Boeing Loses tanker contract – Out come the Lobbies!

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

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

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

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

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

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

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

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

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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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China Uses Trade Surplus to wage Economic War for Natural Resources

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

The Motley Fool reports:

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

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

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

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

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US Government’s Economic Policy ravages US markets – Financial Stocks Tank

The piper has come for payment. In August the Fed bailed out their buddies in the major US financial institutions. After years of speculating in credit derivatives the collapse of the housing bubble threatened the existence of most financial institutions. Instead of requiring the institutions to write down their bad positions the FED pumped in almost $1trillion in liquidity and piloted the purchase of Country Wide Financial, the poster child of bad lending practices, by 4 major banks utilizing funds lent by the Federal Reserve to these institutions. The FED lowered interest rates even though real inflation is through the roof. This was a really bad move but right in line with the disastrous ideology of Reaganomics.

The US dollar has been losing value for the past 5 years. A country’s currency can be seen as shares representing the country’s equity. Just like shares if you spend more money than you earn the currency diminishes in value to represent the new economic reality. If a company creates more shares the value of existing shares is diminished. If the company pays a dividend it receives a higher valuation. The dividend for currency is interest rates. A company may also receive a higher price if the future outlook for earnings (retained equity) is positive. The dollar has devalued because of the current account deficit, budget deficits, artificially low interest rates, and the lack of faith in the United States as a going concern.

The US has eliminated internal production of goods and services. The US only produces 20% of the goods it produces. The US is completely dependent on countries that do not have our values or our product safety laws. The excuse is for cheap labor but the reality is that products may be produced using materials and processes banned in the US. If a worker dies, well, “C’est la vi.” That glue is not available well GHB will do just fine for a child’s toy. The shipping costs are offset by cheap energy produced by high polluting processes. The US cannot complain about quality or the producer will stop shipping goods and stores in the US will have empty shelves. The economic impact of Free Trade at all costs is a reduction of middleclass jobs, lower wages across all segments, and a migration of wealth from the middleclass to the upper class.

The US lives on a smoke and mirrors “Service Economy”. US corporations have become nothing more than marketing companies. Research and Development, Intellectual property, quality workmanship are no longer important. We now make money without working. Wow! Experienced and educated professionals are the latest in the outsourcing scheme. In countries where University is free the PHDs abound and corporate America wants a piece of these low cost professionals. We are now emptying the US production machine, basis of any country, of the last remaining resource, educated scientists, engineers, and top managers.

Corruption is widespread in both Government and Business. Taxes are a cost of doing business. Corruption is a hidden tax on the economy. Corruption is paid for by the collective while the benefits are limited to the parties involved. Corruption is considered a victimless crime. This is like saying that dumping toxic waste into the watershed is a victimless crime. There are victims it is just harder to find the direct correlation. Corruption affects everyone in the country. It reduces GDP just a higher taxes or high interest rates. It causes the loss of jobs. I consider governmental corruption up there with mass murder because the economic effects are felt by rich and poor alike. This in turn results in people not being able to pay their bills, have homes or sometimes even eat. Corruption should carry a mandatory life sentence and lobbying by corporations should be made illegal.

Collusion between politicians and Corporate America has distracted resources from internal infrastructures. Lobbying is legalized bribes. In any other developed country the activities of lobbies would be considered criminal. In the early 90s Italy went through a cleansing process eliminating entire political parties and incarcerating corrupt politicians. The activities were no different than our politicians taking vacations (or the many other perks) on the corporate dime. Italy has since maintained a stable government, reasonable growth, and contained inflation. It would be valuable to discuss the pros and cons of corporate lobbies. It is a good thing that citizens can petition their government for change. It is a bad thing that corporations can petition anyone considering the fact that corporations are not citizens. Corporations have one objective: to make money and the corporation is often misused to further an individual’s greed such as a CEO that makes hundreds of millions of dollars.

