One of the reasons given for stopping the deep water drilling in the Gulf of Mexico was the possibility of another leak. With the new rules imposed on US drilling the chances of an accident have been reduced but these same rules do not apply to other countries. Even long standing rules protecting workers and requiring adequate insurance do not apply to other countries. Other countries do not have the expertise that US companies have and most of all workers and wages that could be going to the US will be exported to other countries.
The question then arises as to why we would encourage other countries to drill in the Gulf, which we have done, by offering financial incentives for them to do just that, deep water drill in the Gulf. Here are some recent news items.
Cuba on Tuesday announced plans to drill five deep water oil wells in the Gulf of Mexico beginning this summer, expressing confidence that its efforts will be rewarded with major new energy finds.
According to information first reported by CNSNews, the Export-Import Bank loaned the Mexican national oil company PEMEX $1 billion last fiscal year and plans to provide another $1 billion this fiscal year, unless Congress objects. About $600 million in 2009 was for drilling 18 wells in the Bay of Campeche in the southern Gulf of Mexico.
The Obama administration is poised to ban offshore oil drilling on the outer continental shelf until 2012 or beyond. Meanwhile, Russia is making a bold strategic leap to begin drilling for oil in the Gulf of Mexico
Then there is the story of Brazil where the US is promoting deep water drilling off of their shores as if we don’t care if oil spills up on their beaches.
An energy analyst says he cannot understand why the Obama administration is borrowing money to lend money to Brazil so it can conduct oil drilling off its eastern coast, yet will not support oil drilling in American waters.
New Subject. I have recently completed a book about my opinions of various subjects. Topics include cultural, financial , religious, and political subjects along with some personal stories. If you have an interest in the book, you can find it at “Lulu.com”. The title is “One Man’s Opinion” by John Novick. In a few weeks it will be available on the other outlets like Amazon and Borders. If you do decide to read it, I would appreciate your comments and of course your opinions.
Thursday, July 7, 2011
Top one percent
The top 1% of taxpayers (AGI over $364,657) earned approximately 21.2% of the nation's income (as defined by AGI), yet paid 39.4% of all federal income taxes. Since total personal income is about 13 trillion the top 1% earned 2.7 trillion.
The government collected 1.2 trillion in personal income tax and the top 1% paid 472 (1,200 billion multiplied by 21.2%) billion of that amount. This means that the top 1% paid 17.4% (472 billion divided by 2,700 billion) of their income in income taxes
This results from the top 1% getting 75% of their income from capital gains and dividends. The Bush tax cuts reduced the capital gains tax from 20% to 15% and the dividend tax from 39.6% to 15%.
If these two tax breaks were reversed the income tax collected from the top 1% would increase by almost one trillion. I believe a good compromise would be adding a trillion to the tax burden of these top 1% and cutting three trillion from entitlements like Medicare, Medicaid and Social Security.
In addition we could cut another half trillion from defense by just spending what the Pentagon wants instead of what congressman want the Pentagon to spend in their various districts.
In any event thanks to the courage of Congressman Paul Ryan we now have both parties talking about cuts. We are on our way. Let’s see where this leads.
The government collected 1.2 trillion in personal income tax and the top 1% paid 472 (1,200 billion multiplied by 21.2%) billion of that amount. This means that the top 1% paid 17.4% (472 billion divided by 2,700 billion) of their income in income taxes
This results from the top 1% getting 75% of their income from capital gains and dividends. The Bush tax cuts reduced the capital gains tax from 20% to 15% and the dividend tax from 39.6% to 15%.
If these two tax breaks were reversed the income tax collected from the top 1% would increase by almost one trillion. I believe a good compromise would be adding a trillion to the tax burden of these top 1% and cutting three trillion from entitlements like Medicare, Medicaid and Social Security.
In addition we could cut another half trillion from defense by just spending what the Pentagon wants instead of what congressman want the Pentagon to spend in their various districts.
In any event thanks to the courage of Congressman Paul Ryan we now have both parties talking about cuts. We are on our way. Let’s see where this leads.
Pimco
I often hear commentators on financial cable stations cry wolf and I normally don’t pay that much attention but recently several factors have come together which may indicate a possible more serious situation. First China has reduced purchases of US bonds for the past three months. Japan will be selling US bonds to get money to pay for earth quake damage and finally and most important:
World's largest bond investor Pimco dumps US Treasuries
Bill Gross, who runs Pacific Investment Management's $236bn bond fund believes that US may be in danger of default
When the money makers start to dump, I get concerned. Gross and Warren Buffet have both divested themselves from US bonds.
If the US should default it would not be like a business as the government would continue to function since we just print money to pay the bills. My concern is that this will add to the inflationary pressures we already face. Those of you who are old enough to remember the late 70’s and early 80’s know what stagflation is when we had 13% inflation, 21% interest rates and 10% unemployment. How many home loans do you think were issued when the interest rate was 21%?
World's largest bond investor Pimco dumps US Treasuries
Bill Gross, who runs Pacific Investment Management's $236bn bond fund believes that US may be in danger of default
When the money makers start to dump, I get concerned. Gross and Warren Buffet have both divested themselves from US bonds.
If the US should default it would not be like a business as the government would continue to function since we just print money to pay the bills. My concern is that this will add to the inflationary pressures we already face. Those of you who are old enough to remember the late 70’s and early 80’s know what stagflation is when we had 13% inflation, 21% interest rates and 10% unemployment. How many home loans do you think were issued when the interest rate was 21%?
Auto loans
Auto dealers borrow money to purchase inventory. A typical dealer has a 5 million dollar loan and these are called floor plan loans. They worked together to bundle these loan request into securitized asset backed securities called ABS’s. These are then purchased by various institutional investors.
This had been working quite well until the big market collapse in late 2008. After that no one would buy these ABS’s. The government then stepped in with a program called Term Asset Backed Security Loan Facility known as TALF. This program would loan money at low interest rates to individuals or businesses so that they could buy ABS’s.
The deal was that TALF would loan money at rates ranging from .5 to 2 percent to be used to purchase floor plan loans which paid 4 to 6 percent. The government guaranteed that if the purchaser made a profit they could keep the money but if they lost the government would absorb 90% of any loss.
There were trillions loaned under the TALF program to all sorts of investors around the world but I would like to high light two of these loans. The wives of two Morgan Stanley executives, Christi Mack and Susan Karches received a TALF loan for 225 million dollars. These ladies had no previous experience in this type of investing.
It’s not what you know, it’s who you know.
This had been working quite well until the big market collapse in late 2008. After that no one would buy these ABS’s. The government then stepped in with a program called Term Asset Backed Security Loan Facility known as TALF. This program would loan money at low interest rates to individuals or businesses so that they could buy ABS’s.
The deal was that TALF would loan money at rates ranging from .5 to 2 percent to be used to purchase floor plan loans which paid 4 to 6 percent. The government guaranteed that if the purchaser made a profit they could keep the money but if they lost the government would absorb 90% of any loss.
There were trillions loaned under the TALF program to all sorts of investors around the world but I would like to high light two of these loans. The wives of two Morgan Stanley executives, Christi Mack and Susan Karches received a TALF loan for 225 million dollars. These ladies had no previous experience in this type of investing.
It’s not what you know, it’s who you know.
Fairness
President Obama has been using the words fair or fairness in pursuit of his tax increase on those making more than $200,000 per year. I believe that in a free market capitalist system the concept of fairness seem woefully out of place. For example if Bill Gates needs brain surgery he will go to the finest facility in the world, and his bed will be surrounded by a half dozen of the world’s finest brain surgeons. Any and all equipment needed, will be made available and no expense will be spared. If the operation cost 50 million it will be paid for up front in cash. If I on the other hand I need brain surgery I will likely go to the local hospital and use the services of the local surgeon. Does this appear to be the kind of fairness that Obama is talking about? I think not!
This is not limited to the health industry. If OJ Simpson had a court appointed public defender, do you think he would have been found not guilty? Can the local inner city kid who robs a gas station and kills the attendant receive the defense of the, “Dream Team”, of lawyers that Simpson got. I think not!
The point is that we live in a world where we do not have unlimited resources which means by definition that we must limit what we do. When it comes to Medicare and Medicaid we cannot spend unlimited resources on each person. We must use the dirty word “ration” when it comes to what we can do. Yes we must have death panels.
You start with something obvious like should a 97 year old man with a bad liver get a heart transplant and then work your way down from that.
The only possible way to put fairness into the systems is to limit what Bill Gates can pay out of his own pocket for his own health care and I don’t believe that Americans want to go down that road.
I say it is time for Americans to wake up to the fact that all of this talk about fairness just takes us away from looking at the problem in a serious way.
This is not limited to the health industry. If OJ Simpson had a court appointed public defender, do you think he would have been found not guilty? Can the local inner city kid who robs a gas station and kills the attendant receive the defense of the, “Dream Team”, of lawyers that Simpson got. I think not!
The point is that we live in a world where we do not have unlimited resources which means by definition that we must limit what we do. When it comes to Medicare and Medicaid we cannot spend unlimited resources on each person. We must use the dirty word “ration” when it comes to what we can do. Yes we must have death panels.
You start with something obvious like should a 97 year old man with a bad liver get a heart transplant and then work your way down from that.
The only possible way to put fairness into the systems is to limit what Bill Gates can pay out of his own pocket for his own health care and I don’t believe that Americans want to go down that road.
I say it is time for Americans to wake up to the fact that all of this talk about fairness just takes us away from looking at the problem in a serious way.
Ryan plan
I was never quite sure what the word Demagogue meant until the recent descriptions of Paul Ryan’s Medicare plan were revealed. Remarks like, “it will throw grandma in the street”, and “disabled kids will be left to fend for themselves” are examples of demagoguery. It is taking something you don’t like and exaggerating the negatives until no one likes it.
In order to understand the Ryan plan we first must understand the present Medicare system. Medicare has two main parts, Part A for hospital bills and Part B for doctor bills. There is no charge for Part A and Part B cost $1,157 per year for most. Note that I said most.
If your hospital bill is $20,000 Medicare will only approve part of that amount, on average about 80% or $16,000. The hospital then charges their private pay patience an additional $4,000 to make up the difference. The same thing happens with doctor bills. If your bill is $300 Medicare will approve, say $200 and the doctor must charge his private patience and extra $100. If Medicare approves $200 the pay 80% of that or $160 and most people have a supplemental insurance policy to pick up the other $40.
I said earlier that the cost for most is $1,157 per year but for higher income people the cost goes up reaching a cost of $4,243 per year for individuals whose income is above $214,000. This is the way that the Ryan plan will work.
The first thing to know about the Ryan plan is that is does not affect anyone who is over the age of 55. For those under that age when they become eligible for Medicare at age 65 the benefits will be similar but the payments will change. The exact numbers are not out yet but typically it will look something like this. Your premium will be $1,157 per year but if your income is above $50,000 you will pay an additional $100 per year for every $1,000 over $50,000 you make. So if your income is $60,000 you will pay $2,157 per year instead of $1,157. At $70,000 you pay $3,157 and so on until at $200,000 income you pay $16,157.
