In the spirit of no crisis is too grave to cut taxes on the rich, Mr. Bush talked about making permanent his tax cuts. Even if this would do anything other than make the rich, richer this would do nothing until 2010 when the current entitlements for the rich expire.

Other programs include bailing out the financial institutions. The push back from the general public was so strong that Countrywide, the poster boy of Corporate Greed and malfeasance, dropped another 30% today to begin trading at bankruptcy levels. In the true spirit of Reaganomics Financial Institutions continue to present vague and misleading information regarding their economic stability. Some institutions, like Countrywide Financial, are falsifying documents in court proceedings to inappropriately participate in the personal bankruptcies a direct result of their immoral practices.

There are stimulus packages that talk about rebates. This package would entail sending a refund check to taxpayers once their IRS return has been filed. While tax reductions are a great thing they would simply be a band-aid solution. This type of intervention is the only one guaranteed to get money into the system immediately but they leave the reasons for the economic problems in place. Unfortunately just the rebate, without further structural changes, will only increase our public debt.

There are stimulus packages that talk about eliminating corporate taxes. Obviously this comes from Corporate America. It does not merit discussion.

How about investing in America?

Inspect our ports for faulty and dangerous products.
Control our borders financing the fence.
Repair our bridges, levies and basic infrastructures.

These are not the superficial quick fix everyone seems to want but they will start America on a path to prosperity instead of the road to the poor house we are currently following. Every operation we undertake must be balanced. We must reduce our debt. We must create economic activity inside the US. We must reign in the power of Corporate America. Finally, we must legislate every aspect of the financial institutions operations. These things will create the greatest economic boom since the 1950s.

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Government by, for and of the Corporation

Americans, outside of the ivory towers, are aware that the US economy is in difficulty. There is no need to study the economic data, MM2 or MM3. They know things are bad because they are losing their jobs and having a hard time making it to the end of the month. Most Americans know that inflation is rampant since they have to heat their homes, drive their cars and buy food. Even the most supportive of President Bush are somewhat dismayed when they hear empty phrases like, “the economy is on a strong foundation” or “additional tax cuts for the rich are necessary.” In the real world things are bad and getting worse.

The Bobble Heads of Wall Street also know how bad things are. They can no longer talk about soft landing or Goldie Locks. Now they are looking for someone else to blame. They run around like chickens with their heads cut of ranting about how the FED “knows nothing”. They believe that America is contained inside the Island of Manhattan and that the only thing that is important is the salvation of Financial Institutions. They believe the hundred million dollar salaries of corrupt and incompetent management teams are more important than the jobs of the rest of America. They refuse to accept that Corporate America is the cause and not the victim.

These individuals are calling for an additional rate cut. They argue that this will increase spending by making more money available. They conveniently ignore the fact that the dollar has lost 50% of its value because of poor economic policy, American debt at historic levels, GDP based on smoke and mirrors service revenues, and forecasts for a much poorer America by international economist. They think that further augmenting the debt crisis by making even more money available will do something good. Rate cuts have proven, and will prove in the future, insignificant. World financial markets are more liquid than previous years and international investors will not buy the Polyannesque policies of the US.

For every 25 basis point drop in the interest rates the dollar will weaken proportionally. Oil in turn will cost more as producers realign the value paid for oil to represent real dollars and real buying power. Since the US does not produce more than 12% percent of the goods it consumes, inflation will directly reflect the falling dollar. Lowering interest rates will do nothing of value. Lowering interest rates will cause a brief increase in stock prices so financial institutions will liquidate their stock positions to unsuspecting Americans. Who cares that the losses will then be recorded in the 401K and IRAs of working America.

We have a few choices. The FED can, and most likely will, lower interest rates by at least 50 basis points. I say why so little. Drop the rates by 400 basis points. Even though dropping interest rates will have no real benefit on the US economy, this would at least quiet the monkeys.

Another, more responsible, road is to accept Reaganomics for what it is. Reaganomics is economic policy designed to redistribute income from the working class to the governing class. Once we accept that Reaganomics do not work, we can implement sound economic and trade policies that would return the US to a productive powerhouse. We can require that any country exporting to the United States be required to follow all laws and regulatory entities for the procurement of raw materials, materials, labor laws, indenture, design and energy production. We can inspect and clearly identify all products regarding origin and content (including genetically cloned meats and by products). Finally we can invest in the United States infrastructures and the United States citizens.

These two strategies are very different and they will take us to different places. I believe we should be fighting for our country and our children’s future. I believe that America can be great again. I believe that if we continue on this road to destruction as mapped by Reaganomics we will see poverty never known in the history of the US. All our big guns and smart bombs cannot save us for the decay of our economy and national infrastructures.

It is time that we invest in America. It is time that we return the United States to its citizens. It is time that America returns to be a Union by, for and of the PEOPLE.