Our system is on the verge of collapse. We need to make changes to the underlying system. The problem is grave. The difficulties we are current facing have been brewing for thirty years and cannot be overcome with a change in interest rates or throwing money at the problems. Change will not come without sacrifice but it is time to pay the piper because the piper will always get his due. Our politicians have no vested interest in change. They are more powerful and receive higher compensation than any time in history. To start to fix the problem we need to change the players. We need real working people in Congress. We need a President who represents us and will think about his country before he thinks about his legacy or other personal gain. We need an individual who is not a politician, someone who actually works for a living (or would if he had a job left). Perhaps one of the workers from middle America who has seen his job outsourced or the scientist who cannot pay his university loans because wages for professionals have been trending downward.

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Vice President Cheney announced enhanced sanctions against Iran

Our government is at it again. It seems that President Bush has been convinced that he is the only one in a position to stop Iran from furthering its nuclear programs. In a widely anticipated move the Vice President Dick Cheney announced enhanced sanctions against Iran stating that the US would freeze assets of banks and a few individuals. Additionally any individual, company or country “doing business” with Iran would suffer the same sanctions and be prohibited from doing business with America and the US financial institutions.

For some reason our government thinks that threatening something it cannot deliver will do any good. Perhaps our government could take a lesson from Sheriff Buford, “Speak softly and carry a big stick.” We speak loudly and try to bitch slap someone to make others think we have a big stick. Perhaps buying a fancy sports car for our President and Vice President would be more effective.

Germany, imports 1 percent of its oil from Iran, and France, gets 6 percent, Italy and Japan would be taking the largest hits. The assessment is considered internally "an initial -- first blush -- estimate based on each country's overall volume of exports to Iran, dependence on Iranian oil and degree of investment in Iran oil projects," according to the Treasury memo.

Japan exports nearly $1.3 billion worth of goods to Iran, has nearly $2 billion worth of oil projects there and gets about 12 percent of its oil from the country, which is approximately equivalent to what the United States buys from Saudi Arabia. Italy buys 9 percent of its oil from Iran, and has $3.2 billion in oil investments in the country and $2.7 billion worth of exports to Iran.

I can assure you that these countries will not impose sanctions. I can also indicate without a doubt that China and Russia will not interrupt trade with Iran. Thus our government has told us that we will no longer import goods from Russia. Italian shoes and fashion will no longer be available at Saks and Nordstrom. The only Caviar available will be smuggled and French wines will be stopped in the ports.
Many friends ask me why Europeans have such low esteem of the United States and its foreign policy. It is actions like these that just leave the Europeans chuckling. The perception is that America wants to be a bully but then cowers in the corner when confronted.

We need to build credibility. It is not about making friends as the Democrats would say, it is about thinking about the consequences and whether or not what we say can actually be done and that there is the will to do something.
Our President needs to cool his jets. We do not need to be spouting off. If the world feels that Iran is a problem then the rest of the world needs to take the lead and we can support them.

Tags: Government Politics Iran Corporate America Finance Government Economy Reaganomics

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Decision of the Century –Crossroad Choice Centralized Communist or Distributed Economy

For some reason Ronald Reagan is given credit for tearing down the Berlin wall. Nothing could be farther from the truth. The fall of Communism and the breakup of the USSR was solely due to Mikhail Gorbachev’s vision of a better future and the total economic failure of the centralized economy. The Centralized economy is based on the belief that goods and services should be produced freely in places where labor is less expensive. It also is based on the belief that big structures are more efficient than smaller structures. It only took about 50 years for this economic structure to destroy Russia’s infrastructures and dilapidate their country’s wealth.

The nation is terribly divided about what political party is better than the other. There is also a new group of citizens, like myself, who think that both are corrupt and decadent and should be eliminated. The politicians have been successful convincing many Americans that the problem is with the other party but America is strong. I sustain that we should completely forget the politicians and look at what our economic and political structure has become. A comparison between the US and the falling USSR could be valuable.