When you look at the plan this way you see it is a reasonable approach to saving Medicare. By the way, some suggest that since everyone likes Medicare, why not have Medicare for everyone? If you do that, to whom would the doctors and hospitals charge off their shortages?
Everyone who understands Medicare knows that it restricts treatments and payments for treatments and this will continue under the Ryan plan. The problem is that the official position of Medicare is that they do not restrict treatments
In order to understand the Ryan plan we first must understand the present Medicare system. Medicare has two main parts, Part A for hospital bills and Part B for doctor bills. There is no charge for Part A and Part B cost $1,157 per year for most. Note that I said most.
If your hospital bill is $20,000 Medicare will only approve part of that amount, on average about 80% or $16,000. The hospital then charges their private pay patience an additional $4,000 to make up the difference. The same thing happens with doctor bills. If your bill is $300 Medicare will approve, say $200 and the doctor must charge his private patience and extra $100. If Medicare approves $200 the pay 80% of that or $160 and most people have a supplemental insurance policy to pick up the other $40.
I said earlier that the cost for most is $1,157 per year but for higher income people the cost goes up reaching a cost of $4,243 per year for individuals whose income is above $214,000. This is the way that the Ryan plan will work.
The first thing to know about the Ryan plan is that is does not affect anyone who is over the age of 55. For those under that age when they become eligible for Medicare at age 65 the benefits will be similar but the payments will change. The exact numbers are not out yet but typically it will look something like this. Your premium will be $1,157 per year but if your income is above $50,000 you will pay an additional $100 per year for every $1,000 over $50,000 you make. So if your income is $60,000 you will pay $2,157 per year instead of $1,157. At $70,000 you pay $3,157 and so on until at $200,000 income you pay $16,157.
When you look at the plan this way you see it is a reasonable approach to saving Medicare. By the way, some suggest that since everyone likes Medicare, why not have Medicare for everyone? If you do that, to whom would the doctors and hospitals charge off their shortages?
Everyone who understands Medicare knows that it restricts treatments and payments for treatments and this will continue under the Ryan plan. The problem is that the official position of Medicare is that they do not restrict treatments
Shame
There are a number of changes that occur in Mid-Life and some are better known that others. One of the lesser known is a man suddenly feeling the need to reconnect with the kind of relationship he had with God when he was younger. It often starts with a vague uneasiness and leads to questioning about his purpose for being here. He begins a journey to find out more about this and generally uses the wrong approach. I would like to use the analogy of a house to illustrate his misguided efforts.
He goes home one day and throws out all of his old furniture, rips up the old carpet and cleans from top to bottom. He paints, adds new floor coverings and furniture. He puts new siding on the house, new roofing shingles, new windows and finishes off with a brand new front door. The he takes a big breath and stands back to admire all of his efforts and then throwing open the door says, OK God, I’m ready, come on in. And then he waits. Days, weeks, months and finally years pass but nothing happens.
One day while standing at the door his eyes wander across the room to the door leading to the basement and he finds himself drawn by some mysterious force to the door. He opens the door and closing it behind him, he finds himself standing on the landing in the dark. While standing there he comes face to face with his anger. He recalls the many times when things didn’t go his way and he just pushed the anger in and suddenly all of the pent up anger was sucked into the darkness and he felt a sense of relief.
He makes his way down the steps to the basement floor and there in the pitch black he sees his hidden fears and these too are pulled into the darkness.
Next he inches his way across the room to the coalbin and closing the door behind him he stands quietly in the dark and looks into the abyss of his hurts. All of the times that someone said or did something that hurt him but he never said anything. These too eased their way out of his inner soul into the dark room and he felt a tremendous sense of peace.
Then he sees an opening in the floor in the corner and getting down on hands and knees he crawls in and soon he is crawling on his belly down there with the slimy creatures of the dark and looking ahead he sees a rock and written the moss on the rock is the word, shame. He knows that when he turns over the rock he will have to face the shame that is hidden in the deepest recesses of his soul. He turns over the rock and suddenly he is upstairs standing in the front door with the bright sunlight shinning throughout the house.
It is then that he comes to understand that God does not come in through the front door of your ego but rather through the back door of your shame. When you expose your shame to the sunlight, you open the door for God
He goes home one day and throws out all of his old furniture, rips up the old carpet and cleans from top to bottom. He paints, adds new floor coverings and furniture. He puts new siding on the house, new roofing shingles, new windows and finishes off with a brand new front door. The he takes a big breath and stands back to admire all of his efforts and then throwing open the door says, OK God, I’m ready, come on in. And then he waits. Days, weeks, months and finally years pass but nothing happens.
One day while standing at the door his eyes wander across the room to the door leading to the basement and he finds himself drawn by some mysterious force to the door. He opens the door and closing it behind him, he finds himself standing on the landing in the dark. While standing there he comes face to face with his anger. He recalls the many times when things didn’t go his way and he just pushed the anger in and suddenly all of the pent up anger was sucked into the darkness and he felt a sense of relief.
He makes his way down the steps to the basement floor and there in the pitch black he sees his hidden fears and these too are pulled into the darkness.
Next he inches his way across the room to the coalbin and closing the door behind him he stands quietly in the dark and looks into the abyss of his hurts. All of the times that someone said or did something that hurt him but he never said anything. These too eased their way out of his inner soul into the dark room and he felt a tremendous sense of peace.
Then he sees an opening in the floor in the corner and getting down on hands and knees he crawls in and soon he is crawling on his belly down there with the slimy creatures of the dark and looking ahead he sees a rock and written the moss on the rock is the word, shame. He knows that when he turns over the rock he will have to face the shame that is hidden in the deepest recesses of his soul. He turns over the rock and suddenly he is upstairs standing in the front door with the bright sunlight shinning throughout the house.
It is then that he comes to understand that God does not come in through the front door of your ego but rather through the back door of your shame. When you expose your shame to the sunlight, you open the door for God
Poseidon
In 1993 the US sent up a satellite named Poseidon and its purpose was to measure sea level to accuracies never before achieved. Between 1993 and 2005 sea level rose an average of 3mm’s per year and between 2005 and 2010 it rose 1mm per year. That is 17 year average of about 2.5 mm’s per year. That means in ten years it would rise 2.5 cm’s and in 100 years it would rise 25 cm which is ten inches. That is less than one foot over the next 100 years
Al Gore’s book on global warming was published in 2006 and as you can see he access to ten years of data from Poseidon which he chose to ignore when he suggested that sea level could rise 20 feet
The film, An Inconvenient Truth, suggested that the sea would rise up to 20ft "in the near future" as the ice in Greenland or Western Antarctica melts.
This tells me that this was not an honest mistake but rather a deliberate attempt to mislead.
Al Gore’s book on global warming was published in 2006 and as you can see he access to ten years of data from Poseidon which he chose to ignore when he suggested that sea level could rise 20 feet
The film, An Inconvenient Truth, suggested that the sea would rise up to 20ft "in the near future" as the ice in Greenland or Western Antarctica melts.
This tells me that this was not an honest mistake but rather a deliberate attempt to mislead.
Gunsmoke
I had a rather odd thing happen today. I was killing time waiting to take my grandson to the doctor and decided to watch and old rerun of “Gun Smoke”. Marshall Dillon was on a train escorting an accused murderer back to Dodge and one of the passengers was the wife of the governor. Now she was from Chicago and spent a lot of her time working at ways to improve the prison system. She proceeded to make friends with Dillon’s prisoner and nearly got everyone killed before she realized that he was a true bad guy and not some kid to be rehabilitated.
I realized while watching that if this same show were produced today that she would have been the heroine that the prisoner would have been the victim and the Marshall would have been the evil monster who liked to torture.
This is just one more way that times have changed
I realized while watching that if this same show were produced today that she would have been the heroine that the prisoner would have been the victim and the Marshall would have been the evil monster who liked to torture.
This is just one more way that times have changed
Prison guards
Something happened this past week in California that is a small item in the overall scheme of things but represents one of the major problems with pensions. If you have a defined benefit pension plan like most public employee plans you determine your pension benefit by how much money you earn in the last years of work, normally the last three years. If your pension plans says it will pay your 1.5% of your final average salary times the number of years you work there, then the amount you earn in those last years is critical. Over the years this has led to the practice of working lots of overtime in those last years to build up your pension. These extra hours were available since people nearing retirement are the most senior employees and can demand the overtime.
Now back to California. The Governor Jerry Brown received a lot of campaign help from members of the prison guard union so he recently negotiated some good deals for them.
The governor is extending this benefit only to members of the California Correctional Peace Officers Assn., a union that spent nearly $2 million to help him win election last year
They are now allowed to accumulate vacation time in unlimited amounts and then to apply those earnings to the last years of work to raise their pension. Since they are eligible for 8 weeks of vacation after one year of service, this can add up to a lot of vacation time. Currently the average guard has 19 weeks of accumulated leave and the starting pay for a guard is $78,000 per year. When this vacation time is added to the employee near retirement they can use their wage at that time which would be considerably higher than the wage they had when the first became eligible for the leave.
The deal also would give the members 18 more days off over the life of the two-year contract, according to Schroeder, bringing the typical prison guard's time off to more than eight weeks in the first year.
Another change that occurred is that the guards used to get an extra $130 per month if they stayed physically fit but that is now changed to just having an annual physical to qualify for the $130.
This is an example of what has been going on all over the country. Unions organize and help with time and money to elect leaders who then offer them extra benefits. This is the thing that the Governor of Wisconsin is fighting but it is a battle that will affect all states.
Now back to California. The Governor Jerry Brown received a lot of campaign help from members of the prison guard union so he recently negotiated some good deals for them.
The governor is extending this benefit only to members of the California Correctional Peace Officers Assn., a union that spent nearly $2 million to help him win election last year
They are now allowed to accumulate vacation time in unlimited amounts and then to apply those earnings to the last years of work to raise their pension. Since they are eligible for 8 weeks of vacation after one year of service, this can add up to a lot of vacation time. Currently the average guard has 19 weeks of accumulated leave and the starting pay for a guard is $78,000 per year. When this vacation time is added to the employee near retirement they can use their wage at that time which would be considerably higher than the wage they had when the first became eligible for the leave.
The deal also would give the members 18 more days off over the life of the two-year contract, according to Schroeder, bringing the typical prison guard's time off to more than eight weeks in the first year.
Another change that occurred is that the guards used to get an extra $130 per month if they stayed physically fit but that is now changed to just having an annual physical to qualify for the $130.
This is an example of what has been going on all over the country. Unions organize and help with time and money to elect leaders who then offer them extra benefits. This is the thing that the Governor of Wisconsin is fighting but it is a battle that will affect all states.
Obama book
I have just finished reading a book about Obama and I highly recommend it. The title is “The Roots of Obama’s Rage” by Dinesh D’Souza. In it he points out with examples that Obama is driven by anti-colonialism as was his father. The writer notes that the name of Obama’s book was Dreams From My Father not Dreams Of My Father. His father was a misguided soul who suffered from alcoholism and died in a drunken driving accident. He only met his father one time when he was ten years old so he romanticized the man. His father lived in Kenya at the time the British were leaving and Kenya was seeking independence. Obama thus sees all western countries including the US as former colonizers. He has a concern for third world countries and in particular those in Africa.