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Reducing Deficits – Can the FED

The United States Government has been running increasing deficits. The Government continues to spend excess liquidity from the Social Security fund paid by workers over the past 75 years. The government knows that the contractual agreement of Social Security will bankrupt the government if they do not replace these funds or cut costs. Their answer is to reduce contractually agreed benefits placing the burden on those who contributed to the fund.

I suggest a different answer. Let’s eliminate useless agencies. The FED has become nothing more than a Sugar Daddy for speculative financial institutions. When the cute smoke and mirrors service sector known as Wall Street makes mistakes the FED intervenes and congress bails them out. This makes the real economy, what is left of it, uncompetitive on the world markets. Originally the FED was designed to control dislocations and excesses of the financial markets however in today’s Reaganomic based financial scam Wall Street completely dictates the actions of the FED.
The FED costs the US taxpayer a great deal of money. Additionally it is responsible for bubble creation and facilitates the devaluation of the dollar by increasing M3, conveniently eliminated from FED policy several years ago. Banks are encouraged to enter into speculative operations by easy money. Individuals are encouraged to spend more than they make because there is no return on savings.

The FED is thinking only about the short term. It does exactly what Wall Street calls for but we have learned that short term focus is usually not in the best interest of any entity. I guess the old adage, “Eat drink and be Merry for Tomorrow We Die!” is the FED’s motto. The FED is doing exactly the opposite of what it should be doing in the long term. We see the disastrous policy expressed as LIBOR spreads continue to increase. In fact we see other interest rates remaining high while the FED lowers rates. The dollar is sold as the Economic Policies of the US are seen as creating greater future problems. All said, the FED is creating more problems than it solves. If an agency costs money and we need to reduce the deficit and the agency is not performing its mandate then get rid of it.

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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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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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Time for a third political party – Return of the Blue Dog Democrats

Day after day our politicians operate with what they are calling leadership. At the risk of being censured by the ACLU for not being sensitive I will provide a translation. When someone in Washington calls for leadership they are saying that they intend to go against the will of the people. Another important translation is populous. When our elected officials use this word they are saying that the person guilty of populism is listening to the stupidity of the will of the people.

Our politicians no longer represent WE THE PEOPLE. They are all off on some agenda. Our political system makes it nearly impossible to get new blood into the system. The Democrats have to pander to the fanatic left and the Republicans have to pander to the religious fanatics. The people who make it through the “vetting” process represent these extremes, not WE THE PEOPLE. It is time for the government of the United States to represent the citizens of the United States. The masses of the United States are not financial executives or CEOs. They are not the religious fanatics who believe that it is ok to kill someone in order to stop abortion. The majority of Americans do not believe that religion should be eliminated nor do they believe that America should stop using energy to protect the environment. WE THE PEOPLE are moderates. This is evidenced by the ease with which the country switches from Republican to Democrat and vice-versa.

Americans believe in hard work. They believe education is important for all and that people should not die in the streets because they cannot afford healthcare insurance. Americans are tolerant. They will elect an openly gay politician and call for the resignation of a politician who says he is straight and goes looking for male company. Americans will spend their last penny to support a religious guru on television and call for his complete destruction when it becomes evident that he does not live the life he preaches. WE THE PEOPLE can accept personal lifestyles; WE THE PEOPE abhor hypocrisy.

At one time it was said that southern democrats were more conservative than the most conservative Republicans. Across the nation the working class Democrats were called BLUE DOG DEMOCRATS. They believed in Fiscal Responsibility, God and Country, Hard Work, Education for all, Assistance for those less fortunate and Personal Responsibility. The idea was that together we are stronger than we are singularly. Today I may be better off and I will help you with your hard times. Tomorrow the tide might change. The BLUE DOG DEMOCRATICS believe that government has a role to mitigate excesses. They believe that we must first secure our home front before we secure others. BLUE DOG DEMOCRATS believe in volunteer work and are wiling to make significant sacrifices for the good of their neighbors and their country.

These are the principles that influence the lives of most people I know. In these times of rampant political corruption and the destruction of America's working class perhaps it is time for a resurgence of the BLUE DOG DEMOCRATS made up of working folk, like you and me.

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

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Mr. Bernanke, Save our $ 100 Million Bonus!

The whining CEOs of America are at it again. In chorus they are calling for the Federal Reserve to decrease interest rates. The tight monetary policy is destroying the economy. Mr. Bernanke, can’t you see that we are in a recession and we will lose our jobs. Mr. Bernanke, Please drop interest rates, our $100 million dollar bonus is based on stock performance. Without intervention from the FED our stock prices will go down. It will be a disaster, this year we will only make $2 million.

It does not matter that these CEOs have driven their companies to the brink of disaster. It does not matter that they have fired their US employees. It does not matter that customer service is now inexistent. It does not matter that these CEOs have lost their competitive advantage by purchasing shoddy products from “developing markets.” It does not matter that they have knowingly introduced into the US market dangerous products undercutting the profitability of US produced goods and services. All that matters is that these “Pezzi da Novanta” are going to lose their bonuses.