The USSR controlled the people by making the government more important than the people. They played on national pride to justify the actions of the KGB. Today we have a very similar situation with all law enforcement but exaggerated with Homeland Security. District Attorneys use their position to steamroll the justice process for their own personal ambitions. One such example could be Elliot Spitzer who prosecuted Martha Stewart for lying to the government. Another could be the Pro Mexican Attorney General who successfully prosecuted two border agents for doing their job when the clear indications from the central government were to allow Illegal Aliens to freely cross the US border with drugs.

The invasion of personal privacy by the citizens of the USSR would have been tolerated if the economy had been good. Unfortunately centralized production facilities are just bad business. Whenever an event affects anyone of these structures then the entire nation suffers. It is like playing the lottery with your entire paycheck every month. Who knows you may win but if you lose there is little to eat over the next weeks. Reaganomics introduced the concept that it was acceptable to have monopolistic structures that use size and financial capabilities to destroy small businesses. It is now acceptable to hear companies indicate that their growth strategy is, “Growth through Acquisition.” In other words if you cannot build a better product at a reasonable price buy them and eliminate the competition.

The USSR further compounded their problems by not investing in the distributed economy. It was only important to protect their major production facilities. Roads, bridges, utilities, telecommunications, and other basic infrastructures did not receive sufficient funding. There just was not enough money. We are seeing the same problems across the US. Hurricanes break levies in New Orleans, bridges collapse in Minnesota, pipes explode in New York, and roads are engulfed in huge sink holds in Texas, just to name a few.

As the corruption of Russia’s political scene progressed the entire economy became less efficient. Unemployment grew, inflation raged, meanwhile the government continued with their talking points, “We are the greatest nation on the face of the Earth.” Perhaps we can find some similarities with our politicians telling us that the economy is strong while we see GDP fall, public debt increases, and the government is no longer able to maintain its contractual agreements with the citizens of the US.

If we continue down the current path we can only expect to realize a future like the USSR’s past. Unfortunately with the current group of crooks running for office nothing will change no matter how we vote. We need new blood. People who are actually interested in “Public Service” and doing the good of the nation. We need to mitigate the mega corporation’s capability to destroy small businesses. We need change. Real Change.

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

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Tell me again, What does the FDA do?

The Food and Drug Administration should verify the quality and safety of food and drugs for human consumption. In the light of scandalous recalls, E.Coli and Salmonella infections the FDA told a congressional panel that they were not able to guarantee the food source. In fact the extent of their controls were more procedural than operative. This week’s testimony before Congress evidenced something more interesting. More than 50% of drugs consumed in the US actually come from China. The FDA has no oversight authority on foreign suppliers. They can request that the Chinese government accompany them to inspect a producer if the producer agrees to receive a visit from the FDA. In any case the supplier must be given 30days advanced notice.

WTF?!? This is another example of the stupidity of Reaganomics and greed of corporate America. If a company were to produce drugs in the US, producers would be subject to regulations, documentation, and surprise inspections. Needless to say the FDA indicated that no drugs are produced in America. I wonder how this all plays into the hoopla about how Canada’s drugs were less safe and lower quality than US drugs. Sounds like lobbies buying the congress, corrupt politicians and outright lies to me.

I guess we are as stupid as the politicians think we are. I believed that our pharmaceutical industry actually produced something. Why wasn’t the opposition out there telling us this instead of their stupid “talking points”. We have abandoned by our government. It is not “all Mr. Bush’s fault.” This is the direct result of Reaganomics. It began thirty years ago and has gone unchecked. Think about our economy as a brand new Cadillac. Reagan and his cronies figured out that if they use a lower grade of oil instead of the synthetic their maintenance costs would decrease. Then they figured out that they could change the air filter every 12 months instead of at six months. Then the oil changes came every 15,000 miles instead of every 5,000. The next plausible solution was to eliminate the 40,000 review and adjustments. The new tires were retreads from China. The garage was sold and the car left out in the hot Texas sun.