He felt it OK to turn the world and apologize for Americas past behavior. He would like to see the US be more on a par with other countries and does not understand American Exceptionalism
On a slightly different subject and a bit of irony the fed policy under Obama of increasing the money supply has caused the price of commodities like food to double and triple in price thus leading to great hardship in the third world, the place he supposedly
He felt it OK to turn the world and apologize for Americas past behavior. He would like to see the US be more on a par with other countries and does not understand American Exceptionalism
On a slightly different subject and a bit of irony the fed policy under Obama of increasing the money supply has caused the price of commodities like food to double and triple in price thus leading to great hardship in the third world, the place he supposedly
Goldman Sacs
A Short Sale is when you sell stock you do not own. So how does this work. Let’s assume that you think a stock is going to fall in value. A certain stock is selling for $100 per share and you believe it will go down in value so you go to your broker and you borrow 100 shares from him and agree to pay him back in one year. He charges you 5% interest for these shares. You immediately sell the 100 shares for $10,000 and you set aside $600 to pay the interest at the end of the year. 12 months later you guessed right and the stock is selling for $50 per share so you go out and buy 100 shares for $5,000 and pay back your broker along with the $600. You have made $4,400 on this transaction.
There is currently an investigation into activities by Goldman Sachs for insider trading. Apparently Goldman put together a group of really bad home mortgages and then told their clients to buy them saying they were a good investment. They sold many billions of these and while doing so their top executives were selling these products short. Sure enough the investments failed and 8 executives from Goldman made over $500 million dollars each. Here is a quote from a professor regarding the White House and Goldman
Lawrence Jacobs, a University of Minnesota political scientist, said that "almost everything that the White House has done has been haunted by the personnel and the money of Goldman . . . as well as the suspicion that the White House, particularly early on, was pulling its punches out of deference to Goldman and its war chest.
Here is list of Goldman employees connected with the White House.
Obama Administration: Deputy Director, National Economic Council
Former Goldman Sachs Title: Financial Analyst
Stephen Friedman:
Obama Administration: Chairman, President’s Foreign Intelligence Advisory Board
Former Goldman Sachs Title: Board Member (Chairman, 1990-94; Director, 2005-)
Gary Gensler:
Obama Administration: Commissioner, Commodity Futures Trading Commission
Former Goldman Sachs Title: Partner and Co-head of Finance
Robert Hormats:
Obama Administration: Undersecretary for Economic, Energy and Agricultural Affairs, State Department
Former Goldman Sachs Title: Vice Chairman, Goldman Sachs Group
Philip Murphy:
Obama Administration: Ambassador to Germany
Former Goldman Sachs Title: Head of Goldman Sachs, Frankfurt
Mark Patterson:
Obama Administration: Chief of Staff to Treasury Secretary, Timothy Geitner
Former Goldman Sachs Title: Lobbyist 2005-2008; Vice President for Government Relations
John Thain:
Obama Administration: Advisor to Treasury Secretary, Timothy Geitner
Former Goldman Sachs Title: President and Chief Operating Officer (1999-2003)
Henry Paulson:
Bush II Administration: Secretary, Treasury 2006 - 2009
Former Goldman Sachs Title: Chairman and CEO (1998-2006)
Neel Kashkari:
Bush II Administration: Assistant Secretary for Financial Stability, Treasury (2008 – 2009)
Former Goldman Sachs Title: Vice President, San Francisco; led Information Technology Security Investment Banking Practice
Reuben Jeffery III:
Bush II Administration: Undersecretary for Economic, Energy and Agricultural Affairs, State Department (2007 –2009)
Former Goldman Sachs Title: Managing Partner Paris until 2002 Security Investment Banking Practice
Robert Steel:
Bush II Administration: Under Secretary for Domestic Finance, Treasury, (2006 – 2008)
Former Goldman Sachs Title: Vice Chairman – 2004
Steve Shafran:
Bush II Administration: Advisor on setting up TARP to Treasury Secretary, Henry Paulson 2008
Former Goldman Sachs Title: Private equity business in Asia until 2000
Edward C. Forst:
Bush II Administration: Advisor on setting up TARP to Treasury Secretary, Henry Paulson 2008
Former Goldman Sachs Title: Co-head of Goldman’s investment management business
Dan Jester:
Bush II Administration: Advisor on setting up TARP to Treasury Secretary, Henry Paulson 2008
Former Goldman Sachs Title: Deputy CFO
Kendrick R. Wilson III:
Bush II Administration: Advisor on setting up TARP to Treasury Secretary, Henry Paulson 2008
Former Goldman Sachs Title: Chairman of Goldman’s financial institutions groups
Joshua Bolten:
Bush II Administration: White House Chief of Staff (2006 – 2009)
Former Goldman Sachs Title: Executive Director, Legal & Government Affairs (1994-99)
Gary Gensler:
Bush II Administration: Undersecretary, Treasury (1999-2001) and Assistant Secretary, Treasury (1997-1999)
Former Goldman Sachs Title: Partner and Co-head of Finance
Robert Rubin:
Bush II Administration: Secretary, Treasury 1995-1999
Former Goldman Sachs Title: Vice Chairman (1987-90)
Robert Zoellick:
Bush II Administration: United States Trade Representative (2001-2005), Deputy Secretary of State (2005-2006), World Bank President (2007 -)
Former Goldman Sachs Title: Vice Chairman, International (2006-07)
William C Dudley:
NY Federal Reserve: Current President/CEO
Former Goldman Sachs Title: Partner and managing director – 2007
Stephen Friedman:
NY Federal Reserve: Former Chairman of the Board – 2009
Former Goldman Sachs Title: Board Member (Chairman, 1990-94; Director, 2005-)
Other Noteworthy Appointees:
Edward Liddy:
Current Title: AIG CEO
Former Goldman Sachs Title: Board Member (Chairman, 1990-94; Director, 2005-)
Duncan Niederauer:
Current Title: Chair/CEO NYSE
Former Goldman Sachs Title: Managing Director – 2007
Malcolm Turnbull:
Current Title: Federal Leader, Liberal Party, Australia
Former Goldman Sachs Title: Partner (1998-2001)
Mark Carney:
Current Title: Governor, Bank of Canada
Former Goldman Sachs Title: Managing Director Goldman Sachs Canada until 2003
David Watson:
Current Title: Monetary Policy Committee, Bank of England
Former Goldman Sachs Title: Chief European economist
Romano Prodi:
Current Title: Prime Minister of Italy (1996-1998 and 2006-2008) and President of the European Commission (1999-2004)
Former Goldman Sachs Title: Paid adviser/consultant 1990 – 1993
Mario Draghi:
Current Title: Governor of the Bank of Italy (2006- )
Former Goldman Sachs Title: European Deputy Chairman/Partner until 2006
Massimo Tononi:
Current Title: Italian Deputy Treasury Chief (2006-2008)
Former Goldman Sachs Title: Partner 2004 – 2006
Do you think any of the Goldman short sellers will be going to jail?
There is currently an investigation into activities by Goldman Sachs for insider trading. Apparently Goldman put together a group of really bad home mortgages and then told their clients to buy them saying they were a good investment. They sold many billions of these and while doing so their top executives were selling these products short. Sure enough the investments failed and 8 executives from Goldman made over $500 million dollars each. Here is a quote from a professor regarding the White House and Goldman
Lawrence Jacobs, a University of Minnesota political scientist, said that "almost everything that the White House has done has been haunted by the personnel and the money of Goldman . . . as well as the suspicion that the White House, particularly early on, was pulling its punches out of deference to Goldman and its war chest.
Here is list of Goldman employees connected with the White House.
Obama Administration: Deputy Director, National Economic Council
Former Goldman Sachs Title: Financial Analyst
Stephen Friedman:
Obama Administration: Chairman, President’s Foreign Intelligence Advisory Board
Former Goldman Sachs Title: Board Member (Chairman, 1990-94; Director, 2005-)
Gary Gensler:
Obama Administration: Commissioner, Commodity Futures Trading Commission
Former Goldman Sachs Title: Partner and Co-head of Finance
Robert Hormats:
Obama Administration: Undersecretary for Economic, Energy and Agricultural Affairs, State Department
Former Goldman Sachs Title: Vice Chairman, Goldman Sachs Group
Philip Murphy:
Obama Administration: Ambassador to Germany
Former Goldman Sachs Title: Head of Goldman Sachs, Frankfurt
Mark Patterson:
Obama Administration: Chief of Staff to Treasury Secretary, Timothy Geitner
Former Goldman Sachs Title: Lobbyist 2005-2008; Vice President for Government Relations
John Thain:
Obama Administration: Advisor to Treasury Secretary, Timothy Geitner
Former Goldman Sachs Title: President and Chief Operating Officer (1999-2003)
Henry Paulson:
Bush II Administration: Secretary, Treasury 2006 - 2009
Former Goldman Sachs Title: Chairman and CEO (1998-2006)
Neel Kashkari:
Bush II Administration: Assistant Secretary for Financial Stability, Treasury (2008 – 2009)
Former Goldman Sachs Title: Vice President, San Francisco; led Information Technology Security Investment Banking Practice
Reuben Jeffery III:
Bush II Administration: Undersecretary for Economic, Energy and Agricultural Affairs, State Department (2007 –2009)
Former Goldman Sachs Title: Managing Partner Paris until 2002 Security Investment Banking Practice
Robert Steel:
Bush II Administration: Under Secretary for Domestic Finance, Treasury, (2006 – 2008)
Former Goldman Sachs Title: Vice Chairman – 2004
Steve Shafran:
Bush II Administration: Advisor on setting up TARP to Treasury Secretary, Henry Paulson 2008
Former Goldman Sachs Title: Private equity business in Asia until 2000
Edward C. Forst:
Bush II Administration: Advisor on setting up TARP to Treasury Secretary, Henry Paulson 2008
Former Goldman Sachs Title: Co-head of Goldman’s investment management business
Dan Jester:
Bush II Administration: Advisor on setting up TARP to Treasury Secretary, Henry Paulson 2008
Former Goldman Sachs Title: Deputy CFO
Kendrick R. Wilson III:
Bush II Administration: Advisor on setting up TARP to Treasury Secretary, Henry Paulson 2008
Former Goldman Sachs Title: Chairman of Goldman’s financial institutions groups
Joshua Bolten:
Bush II Administration: White House Chief of Staff (2006 – 2009)
Former Goldman Sachs Title: Executive Director, Legal & Government Affairs (1994-99)
Gary Gensler:
Bush II Administration: Undersecretary, Treasury (1999-2001) and Assistant Secretary, Treasury (1997-1999)
Former Goldman Sachs Title: Partner and Co-head of Finance
Robert Rubin:
Bush II Administration: Secretary, Treasury 1995-1999
Former Goldman Sachs Title: Vice Chairman (1987-90)
Robert Zoellick:
Bush II Administration: United States Trade Representative (2001-2005), Deputy Secretary of State (2005-2006), World Bank President (2007 -)
Former Goldman Sachs Title: Vice Chairman, International (2006-07)
William C Dudley:
NY Federal Reserve: Current President/CEO
Former Goldman Sachs Title: Partner and managing director – 2007
Stephen Friedman:
NY Federal Reserve: Former Chairman of the Board – 2009
Former Goldman Sachs Title: Board Member (Chairman, 1990-94; Director, 2005-)
Other Noteworthy Appointees:
Edward Liddy:
Current Title: AIG CEO
Former Goldman Sachs Title: Board Member (Chairman, 1990-94; Director, 2005-)
Duncan Niederauer:
Current Title: Chair/CEO NYSE
Former Goldman Sachs Title: Managing Director – 2007
Malcolm Turnbull:
Current Title: Federal Leader, Liberal Party, Australia
Former Goldman Sachs Title: Partner (1998-2001)
Mark Carney:
Current Title: Governor, Bank of Canada
Former Goldman Sachs Title: Managing Director Goldman Sachs Canada until 2003
David Watson:
Current Title: Monetary Policy Committee, Bank of England
Former Goldman Sachs Title: Chief European economist
Romano Prodi:
Current Title: Prime Minister of Italy (1996-1998 and 2006-2008) and President of the European Commission (1999-2004)
Former Goldman Sachs Title: Paid adviser/consultant 1990 – 1993
Mario Draghi:
Current Title: Governor of the Bank of Italy (2006- )
Former Goldman Sachs Title: European Deputy Chairman/Partner until 2006
Massimo Tononi:
Current Title: Italian Deputy Treasury Chief (2006-2008)
Former Goldman Sachs Title: Partner 2004 – 2006
Do you think any of the Goldman short sellers will be going to jail?