Yes, I agree, the US economy is in the pits. Yes, there are many problems. Yes, unemployment is really about 12% instead of the 4.5% listed in the government data. Yes, public debt is 70% of GDP as measured by GAAP. But inflation is also rampant and the only way to bring it down is with tough love economic policy. We must reduce our debt, not by breaking the contract of Social Security, but be eliminating tax breaks and removing tax relief for the top 0.5% of the population. We must stop subsidizing US companies who produce products outside of the US through wars to “protect US interests.” We must eliminate financial institution’s stranglehold on US citizens by passing tough usury laws making “fees” part of interest costs and limiting interest to 10% above LIBOR.

We must take on inflation. Interest rates are historically low. Lowering interest rates at this point will only increase inflation. It will not take on the reasons why we are in such a mess. We are in this predicament because corporate America has taken over the government. America is longer a place of dreams. Americans are simply cattle for the slaughter for corporations.

Do not worry corporate America. Mr. Bernanke will come to your rescue. Good economic policy is simply a matter of perception. You will get your interest rate cut. The stock market will go up and you will get your end of year bonus. Unfortunately the future will not be as bright. Monopoly style economic policy will create further dislocations in our economy and sooner or later the piper will be paid.

Tags: Government Politics China Corporate America Finance 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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Federal Reserve makes indirect investment in Country Wide Financial

Cowboy Capitalism is a great thing particularly when practiced with tax dollars by the US Government. The Federal Reserve “encouraged” the 4 major banks to withdraw $500 million each from the Fed Window. That same afternoon Bank of America, one of the 4 banks, announces that it is making a $2 billion investment in Country Wide Financial, the failing sub prime lender. Let’s do some math: 4 banks * 500 million = $ 2 billion investment in a greedy failing sub prime lender.

I guess it would be too much to ask that the “smartest guys in the room” of Wall Street were held to the same notions of accountability that the normal working Joe is. Rest assured, if you are unable to make your mortgage payment you will lose your house. Your credit will be ruined and you may even lose your job. For the intelligent $100 million CEOs who practice predatory lending when they get in trouble the government provides and exit strategy.

This is not the end of the how the US government is using your tax dollars to bail out its corporate cronies. More tomorrow on China and Sub Prime Tsunami.

Tags: Government Politics China Corporate America Finance Economy Reaganomics

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Infrastructures, Economy Tanking and Food Poisoning

So many events, what to discuss this week? It seems, thinking about politics and politicians, only negative things come to mind. Some will say that Americans want someone to blame for everything bad that happens. I believe it is more that Americans are very lucky. Notwithstanding our superficial “what have you done for me today” mentality, the United States has not suffered too much. I am not sure if it is just the law of probability working in our favor or somehow we are more resilient than other nations. Any way you look at it, we are lucky.

Our infrastructures need several trillion dollars in repairs, not new construction, simply repairs. One third of our population is “Food Insecure”. Product recalls for dangerous and poisonous products occur at about 1 a week. Some come from China. Some are homegrown. All are the result of economic policy that favors short-term thinking and is the result of corruption. Someone is making a buck at the expense of our nation’s physical and economic health.

The most recent data suggests that Hillary Clinton will win the next election and that most Americans are not concerned about political dynasties. In other words, most Americans do not see a need for change. Change cannot occur if it is not desired. We cannot build a better future if we do not see anything to improve today. A baby boomer friend explained it to me this way. “I suffered, I paid the price. I have been there and got the T Shirt. My children and grandchildren can pay their dues.”

What can I respond to that? A government really is the face of the people.

Tags: Government Politics Corporate America Corruption

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The Economy is Tanking – I have a job, does it matter?

The most recent economic data clearly shows that the United States’ economy is in a serious contraction and yet inflation remains a worry. At the same time most of our mass media supports the Administration’s vision that everything is fine, that jobs are plentiful and we need to forge on with additional tax cuts, subsidies for Corporate America to produce goods offshore and to flood the US labor pool with illegal aliens. Notwithstanding our worldwide allies of Russia and China doing just the opposite.

We continue to spend money spreading a false democracy and trying to forcefully convince the rest of the world that our way is the only way. I even read one of my wine blogging buddies today pimping the idea that, in the name of free market, Europe should eliminate the strict legislation regarding the production of wines. Primarily this legislation says that the to place a quality control insignia on a label, the producer must use certain types of grapes, grown in the region, and processed by methods that prohibit pumping the wine with sugars or alcohol additives.

Why waste the time writing about this stuff. Who cares how the Administration sees economy? Well, I believe Joe Citizen is intelligent. Joe Citizen is capable of reasoning and together we can come to a reasonable solution. We can do this if we have sufficient and valid information. So while the President tells Americans to spend, spend, spend over the holiday season, perhaps heads of household would hold back a bit if they were provided information indicating that their jobs are in jeopardy, that prices are rising and that our government, sooner or later, will increase taxes or reduce services because of the $47 trillion and growing debt.

Tags: Politics Corporate America Corrupt Politicians Government Data War on the Middle Class Border Security Port Security Stop Pork Spending Illegal Immigration

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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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