Our economy, like that Cadillac, now clicks, leaks a bit of oil here and there and strangely enough the car jumps when the automatic transmission shifts from first to second. It still starts in the morning but it sure has a hard time and a black plume of smoke funnels out the tail pipe. Strangely when we push the accelerator the engine floods and almost dies. It is still a Cadillac but it needs some serious TLC.

Our country and our economy needs a full check-up. It may need a valve job and the head gasket may be gone. The tires may explode on the expressway but we can fix that with a little preventative care. Who knows, the transmission my only need a new flywheel or a simple cable adjustment.

Unfortunately our technicians are wiping down the leather and polishing the body instead of making sure this economy will take us from point A to point B. The process of Reaganomics must be stopped. We must tell our politicians to fight against Reaganomics in all its forms. This can be the power train of the world once again but we must eliminate corporate influence in government and hang corrupt politicians. If goods are not produced under the same regulations, including inspections that US corporations would be subject to, they must not be allowed to cross the US borders.

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

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Reaganomics – A Lesson in short-sighted Stupidity

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

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

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

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

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

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

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

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

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


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

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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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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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Corporate Greed Endangers US Children – The Never Ending Story

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

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

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

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

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UAW / GM – A New Beginning or a death blow to America's Fabric

I have never been part of a union. When Ciba Geigy became a union shop I did not join. I left a job, as a young pup, from General Motors because I simply got board. As managing director or CEO, over the years I have found the unions to be difficult to work with. They made unreasonable requests and took up a great deal of time. The thing I hated the most was them wanting to favor certain members or to insert some friend.

Initially the public was led to believe that GM needed to eliminate health care costs to be competitive with other producers. Over the years they had negotiated contracts with employees offering benefits. They had a contract that they now want to breach. Contracts with US companies mean nothing. Corporate America uses bankruptcy to not pay their debts and break their contracts while maintaining management perks and major financial interests equity positions.

It seemed obvious that the strike would be avoided and an agreement could be reached. It would be simple for GM to set up an annuity that would be able to cover the associated future liabilities. Monday the union went on strike. In the press conference the union indicated that their sticking point was US production. The union wants guarantees that GM will keep part of its production here in the US. GM, as the rest of Corporate America, wants access to US markets while taking advantage of the disastrous trade agreements negotiated over the years by the government. Reaganomics at its best.

I have written about how producing offshore does not reduce costs, it simply shifts costs from the company to the government and general population. GM wants to become another marketing company selling its name to cover made in China. We have seen why companies do this. Mattel, Disney and others prefer to produce goods where they have fewer safety and quality regulations.

If the union caves, America loses. A union loss will mean the final blow to an America that actually produces a good. It will mean the death of the union by loss of members and would be the final step toward a “service” economy. It will mean the loss of America that produces physical goods. It will mean the loss of America’s capability to regulate quality. It will mean that America will live in fear other countries shutting off the supply of food and goods. Once we have consumed the equity in our nation built by our ancestors we will be less than Mexico. Americans will have to migrate around the world to find work.

The unions do not realize it but they are fighting a battle of epic proportions. This battle will determine the future of America. It will determine if WE THE PEOPLE have a future. The type of agreement will tell us whether or not the US will continue to be a super power.

Tags: Government Politics Recession Corporate America Finance GM Economy Reaganomics

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Congress Spews Words of Wisdom – Buyer Beware!

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

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

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

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

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

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

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Ex-Chairman of the FED Greenspan proposes that the war in Iraq is about oil

Ex FED Chairman Alan Greenspan is making the rounds on the television circuits to promote his new book. In one of these interviews he stated that he was not against the war in Iraq. He did not feel that it had anything to do with Weapons of Mass Destruction instead it was about the expansion of radical regimes and the control of the straights of Hormutz. Paraphrasing, a country could shut off 11 billion barrels a day of oil to the western world changing the world as we know it.