Happiness
When I was a student I was taught that there was a heaven and a hell and it was with some consternation that I encountered the concept of predestination. My thought was that if God already knew what my future was then what difference did it make as to how I lived my life.
It was many years later, after I conclude that there was no hell that I got a better understanding of predestination. I believe that before I was born that God laid out a plan for my life down to the tiniest detail and if I followed that plan I would have life of joy and happiness. This does not mean that I would never encounter any disappointments but that I would be able to deal with these down turns in a constructive manner.
The conflict arises because God also gave me a free will and I am allowed to deviate from God’s plan anytime I choose.
Now as a young adult my ego stepped in and began to run the show and often times the plan of the ego moved away from God’s plan and thus introduced stress into my life.
Think of God’s plan as your right hand and the ego’s plan as you left hand. Now there is a spring holding these two hands together and as they pull apart the tension on the spring increases. As long as they remain fairly close the tension is not too great to cause any trouble but when they move a certain distance, problems surface. These problems can be physical, mental, emotional or spiritual and they detract from your joy and happiness. If you are fortunate, sometime well into the second half of life you realize what is going on and you take the necessary steps to reign in your ego and realign yourself with God’s plan and you can spend your remaining years in peace and contentment.
So while there is such a thing as predestination, I am not bound by limits of God’s plan because I am free to choose which plan I want to follow. By following the plan of the ego does not mean that I must spend the rest of eternity in hell but it does mean that my life on earth was not as happy as it could have been
It was many years later, after I conclude that there was no hell that I got a better understanding of predestination. I believe that before I was born that God laid out a plan for my life down to the tiniest detail and if I followed that plan I would have life of joy and happiness. This does not mean that I would never encounter any disappointments but that I would be able to deal with these down turns in a constructive manner.
The conflict arises because God also gave me a free will and I am allowed to deviate from God’s plan anytime I choose.
Now as a young adult my ego stepped in and began to run the show and often times the plan of the ego moved away from God’s plan and thus introduced stress into my life.
Think of God’s plan as your right hand and the ego’s plan as you left hand. Now there is a spring holding these two hands together and as they pull apart the tension on the spring increases. As long as they remain fairly close the tension is not too great to cause any trouble but when they move a certain distance, problems surface. These problems can be physical, mental, emotional or spiritual and they detract from your joy and happiness. If you are fortunate, sometime well into the second half of life you realize what is going on and you take the necessary steps to reign in your ego and realign yourself with God’s plan and you can spend your remaining years in peace and contentment.
So while there is such a thing as predestination, I am not bound by limits of God’s plan because I am free to choose which plan I want to follow. By following the plan of the ego does not mean that I must spend the rest of eternity in hell but it does mean that my life on earth was not as happy as it could have been
Morality
On the news today there is a story about a gas station in California where the pump price was set at $1.10 instead of $4.29 and in three hours some 7,000 gallons of gas was sold at this lower price. An estimated 300 customers bought gas at this low price and no one reported this to the station manager. Ordinarily I would not pay much attention to a story like this but it reminded me of something that happened to me about 40 years ago. As most of you know I used to own a neighborhood tavern and one night after closing someone broke in and took the money from the till. I don’t recall the amount but I do know that typically about 75% of my daily take was in the form of checks. In the days that followed many customers came in and told me that if their check did not clear the bank they would come in and write me another check. As I recall these people completely reimbursed me for all the checks I lost in the robbery. Does this show how times have changed or does it show the difference between California and North Dakota? I don’t know.
67
Today President Obama laid out his view of the Middle East and in a surprise said that Israel should go back to the 1967 borders. In 2004 President Bush said the US would not require Israel to do this and a letter to that effect was sent to congress and 75% of the house members and 75% of the senate signed the letter. This was not an agreement made with Bush and the congress but it was made with the United States government.
In Israel’s 70 years history there have been 5 wars with the Arabs and Israel won all five. In each war they captured Arab territories and later gave back the territories. After the 67 war they kept certain territories so they could defend themselves against future attacks. If Israel goes back to the 67 borders the Arab border will be only five miles from the capital of Tel Aviv.
It has always been expected that one day Israel would be willing to negotiate a return to these borders when they could be assured they would not be attacked. In addition Israel would demand that the Palestinians give up the right of return. These is the idea that all Palestinians that lived in what is now Israel in 1948 when Israel became a state had the right to return to Israel and reclaim their property and be citizens of Israel. Since there are fewer than 5 million Jews in Israel and there would be 6 million Palestinians returning that would be the end of Israel because these people returning would have the rights of citizens and the right to vote. The very next election they would vote all the Jews out of the country and that would be the end of Israel.
The interesting thing about this right of return is that throughout history this right has been reserved only to those who were displaced and not their progeny. Since this occurred in 1948 most of these people are dead and it would make no difference but the UN has ruled in this case that it is the refugees and their progeny who could return.
As a reminder when the Jewish state was created in 1948 there were about a half million Jews living in that area and about a half million Arabs. In the days preceding the war all of these Arabs moved out of the area and about an equal number of Jews who were living in Arab lands moved into Israel. The war then began with forces from Egypt, Syria, Jordan, Iraq, Lebanon, Saudi Arabia and Palestine attacking Israel. Their plan was to drive Israel into the sea but instead Israel defeated these armies, something which would repeat itself in four more wars.
Each time the Arabs were humiliated their hatred toward the Jews increased and today they would like nothing better, as the leader of Iran says, to wipe Israel off the map. Another disturbing aspect is the fact that two days ago the Jews were told there would be no mention of the 67 borders but today it came out just one day before the head of Israel is schedule to visit the White House. When Netanyahu visited Obama last year he was made to sit and wait while the President ate dinner which was considered a slap in the face and some say this is no way to treat an ally.
In Israel’s 70 years history there have been 5 wars with the Arabs and Israel won all five. In each war they captured Arab territories and later gave back the territories. After the 67 war they kept certain territories so they could defend themselves against future attacks. If Israel goes back to the 67 borders the Arab border will be only five miles from the capital of Tel Aviv.
It has always been expected that one day Israel would be willing to negotiate a return to these borders when they could be assured they would not be attacked. In addition Israel would demand that the Palestinians give up the right of return. These is the idea that all Palestinians that lived in what is now Israel in 1948 when Israel became a state had the right to return to Israel and reclaim their property and be citizens of Israel. Since there are fewer than 5 million Jews in Israel and there would be 6 million Palestinians returning that would be the end of Israel because these people returning would have the rights of citizens and the right to vote. The very next election they would vote all the Jews out of the country and that would be the end of Israel.
The interesting thing about this right of return is that throughout history this right has been reserved only to those who were displaced and not their progeny. Since this occurred in 1948 most of these people are dead and it would make no difference but the UN has ruled in this case that it is the refugees and their progeny who could return.
As a reminder when the Jewish state was created in 1948 there were about a half million Jews living in that area and about a half million Arabs. In the days preceding the war all of these Arabs moved out of the area and about an equal number of Jews who were living in Arab lands moved into Israel. The war then began with forces from Egypt, Syria, Jordan, Iraq, Lebanon, Saudi Arabia and Palestine attacking Israel. Their plan was to drive Israel into the sea but instead Israel defeated these armies, something which would repeat itself in four more wars.
Each time the Arabs were humiliated their hatred toward the Jews increased and today they would like nothing better, as the leader of Iran says, to wipe Israel off the map. Another disturbing aspect is the fact that two days ago the Jews were told there would be no mention of the 67 borders but today it came out just one day before the head of Israel is schedule to visit the White House. When Netanyahu visited Obama last year he was made to sit and wait while the President ate dinner which was considered a slap in the face and some say this is no way to treat an ally.
Missouri
A friend sent me this interesting piece and check out the source at the bottom
Missouri has no problem with illegals, go figure...won't be too difficult......
Missouri's approach to the problem of illegal immigration appears to be more advanced, sophisticated, strict and effective than anything to date in Arizona .
Do the loonies in San Francisco , or the White House, appreciate what Missouri has done? When are our fearless President and his dynamic Attorney General going to take action to require Missouri start accepting illegal immigrants once again? So, why doesn't Missouri receive attention?
Answer: There are no Mexican illegals in Missouri to demonstrate.The "Show Me" state has once again shown us how it should be done. There needs to be more publicity and exposure regarding what Missouri has done.
In 2007, Missouri placed on the ballot a proposed constitutional amendment designating English as the official language of Missouri . In November, 2008, nearly 90% voted in favor! Thus, English became the official language for ALL governmental activity in Missouri . No individual has the right to demand government services in a language OTHER than English.
In 2008, a measure was passed that required the Missouri Highway Patrol and other law enforcement officials to verify the immigration status of any person arrested, and inform federal authorities if the person is found to be in Missouri illegally. Missouri law enforcement officers receive specific training with respect to enforcement of federal immigration laws.
In Missouri , illegal immigrants do NOT have access to taxpayers benefits such as food stamps and health care through Missouri HealthNET.
In 2009, a measure was passed that ensures Missouri 's public institutions of higher education do NOT award financial aid to individuals who are illegally in the United States ..
In Missouri , all post-secondary institutions of higher education to annually certify to the Missouri Dept. of Higher Education that they have NOT knowingly awarded financial aid to students who are unlawfully present in the United States .