He felt that this was the real reason for the war. He also stated that the Administration could not present a case for war based on this premise because of the President’s and the Vice President’s ties to the oil industry. I have always believed that the war had nothing to do with WMD. I felt it was highly improbable that we could have been so wrong about their capabilities. I did not believe however that this had anything to do with oil because any reasonable man would have understood that the cost in blood and treasure would have been significantly higher than any losses suffered by the oil industry.

Mr. Greenspan may believe that war is worth protecting America’s future. Perhaps Russia and China feel the same way. I do not believe that taking away someone’s free will to act over their own resources can be excused with our future economic survival. I guess the lives of thousands of Iraq’s citizens and thousands of US soldier’s is less important than EXXON’s profit margin. While we cannot change what has been done we can tax the oil companies to pay for their war.

Our economic way of life could easily have been protected without going to war. We have not made significant progress in energy generation because oil has been so cheap and corporations have lobbied against alternative energy development. It is time that we make energy independence a primary goal. Independence can only come from non-petroleum based solutions.

This is our country. It must represent who we are. We have delegated the management of our image and culture to corrupt politicians and corporate America for too long. If we allow the decadence to continue we will lose our place in history and become relegated to obscurity of a nation that squandered its inheritance. We must be the best nation in the world based on principles not because we have better missiles. Remember every day there is someone bigger, stronger and more intelligent. We must be great because we work hard, are honest and can gain consensus.

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

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

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

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

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

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

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

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

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

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

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

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

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

Tags: Government Politics Recession Corporate America Finance China Economy Reaganomics

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Reaganomics has made America Less Productive

The California Agricultural Industry believes that there will be less illegal immigrants to pick their fruits and vegetables. Strangely enough wages are rising for California farm workers. I could go on for several articles talking about how the California example relates to the rest of America’s workers and how the government has sold out Joe Citizen but there is something even more interesting emerging from the California experiment. The unintended consequences of California’s rising farm wages clearly evidences that Reaganomics has made America less competitive on the world’s stage. All economies following the Cowboy Capitalism model should take note.

As a short premise I was somewhat amazed at how technologically backward the United States was when compared to everyday business in Europe. A simple example is the digital cell phone network just implemented this year in the US. Something Europe did with GSM back in the middle 90s, a good 15 years before the US.

The California farmers are investing millions of dollars in technology to improve food safety and time to market. A $ 1 million investment reduces the number of laborers from 30 to 18 with a payback, even with slave labor wages, of just 3 years. The addiction to low cost labor resulted in loss of productivity. The predictions of 1000 percent cost increases were exaggerated. Simply put, Reaganomics and the open border policy kept the California farmers from implementing modern technology solutions that will result in better quality controls, fresher products and lower costs.

It is obvious that necessity is the mother of invention. Take away the need and there is no reason for companies to innovate. Reaganomics has seriously impeded the United States innovation favoring outdated production methods and processing and costing the US economy in both productivity and social distress. The same concepts are true across all sectors of our economy. We have favored outsourcing for short-term gains instead of investing in the infrastructures necessary for a competitive America. Our roads and bridges are failing. The US has one of the lowest broadband penetration rates of the free world. Our best and brightest, because they are poor, never get the formal training to allow them to express their full potential. Our craftsmen and artisans are making telemarketing calls because they cannot compete with contractors using illegal immigrants.

These are the fruits of Reaganomics. The supporters will scream and shout. There are many these days who vehemently defend the stupidity of Reaganomics and risk coronary failure to express their discontent with the Federal Reserves position to fight inflation. Do not listen to the verbiage. Opinions are like assholes… Take a look at the results. Reaganism and Cowboy Capitalism weaken America’s capacity to compete on global markets. Savage immigration policies like open borders reduce the number of qualified, experienced workers necessary to avoid little things like the Subprime Tsunami.

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

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Regulating Imports and the Free Market

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

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

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

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

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

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

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

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

Tags: Government Politics China Corporate America Finance Economy Reaganomics

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