So, while Arizona has made national news for its new law, it is important to remember, Missouri has been far more proactive in addressing this horrific problem Missouri has made it clear that illegal immigrants are NOT welcome in the state and they will certainly NOT receive public benefits at the expense of Missouri taxpayers
Taken from: "The Ozarks Sentinel" Editorial - Nita Jane Ayres, May 13, 2010. If the link does not work, just type in "The Ozarks Sentinel - Nita Jane Ayres" in Google. Here is the link to confirm: Be sure to read the reader comments too.
http://www..ozarkssentinel.com/missouri-ahead-of-the-game-in-dealing-with-illegal-immigrants-p1034.htm
Missouri has no problem with illegals, go figure...won't be too difficult......
Missouri's approach to the problem of illegal immigration appears to be more advanced, sophisticated, strict and effective than anything to date in Arizona .
Do the loonies in San Francisco , or the White House, appreciate what Missouri has done? When are our fearless President and his dynamic Attorney General going to take action to require Missouri start accepting illegal immigrants once again? So, why doesn't Missouri receive attention?
Answer: There are no Mexican illegals in Missouri to demonstrate.The "Show Me" state has once again shown us how it should be done. There needs to be more publicity and exposure regarding what Missouri has done.
In 2007, Missouri placed on the ballot a proposed constitutional amendment designating English as the official language of Missouri . In November, 2008, nearly 90% voted in favor! Thus, English became the official language for ALL governmental activity in Missouri . No individual has the right to demand government services in a language OTHER than English.
In 2008, a measure was passed that required the Missouri Highway Patrol and other law enforcement officials to verify the immigration status of any person arrested, and inform federal authorities if the person is found to be in Missouri illegally. Missouri law enforcement officers receive specific training with respect to enforcement of federal immigration laws.
In Missouri , illegal immigrants do NOT have access to taxpayers benefits such as food stamps and health care through Missouri HealthNET.
In 2009, a measure was passed that ensures Missouri 's public institutions of higher education do NOT award financial aid to individuals who are illegally in the United States ..
In Missouri , all post-secondary institutions of higher education to annually certify to the Missouri Dept. of Higher Education that they have NOT knowingly awarded financial aid to students who are unlawfully present in the United States .
So, while Arizona has made national news for its new law, it is important to remember, Missouri has been far more proactive in addressing this horrific problem Missouri has made it clear that illegal immigrants are NOT welcome in the state and they will certainly NOT receive public benefits at the expense of Missouri taxpayers
Taken from: "The Ozarks Sentinel" Editorial - Nita Jane Ayres, May 13, 2010. If the link does not work, just type in "The Ozarks Sentinel - Nita Jane Ayres" in Google. Here is the link to confirm: Be sure to read the reader comments too.
http://www..ozarkssentinel.com/missouri-ahead-of-the-game-in-dealing-with-illegal-immigrants-p1034.htm
Benefits
A man by the name of Alexander Tyler is credited with saying
"A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship."
I realize we have a Representative Republic and not a Democracy but the idea intrigues me because in the next election we will find out if the people are wise enough to vote to limit their benefits or will they chose to spend us into bankruptcy.
"A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship."
I realize we have a Representative Republic and not a Democracy but the idea intrigues me because in the next election we will find out if the people are wise enough to vote to limit their benefits or will they chose to spend us into bankruptcy.
Socialism
I often hear people say that Obama is leading us toward socialism so I looked up the definition of Socialism.
Socialism is an economic system characterized by public ownership and centralized planning of all major industries (manufacturing, services, and energy), banks and insurance companies, agribusiness, transportation, the media, and medical facilities.
As I read that I am astounded that so called educated people believed that such a system would work. I will let my imagination run wild and set up a socialist type of country. First the government owns everything so they can agree to pay everyone the same salary regardless of what the job entails. Brain surgeons and CEO’s make the same as garbage collectors and janitors. That is easy enough to do although it begs the question as to why someone would go through all the training for no extra salary but this is not the tough part. How does the government decide on how many surgeons and how many janitors are needed and then how do they decide who will assume those positions. Next take production of goods and services. How many cars and how many clerks are needed and once again who are these people and how are they selected. Finally who decides who does the selecting?
It is obvious to me that such a system as pure socialism cannot exist in the real world but partial socialism is what most people refer to when they say Obama is tending toward socialism. The argument is how far toward socialism do we want to go. For all of my life the federal government has been assuming more responsibility. It appears that we are at a crossroad and the pendulum is beginning to swing back. Will the people who have become accustom to Big Brother be willing to give up some of their benefits and take on more personal responsibility? We will find out in November 2012.
Socialism is an economic system characterized by public ownership and centralized planning of all major industries (manufacturing, services, and energy), banks and insurance companies, agribusiness, transportation, the media, and medical facilities.
As I read that I am astounded that so called educated people believed that such a system would work. I will let my imagination run wild and set up a socialist type of country. First the government owns everything so they can agree to pay everyone the same salary regardless of what the job entails. Brain surgeons and CEO’s make the same as garbage collectors and janitors. That is easy enough to do although it begs the question as to why someone would go through all the training for no extra salary but this is not the tough part. How does the government decide on how many surgeons and how many janitors are needed and then how do they decide who will assume those positions. Next take production of goods and services. How many cars and how many clerks are needed and once again who are these people and how are they selected. Finally who decides who does the selecting?
It is obvious to me that such a system as pure socialism cannot exist in the real world but partial socialism is what most people refer to when they say Obama is tending toward socialism. The argument is how far toward socialism do we want to go. For all of my life the federal government has been assuming more responsibility. It appears that we are at a crossroad and the pendulum is beginning to swing back. Will the people who have become accustom to Big Brother be willing to give up some of their benefits and take on more personal responsibility? We will find out in November 2012.
Ruben
In the past I have discussed the China Wall. This was one of the first things I learned when I got into the financial business. It is a fictitious wall that separated banks into the commercial side and the investment side. The idea is the employees on side should not discuss business with the other side since the commercial side might be tempted to invest customer funds in businesses represented by the investment side. This is what happened in the 20’s and the banks went broke when businesses failed. A law was passed in the 30’s to prevent this from happening again. The law was named after its sponsors Senator Glass and Congressman Steagall. For many years various interested parties tried to repeal Glass-Steagall and in 1999 they succeeded.
The CEO of Travelers Insurance Sanford Weill wanted to merge with Citibank which was run by John Reed but they needed to get rid of Glass-Steagall to allow such a merger. Weill was a mover and shaker and had influence with Fed Chairman Alan Greenspan and Treasury Secretary Robert Rubin and so with their help he was able to push through the repeal. The new company was called Citigroup and was the biggest merger in US history and became the largest financial institution in the world.
Now here is the interesting part. Rubin left the government and got a job with Citicorp and over the next ten years he was paid $115 million while he helped to run the company into the ground.
Here is a quote from the new media:
Rubin made at least $115 million (plus stock options) between 1999 and 2008, before the feds had to inject $45 billion and then guarantee $300 billion of the firm's liabilities to keep the place afloat.
Rubin told the Wall Street Journal in November 2008 that he was worth every penny -- and then some. "I bet there's not a single year where I couldn't have gone somewhere else and made more," he said.
Is this a great country or what!
The CEO of Travelers Insurance Sanford Weill wanted to merge with Citibank which was run by John Reed but they needed to get rid of Glass-Steagall to allow such a merger. Weill was a mover and shaker and had influence with Fed Chairman Alan Greenspan and Treasury Secretary Robert Rubin and so with their help he was able to push through the repeal. The new company was called Citigroup and was the biggest merger in US history and became the largest financial institution in the world.
Now here is the interesting part. Rubin left the government and got a job with Citicorp and over the next ten years he was paid $115 million while he helped to run the company into the ground.
Here is a quote from the new media:
Rubin made at least $115 million (plus stock options) between 1999 and 2008, before the feds had to inject $45 billion and then guarantee $300 billion of the firm's liabilities to keep the place afloat.
Rubin told the Wall Street Journal in November 2008 that he was worth every penny -- and then some. "I bet there's not a single year where I couldn't have gone somewhere else and made more," he said.
Is this a great country or what!
Ratings
I just finished reading a new book about the economic collapse of the mortgage bank system entitled. “Reckless Endangerment”. The one thing that concerned me most was the author’s surprise that the rating companies like S&P and Moody’s were not aware of the danger that various companies were in until it was too late. They mentioned that Enron, WorldCom and Fanny Mae were all highly rated until a few days before they went under.
Why does this surprise me? Some 40 years ago a large insurance company Mutual of New York was rated triple A just a week before they went under. I investigate to find out why this happened and learned that the rating companies base their rating on data provided to them by the companies they are rating. I have previously written about my experience with Equitable in this regards. A French Company named AXA wanted to get into the US insurance market and they agreed to invest one billion dollars to purchase part of Equitable. Before doing this AXA spent 20 million dollars appraising Equitable holdings and only then did they make the investment. It was obvious to me at that time that no rating company could afford to check out anyone they were rating in that manner. It was then I learned that they just accept the data from the company they are rating. From that day on I realized that the ratings given by rating companies were worthless. This was proven by the three named companies above who gave false information to the rating companies.
My question is, why did I know this and not the experts in the field. Even today when I see a financial firm advertising that they have triple A ratings, I just chuckle to myself
Why does this surprise me? Some 40 years ago a large insurance company Mutual of New York was rated triple A just a week before they went under. I investigate to find out why this happened and learned that the rating companies base their rating on data provided to them by the companies they are rating. I have previously written about my experience with Equitable in this regards. A French Company named AXA wanted to get into the US insurance market and they agreed to invest one billion dollars to purchase part of Equitable. Before doing this AXA spent 20 million dollars appraising Equitable holdings and only then did they make the investment. It was obvious to me at that time that no rating company could afford to check out anyone they were rating in that manner. It was then I learned that they just accept the data from the company they are rating. From that day on I realized that the ratings given by rating companies were worthless. This was proven by the three named companies above who gave false information to the rating companies.
My question is, why did I know this and not the experts in the field. Even today when I see a financial firm advertising that they have triple A ratings, I just chuckle to myself
Mortgage
One of the main reasons that the mortgage fiasco was so big is that it was allowed to develop even though many people warned that there were serious problems. Every time someone or some agency challenged the easy access to a home mortgage they were shot down by accusing them of not wanting poor people to participate in the American Dream of home ownership. The biggest advocates for the loose requirements for home loans were liberals who wanted to help the poor. One of these was Barney Frank, who chairs the House Financial Services Committee, the congressional committee whose job is to oversee the mortgage business. For more than ten years Frank defended mortgage giant Fanny Mae against attacks by promising to make it easier for low income people to get loans.
One group that regularly investigated Fanny Mae was the Office of Federal Housing Enterprise Oversight (OFHEO). Now I would be willing to cut Barney some slack during the early years as this problem developed but at some point he had to know that things were not right. Yet in late 2010, two years after the whole thing blew up, he was asked why he always defended Fanny Mae and he said that he thought the problem was just an adversarial relationship between the regulators at OFHEO and Fanny. This is a very revealing statement as most people would expect there to be or would demand that there be tension between the regulators and the regulated. Frank had been in bed with Fanny for so many years he could not break away even after they were proven to be corrupted.
Lest we just want to blame our elected officials be advised that Frank easily won re-election after the scandal was made public and he is now serving his 31st year in congress.
The people who have been most hurt by the collapse of the housing market were the very poor people that Frank set out to help. This same result has happened over and over since the start of the Great Society which was supposed to help the poor but has time after time hurt more than it helped. This has not deterred liberals from continuing to propose government programs that will help (?) the poor. One more example of the unintended consequence
One group that regularly investigated Fanny Mae was the Office of Federal Housing Enterprise Oversight (OFHEO). Now I would be willing to cut Barney some slack during the early years as this problem developed but at some point he had to know that things were not right. Yet in late 2010, two years after the whole thing blew up, he was asked why he always defended Fanny Mae and he said that he thought the problem was just an adversarial relationship between the regulators at OFHEO and Fanny. This is a very revealing statement as most people would expect there to be or would demand that there be tension between the regulators and the regulated. Frank had been in bed with Fanny for so many years he could not break away even after they were proven to be corrupted.
Lest we just want to blame our elected officials be advised that Frank easily won re-election after the scandal was made public and he is now serving his 31st year in congress.
The people who have been most hurt by the collapse of the housing market were the very poor people that Frank set out to help. This same result has happened over and over since the start of the Great Society which was supposed to help the poor but has time after time hurt more than it helped. This has not deterred liberals from continuing to propose government programs that will help (?) the poor. One more example of the unintended consequence
Medicare
The two sides have staked out their claims on how to solve the problem with Medicare and they are both right so regardless of which way we go we will begin to make some headway. The Obama plan is to set up a government committee of 12 members who will decide what treatments are available. The Ryan plan offers vouchers to people who can then purchase a plan through a group of private insurers. Both of these approaches use rationing to reduce cost and that is the only logical way to go. Whenever any benefit is reduced or eliminated there will be good arguments as to why this particular procedure should be allowed but as time passes people will realize that this is the only way to save the program. It comes down to the simple fact that everyone cannot have every procedure that is medically available and someone or some insurance company will have to make these tough choices. Unbeknownst to most people this process of rationing has been going on for many years in both Medicare and private insurance. Last year when the phrase “Death Panels” was coined everyone panicked but upon further evaluation it was revealed that by the way that doctors present options the idea of dying with dignity was often chosen over life extending treatments. It is time for people to grow up and face the fact that there is not enough money to do everything for everyone. Once both political parties have the courage to explain this quandary to their constituents we will begin to take the necessary steps to save Medicare. Let’s hope this happens before the whole program goes down the drain, which by the way is currently scheduled for 2018.
Since Medicaid is financed with ongoing funds from the federal and state governments there is no date when it will go broke but it faces the same cost problems that Medicare does and the same cure will be needed. We must ration. This is a very difficult problem since about one in four Medicaid recipients are in eldercare facilities. There is new technology available that can keep many of these people in their homes. For about $10,000 most houses can have the bath modified to accept people in wheel chairs. Instead of paying out $7,000 per month to stay in a care facility many people can stay in their homes where they would rather be. This is only one example. In the future it may be necessary that families take on more responsibility as they did not that many years ago. People who use Medicaid for their health insurance will have to face rationing just as others in private insurance will face.
Since Medicaid is financed with ongoing funds from the federal and state governments there is no date when it will go broke but it faces the same cost problems that Medicare does and the same cure will be needed. We must ration. This is a very difficult problem since about one in four Medicaid recipients are in eldercare facilities. There is new technology available that can keep many of these people in their homes. For about $10,000 most houses can have the bath modified to accept people in wheel chairs. Instead of paying out $7,000 per month to stay in a care facility many people can stay in their homes where they would rather be. This is only one example. In the future it may be necessary that families take on more responsibility as they did not that many years ago. People who use Medicaid for their health insurance will have to face rationing just as others in private insurance will face.
Tax and spend
As the elected officials in Washington debate how they will solve the budget problems we are faced with two arguments. The Democrats say we must cut spending and raise the tax rates but the Republicans say cut spending and reform the tax laws. Obama wants to raise taxes on those making more than $200,000 and use that money to invest (spend) on education and infrastructure. This is what we used to call tax and spend. His theory is that by spending this money we will cause the economy to grow. We know that the so called shovel ready projects are not ready. It takes years to get environmental approval and planning can only start after these approvals. As far as spending on education this may keep some teachers from getting laid off but there are good reasons to doubt that spending more will improve education.
On the other side there is evidence that shows when you increase taxes on those who provide jobs you slow down the economy. I believe both sides concur that reforming the existing tax law can help. When large corporations pay zero tax it is not because the tax rate is too low it is because there are too many loopholes in the tax code. We could easily lower the corporation tax rate from the current 35% to 25% and eliminate the loopholes and end up with more revenue.
The question remains, is it better for the economy if the government spends our money or is it better if we spend our money. Remember that taxation is merely the transfer of money from one group of people to another group with the government deciding who gets what and from whom. If you are a cynic you see it as taking money from those who earn it and giving it to those who don’t. Most people realize that there are times in the lives of people that they need help and most are ready to give help but when it gets to the point of more people in the wagon than pulling the wagon then no one is helped. Currently there are 310 million people in the US and 40 million receive food stamps, 10 million get unemployment benefits, 58 million on Medicaid and 52 million on social security and if you do the math you see there are more in the wagon than pulling the wagon.
Wake up people!
On the other side there is evidence that shows when you increase taxes on those who provide jobs you slow down the economy. I believe both sides concur that reforming the existing tax law can help. When large corporations pay zero tax it is not because the tax rate is too low it is because there are too many loopholes in the tax code. We could easily lower the corporation tax rate from the current 35% to 25% and eliminate the loopholes and end up with more revenue.
The question remains, is it better for the economy if the government spends our money or is it better if we spend our money. Remember that taxation is merely the transfer of money from one group of people to another group with the government deciding who gets what and from whom. If you are a cynic you see it as taking money from those who earn it and giving it to those who don’t. Most people realize that there are times in the lives of people that they need help and most are ready to give help but when it gets to the point of more people in the wagon than pulling the wagon then no one is helped. Currently there are 310 million people in the US and 40 million receive food stamps, 10 million get unemployment benefits, 58 million on Medicaid and 52 million on social security and if you do the math you see there are more in the wagon than pulling the wagon.
Wake up people!
Countrywide
One of the main characters in the mortgage financial scandal was a man by the name of Angelo Mozilo. He was a guy who started a small mortgage company in the 60’s and by capitalizing on mortgage schemes he parleyed his small operation called CounrtyWide into the largest mortgage company in the country. By selling bad mortgages to Wall Street bankers he made millions and then when the end of the good times arrived he sold his own stock in CountryWide for $140 million. He sold while telling his investors that everything was fine when he knew the company was going down the drain.
At the end of 2008, Countrywide was acquired by Bank of America in a deal worth some $2.5 billion. Bank of America had already pumped $2 billion into the mortgage lender before the deal was completed, and the acquisition was seen as a way to protect that investment.
Although Mozilo's company is now part of Bank of America, he is still profiting. As part of the acquisition, Bank of America agreed to retain Mozilo as a consultant. Mozilo is obligated to make himself available for a specified period of time each month through December 2011 and at the rate of $400,000 per year.
He is also entitled to receive other benefits, including office space, secretarial support, use of the company's aircraft, financial consulting services and payment of annual country club dues.
For three years, he gets continuing health, life insurance and financial planning benefits for himself and his beneficiaries. After those three years, he and his spouse will continue to get health benefits for their lifetimes.
And so ends another great story of rags to riches. What a country!
At the end of 2008, Countrywide was acquired by Bank of America in a deal worth some $2.5 billion. Bank of America had already pumped $2 billion into the mortgage lender before the deal was completed, and the acquisition was seen as a way to protect that investment.
Although Mozilo's company is now part of Bank of America, he is still profiting. As part of the acquisition, Bank of America agreed to retain Mozilo as a consultant. Mozilo is obligated to make himself available for a specified period of time each month through December 2011 and at the rate of $400,000 per year.
He is also entitled to receive other benefits, including office space, secretarial support, use of the company's aircraft, financial consulting services and payment of annual country club dues.
For three years, he gets continuing health, life insurance and financial planning benefits for himself and his beneficiaries. After those three years, he and his spouse will continue to get health benefits for their lifetimes.
And so ends another great story of rags to riches. What a country!
More on Countrywide
Angelo Mozilo, the butcher's son from the Bronx who turned Countrywide Financial into a powerhouse of the subprime mortgage market, settled civil fraud and insider trading charges with the SEC today.
Mozilo will pay $22.5 million in penalties and disgorge $45 million in gains, according to Reuters. The deal was struck in U.S. district judge John Walter's court in Los Angeles.
Mozilo will pay $22.5 million in penalties and disgorge $45 million in gains, according to Reuters. The deal was struck in U.S. district judge John Walter's court in Los Angeles.
Chrysler
About a year ago it was announced that General Motors had repaid their government loan but after further investigation it was determined that they used another government loan for the payoff. The CEO of GM was on TV bragging about this loan payoff but when the truth came out he had to run for cover as they stopped the commercial.
Yesterday Vice President Biden announced that Chrysler had repaid its government loan so I was somewhat suspicious. Here is a recent news item.
No one was really surprised that Chrysler posted a quarterly profit — a modest $116 million — this year, technically its first since exiting bankruptcy in 2009, but really the first time it’s been in the black since the mid-2000s.
Now I wondered how they could pay off a 7 billion dollar loan so I looked further into the matter and discovered that Fiat had increased its ownership from 20% to 46% so I figured that Chrysler got the money from Fiat. Now there are 650 million shares of outstanding Chrysler stock and it is values at $8 per share so the book price of the entire company is about 5 billion. If Fiat bought 26% of that it would only inject about 1.2 billion so how could they pay off 7 billion.
Here is another quote:
The Obama administration’s bailout agreement with Fiat gave the Italian car company a “Incremental Call Option” that allows it to buy up to 16% of Chrysler stock at a reduced price. But in order to exercise the option, Fiat had to first pay back at least $3.5 billion of its loan to the Treasury Department. But Fiat was having trouble getting private banks to lend it the money. Enter Obama Energy Secretary Steven Chu who has signaled that he will approve a fuel-efficient vehicle loan to Chrysler for … wait for it … $3.5 billion.
But wait there is more:
So, to recap, the Obama Energy Department is loaning a foreign car company $3.5 billion so that it can pay the Treasury Department $7.6 billion even though American taxpayers spent $13 billion to save an American car company that is currently only worth $5 billion.
Oh, and Obama plans to make this “success” a centerpiece of his 2012 campaign.
More smoke and mirrors. Will the American people ever catch on?
Yesterday Vice President Biden announced that Chrysler had repaid its government loan so I was somewhat suspicious. Here is a recent news item.
No one was really surprised that Chrysler posted a quarterly profit — a modest $116 million — this year, technically its first since exiting bankruptcy in 2009, but really the first time it’s been in the black since the mid-2000s.
Now I wondered how they could pay off a 7 billion dollar loan so I looked further into the matter and discovered that Fiat had increased its ownership from 20% to 46% so I figured that Chrysler got the money from Fiat. Now there are 650 million shares of outstanding Chrysler stock and it is values at $8 per share so the book price of the entire company is about 5 billion. If Fiat bought 26% of that it would only inject about 1.2 billion so how could they pay off 7 billion.
Here is another quote:
The Obama administration’s bailout agreement with Fiat gave the Italian car company a “Incremental Call Option” that allows it to buy up to 16% of Chrysler stock at a reduced price. But in order to exercise the option, Fiat had to first pay back at least $3.5 billion of its loan to the Treasury Department. But Fiat was having trouble getting private banks to lend it the money. Enter Obama Energy Secretary Steven Chu who has signaled that he will approve a fuel-efficient vehicle loan to Chrysler for … wait for it … $3.5 billion.
But wait there is more:
So, to recap, the Obama Energy Department is loaning a foreign car company $3.5 billion so that it can pay the Treasury Department $7.6 billion even though American taxpayers spent $13 billion to save an American car company that is currently only worth $5 billion.
Oh, and Obama plans to make this “success” a centerpiece of his 2012 campaign.
More smoke and mirrors. Will the American people ever catch on?
Medicare
The problem we are encountering with Medicare is the same that we saw with the Bush attempt to fix Social Security. In both situations the cost problem has developed into one of ideology. The Republicans want to privatize the system and the Democrats want to keep these as government plans. As long as they continue to fight this battle ideologically nothing will be done.
I think the Republicans have to concede that now is not the time to privatize. Current Medicare premiums rage from $96.40 per month to $369.10 per month depending on income. The higher amount is for individuals whose income is greater than $200,000 per year. By doing the math it can be shown that there is room for adjustments here. A single person who gets $10,000 per year from social security pays 12% of their income for part B whereas a person who earns $200,000 pays 2.2%. One way to improve the cost problem is to increase the amount paid by higher income people. The second change is to increase the age when people become eligible for Medicare. It was set at age 65 when Medicare was started back in 1965 and has never been changed. This age could gradually be increased as the baby boomers retire.
In addition to the above changes it is also necessary to formally ration benefits. The current Republican plan allows insurance companies to ration and Obama’s plan sets up a committee of 15 government employees to ration. We know that we cannot provide every medical service to every Medicare recipient so the question is how do we ration? The first step is for everyone to understand that we have been rationing health care in both private and public plans for many years and then we can formalize how we ration. Up to now we have been doing this on the sly.
I think the Republicans have to concede that now is not the time to privatize. Current Medicare premiums rage from $96.40 per month to $369.10 per month depending on income. The higher amount is for individuals whose income is greater than $200,000 per year. By doing the math it can be shown that there is room for adjustments here. A single person who gets $10,000 per year from social security pays 12% of their income for part B whereas a person who earns $200,000 pays 2.2%. One way to improve the cost problem is to increase the amount paid by higher income people. The second change is to increase the age when people become eligible for Medicare. It was set at age 65 when Medicare was started back in 1965 and has never been changed. This age could gradually be increased as the baby boomers retire.
In addition to the above changes it is also necessary to formally ration benefits. The current Republican plan allows insurance companies to ration and Obama’s plan sets up a committee of 15 government employees to ration. We know that we cannot provide every medical service to every Medicare recipient so the question is how do we ration? The first step is for everyone to understand that we have been rationing health care in both private and public plans for many years and then we can formalize how we ration. Up to now we have been doing this on the sly.
Economy
During my adult life the economy has gone thru booms and busts and these are known as cyclical business cycles. The standard way to get out of a cyclical recession is to have the government spend more money, called monetary policy and lower taxes, called fiscal policy. This is what we have tried for the past few years and so the question is why hasn’t it worked? The answer is that the problem is not cyclical but it is structural. But what is meant by structural. If I lose my job at the auto factory because there is a slow –down in the economy that is a cyclical change but if people start using mass transit and biking and walking and the demand for cars drops and then I get laid off that is structural. If I lose my job at the car plant because of automation, that is structural. If I lose my job as a tool and die maker because of a computerized robot does my job better at lower cost, that is structural. If I lose my job at the GE plant making light bulbs because they outlawed incandescent in favor of new technology and the new bulbs are made in China that is structural. If I am unemployed because the country needs computer people and I don’t understand computers, that is structural.
Now President Obama has assumed that when he took office we were in the midst of a typical cyclical recession but he was wrong. The typical cures for cyclical downturns is to have the government deficit spend and lower taxes which is what was down but it didn’t work because we have a structural problem. It is like prescribing antibiotics for a viral infection. You can’t get there from here.
The solution to our current economic problem is to remove government restrictions on business, starting with getting rid of all the Czars we have, getting rid of Obama care, stop printing money and stop spending money. The sooner the government gets out of the way, the sooner businesses will feel comfortable about expanding and creating jobs.
Once we have job creation all of the other problems will start to go away. The president must understand that we cannot spend our way out of a structural downturn. In simple terms what we need is smaller less intrusive government.
Now President Obama has assumed that when he took office we were in the midst of a typical cyclical recession but he was wrong. The typical cures for cyclical downturns is to have the government deficit spend and lower taxes which is what was down but it didn’t work because we have a structural problem. It is like prescribing antibiotics for a viral infection. You can’t get there from here.
The solution to our current economic problem is to remove government restrictions on business, starting with getting rid of all the Czars we have, getting rid of Obama care, stop printing money and stop spending money. The sooner the government gets out of the way, the sooner businesses will feel comfortable about expanding and creating jobs.
Once we have job creation all of the other problems will start to go away. The president must understand that we cannot spend our way out of a structural downturn. In simple terms what we need is smaller less intrusive government.
Volt
Here is short but sweet example of American ingenuity resulting in an unexpected consequence based around the good intentions of a government program. It seems that the government is offering a $7,500 tax credit (a credit is money you subtract directly from taxes you owe) so some dealers are buying Volts, taking the credit for themselves and then selling the Volt as a used car with Zero mileage. What a country!
John Ed\wards
The road through life can and usually is bumpy and the case of John Edwards represents a study worth investigating. He was born into a middle class family and was the first member of his family to go to college. He was a good student and continued on through law school. He became a very successful defense attorney and amassed a fortune estimated at 70 million. Later he became a US senator and vice presidential candidate. He married and had 4 children. It was a rags to riches charmed life. He was at the apex of his life when things began to turn around. He wife was dying from cancer when he had a child with a young woman who worked in his office. He denied this but later admitted to the affair. His wife died and he recently was accused of using campaign funds to cover up his affair and is now awaiting trial. All of this is factual and I would like to move into the area of fantasy. There is a place in Matthew where it says that it is easier for a camel to pass through the eye of a needle that it is for a rich man to enter the kingdom of heaven. I believe that if we move 30 years into the future and we see Edwards as an 80 year old looking back on his life that he will say that when he lied about his affair it was the low point of his life and it was a turning point. From that point on he started to understand how life really works and what is really important. He learned after that God doesn’t come into your life through the front door of your ego but through the back door of your shame. At the point where his shame was broadcast on the public airways he felt deep within the beginnings of a new life. As the years past he came to understand that fame and fortune were just phantoms and represented barriers to happiness. It was only after meeting his shame that he began thinking of others and how he could help them and with each passing year he grew into the person he was meant to be. It is not the rich that prevents the rich man from entering a life of happiness but the ego that bloats up when riches come along.
When things are going my way I don’t need anyone. I am self-sufficient and I control my destiny and I am the captain of my ship and I know where I am going and how I will get there. Every one of those I’s in the previous sentence represents the ego. It is only when adversity strikes and misfortune rears her ugly head that I have the opportunity to open my heart to those around me. When my mistakes are made public and my shame is exposed I am on the road to happiness. I may not know it at the time but down the road it will be my salvation. The road of life is filled with strange and unexpected turns. I have faced disappointed many times but in retrospect each was a learning experience.
Back to the real world I believe that Edwards could make a decision to devote the rest of his life to doing pro bono law work for those who cannot afford a top attorney. As the years past and he used his skills to help others his children would slowly regain the respect they once had for him as will those around him.
Presented by Pastor John
When things are going my way I don’t need anyone. I am self-sufficient and I control my destiny and I am the captain of my ship and I know where I am going and how I will get there. Every one of those I’s in the previous sentence represents the ego. It is only when adversity strikes and misfortune rears her ugly head that I have the opportunity to open my heart to those around me. When my mistakes are made public and my shame is exposed I am on the road to happiness. I may not know it at the time but down the road it will be my salvation. The road of life is filled with strange and unexpected turns. I have faced disappointed many times but in retrospect each was a learning experience.
Back to the real world I believe that Edwards could make a decision to devote the rest of his life to doing pro bono law work for those who cannot afford a top attorney. As the years past and he used his skills to help others his children would slowly regain the respect they once had for him as will those around him.
Presented by Pastor John
Holocaust
Once in a while, sad to say that it is so rare, I come across a story that makes me proud to be a member of the human race. A man by the name of Felix Zandman was hidden away in a small underground room along with his uncle and two other Jews in Poland during WW 11. The room was so small they had to take turns lying down and deal with their personal modesty as best they could for the 17 months they lived in this tiny space. To pass the time the uncle taught the young Felix higher math by rote. After the war Felix went on to college and later immigrated to the US where he founded an electronics company, Vishay International. He died this week at the age of 83, a self-made billionaire. Have you ever wondered what the other 6 million Jews, who were killed in the Holocaust, might have contributed to the world, had they lived? We all have heard it said that we would never allow this to happen again but things are developing around the world today that cause me concern. I am speaking of the growing sympathy toward the people of Palestine and the threats from some of the Israeli neighbors.
Trees
Sino Forrest is a company that has millions of acres of trees on plantations in China. They have been accused of overstating their inventory, so to calm the waters they have hired Price Waterhouse Accounting to audit their books.
This is another one of those cases that I have referred to in the past where the accounting firm takes the word of the company to determine the value of the company. To review when AXA, a French Company wanted to get into the US life insurance market they offered to invest one billion dollars in Equitable Life of NY. Before doing that they spent 20 million appraising Equitable assets. Does anyone believe that Price Waterhouse is going to count the estimated billions of trees owned by Sino Forrest at a cost of millions or will they just go with the current inventory on the books?
If they just go with the current books then hiring this firm is just a PR stunt and in no way will determine if they are over counting inventory or not. It may calm the fears of ordinary investors but the pros know better. I bring this up to show why ordinary investors should stick to broad based mutual funds since ordinary people do not have the time to look into the accuracy of a company’s inventory data.
This is another one of those cases that I have referred to in the past where the accounting firm takes the word of the company to determine the value of the company. To review when AXA, a French Company wanted to get into the US life insurance market they offered to invest one billion dollars in Equitable Life of NY. Before doing that they spent 20 million appraising Equitable assets. Does anyone believe that Price Waterhouse is going to count the estimated billions of trees owned by Sino Forrest at a cost of millions or will they just go with the current inventory on the books?
If they just go with the current books then hiring this firm is just a PR stunt and in no way will determine if they are over counting inventory or not. It may calm the fears of ordinary investors but the pros know better. I bring this up to show why ordinary investors should stick to broad based mutual funds since ordinary people do not have the time to look into the accuracy of a company’s inventory data.
Fair
The controversy surrounding the case of Anthony Wiener points out an interesting characteristic of our human nature in that we tend to judge a person’s behavior on the bases of how much we like them. Moral, ethical and legal activities take a back seat to personality. Wiener who sent naked pictures of himself to young women is being asked to resign even though there is precedent to the contrary in the case of former President Clinton. Wiener sent the pictures to several different women on his Face Book site and then when questioned about it proceeded to lie to the public numerous times over a ten day period before finally admitting to the deed. Now fortunately for most of us lying is not a crime. President Clinton, on the other hand, had sexual relations with a young woman, who was working in the White House while he was president. He then said on national television that he did not have sexual relations but it was later proven that she performed oral sex on him. This led to the ridiculous conclusion, that she was having sex with him but he was not having sex with her. He then compounded the problem by saying under oath that he did not have sex with her. Now lying under oath constitutes a crime.
The reason given that Wiener is being treated more harshly than Clinton, is that people generally do not like Wiener but they do like Clinton. This brings me back to the point of human nature. We tend to make allowances for people we like and it goes even further in that people who look presentable tend to get a better reception. Many studies have shown that men who are tall and women who are attractive are looked upon in a favorable manner. Just another example of the many ways that life is not fair. When a child is treated unfairly and dad tried to console him by telling him that life is not fair, he is just getting the child prepared to face the world as it is. When legislators run around passing laws to make life fair they are going up against human nature and more times than not it doesn’t work. How many times have you heard the phrase, “you can’t legislate morality”.
The reason given that Wiener is being treated more harshly than Clinton, is that people generally do not like Wiener but they do like Clinton. This brings me back to the point of human nature. We tend to make allowances for people we like and it goes even further in that people who look presentable tend to get a better reception. Many studies have shown that men who are tall and women who are attractive are looked upon in a favorable manner. Just another example of the many ways that life is not fair. When a child is treated unfairly and dad tried to console him by telling him that life is not fair, he is just getting the child prepared to face the world as it is. When legislators run around passing laws to make life fair they are going up against human nature and more times than not it doesn’t work. How many times have you heard the phrase, “you can’t legislate morality”.
Home mortgage
I have written before on how the mortgage crisis had its beginning and I would like to expand on that in more detail. Recall that it all began in the 1970’s when it was discovered that mortgage companies were red lining. This means that in certain neighborhoods the income levels were so low that loans were not offered. Bankers would take a red pencil and draw lines around these neighborhoods and did not offer loans to those people. In order to rectify this apparent discrimination the government passed four laws during the 70’s and 80’s. The first was the Home Mortgage Disclosure Act (HMDA) which required banks to report on their loans. I use the term bank when in fact most home loans were provided by Savings and Loan Institutions which today are called bank. Because of this law by 1977 the government had all the information it needed to prove discrimination by banks against poor people. The second was the Community Reinvestment Act (CRA). This law required the banks to make loans to poor people and there were stiff penalties if they did not. In order for banks to comply without losing money they had to find a way to charge more for these loans. Third, the Deregulatory and Monetary Control Act (DIDMCA) was passed in 1980. This allowed banks to charge more for higher risk loans. Forth, in 1982 the Alternative Mortgage Transaction Parity Act (AMTPA) passed and it allowed banks to charge variable interest rates using balloon payments. And with the passage of these four Acts the sub-prime mortgage was born.
It seems that it never occurred to the law makers that banks could not afford to give loans to people who could not repay them. This is the result of law makers who have no business experience. Some of the same law makers who passed the above Acts are now saying that the banks are responsible for the crisis.
So what did the banks do with these loans? They sold them to someone else and said you worry about defaults. This led to the securitization of loans. This means that the loans were bundled together and sold as security investments like mutual funds. These bundles were called Collateralized Debt Obligations (CDO’s). These CDO’s can be bundles of any type but when they contain mortgages they are called Mortgage Backed Securities (MBS’s). In the days before the Acts a banker would meet with the borrower and set up a loan that was based on the ability to pay since the loan would stay in the bank and the bank had a long term interest in the safety of the loan. With the advent of CDO’s this all changed.
During the years when many of these variable loans were sold the interest rate on a 30 year mortgage held in the 5 to 7% range which was historically low and thus allowed many people to take on larger mortgages. Then in 2003 Greenspan started raising the fed fund rates and he raised them 17 times going from 1% to 5.25% which caused the variable home loans to increase by over 4%. What does this look do to the loan? Since the prime rate was 5% and the sub-prime was 10% this now increased each by 4% so the sub-prime went to 14%. You do the math and you will quickly understand why so many poor people had to default. Just another example of the unexpected consequences of good intentions. Isn’t government grand!
It seems that it never occurred to the law makers that banks could not afford to give loans to people who could not repay them. This is the result of law makers who have no business experience. Some of the same law makers who passed the above Acts are now saying that the banks are responsible for the crisis.
So what did the banks do with these loans? They sold them to someone else and said you worry about defaults. This led to the securitization of loans. This means that the loans were bundled together and sold as security investments like mutual funds. These bundles were called Collateralized Debt Obligations (CDO’s). These CDO’s can be bundles of any type but when they contain mortgages they are called Mortgage Backed Securities (MBS’s). In the days before the Acts a banker would meet with the borrower and set up a loan that was based on the ability to pay since the loan would stay in the bank and the bank had a long term interest in the safety of the loan. With the advent of CDO’s this all changed.
During the years when many of these variable loans were sold the interest rate on a 30 year mortgage held in the 5 to 7% range which was historically low and thus allowed many people to take on larger mortgages. Then in 2003 Greenspan started raising the fed fund rates and he raised them 17 times going from 1% to 5.25% which caused the variable home loans to increase by over 4%. What does this look do to the loan? Since the prime rate was 5% and the sub-prime was 10% this now increased each by 4% so the sub-prime went to 14%. You do the math and you will quickly understand why so many poor people had to default. Just another example of the unexpected consequences of good intentions. Isn’t government grand!
Barney Frank
Barney Frank was in congress when the Community Investment Act was passed. This was one of four Acts passed during the late 70’s and early 80’s that force banks to make home loans to people who were not qualified. These loans were backed by Fannie Mae and Freddie Mac and were designed to make the American Dream of home ownership available to everyone. Frank continued to defend the actions of these two agencies throughout the years preceding the big mortgage crisis of 2008. Once the collapse came and he had to admit his err in judgment he was on TV and here is a quote from that interview:
So, as I waited to be interviewed on a TV show last August, I was surprised and pleased to hear Mr. Frank concede that he had erred: “I hope by next year we’ll have abolished Fannie and Freddie” he said, referring to the two government sponsored enterprises (GSEs), “... it was a great mistake to push lower-income people into housing they couldn’t afford and couldn’t really handle once they had it.” Then he added, “I had been too sanguine about Fannie and Freddie.
The dictionary definition of sanguine is Cheerfully optimistic. That interview was on August of 2010. In the November elections following his admission of bad judgment he was reelected.
On Tuesday, voters in the United States went to the polls for midterm elections. The entire House of Representatives and one-third of the Senate were up for grabs and, when the polls closed, internet gambling champion Barney Frank (D-MA) was reelected by a 54% vote. This was an election when the Republicans won house seats in record numbers
The Congressional Budget Office (CBO) says the real cost of the federal government guaranteeing the business of failed mortgage giants Fannie Mae and Freddie Mac is $317 billion
The top six executives of the two mortgage giants, Fannie Mae and Freddie Mac, received a combined total of $35.4 million during 2009 and 2010
We complain about the corruption in government but we keep reelecting the same people. The above illustrates the money he cost the taxpayers but does not include the pain and suffering inflicted upon all those poor people who were promised their dream home.
So, as I waited to be interviewed on a TV show last August, I was surprised and pleased to hear Mr. Frank concede that he had erred: “I hope by next year we’ll have abolished Fannie and Freddie” he said, referring to the two government sponsored enterprises (GSEs), “... it was a great mistake to push lower-income people into housing they couldn’t afford and couldn’t really handle once they had it.” Then he added, “I had been too sanguine about Fannie and Freddie.
The dictionary definition of sanguine is Cheerfully optimistic. That interview was on August of 2010. In the November elections following his admission of bad judgment he was reelected.
On Tuesday, voters in the United States went to the polls for midterm elections. The entire House of Representatives and one-third of the Senate were up for grabs and, when the polls closed, internet gambling champion Barney Frank (D-MA) was reelected by a 54% vote. This was an election when the Republicans won house seats in record numbers
The Congressional Budget Office (CBO) says the real cost of the federal government guaranteeing the business of failed mortgage giants Fannie Mae and Freddie Mac is $317 billion
The top six executives of the two mortgage giants, Fannie Mae and Freddie Mac, received a combined total of $35.4 million during 2009 and 2010
We complain about the corruption in government but we keep reelecting the same people. The above illustrates the money he cost the taxpayers but does not include the pain and suffering inflicted upon all those poor people who were promised their dream home.
Jobs
On February of 2009 the Obama administration passed the Stimulus Bill of 787 billion dollars. They predicted that passing this would keep unemployment below 8% but then it went to over 10%. They responded by saying that the economy was worse than they expected even though he had previously stated that the economy was the worst since the Great Depression. Last week the president said that he had created 2 million jobs in the past 15 months and attributed this to the stimulus. Assuming that is true we do the math and discover that each job cost the government $390,000. This does not count the second stimulus called QE2 which passed last November for 600 billion more. If this is the way we create jobs and we currently have 15 million people unemployed we must spend 5 trillion more to get jobs for these people. The fed has printed up 2.5 trillion in the last two years so I guess they could print up another 5 trillion. The reason I am going through this exercise is to point out that the average person does not have to analyze the situation to know that there is something not right about just printing money and handing it out to friends to spend. You can just use your common sense and know that this is going to lead to some serious problems not the least of which is inflation. I know that the average working stiff can see through this charade.
War
Polls show that the American people are getting tired of the war in Afghanistan. I believe the reason for this is a misunderstanding between the civilian leadership and the military leadership. It is up to the President to set out the strategy and the military to determine the tactics. For example, suppose the President would say to the generals that we want to destroy the poppy fields and encourage the farmers to grow food products. The generals would then respond by saying we can do that and we will need 50,000 troops and two years. The failure in Viet Nam was a lack of strategy and we are in the same situation in Afghanistan. Obama told the generals what he wanted them to do and they said they need 60,000 troops and Obama said you can have 30,000 and they accepted that. They should have come back to the President and said if you are only sending half what we need then you must change your strategy. McChrystal tried to do this but the President would not meet privately with him for six months so he went ahead with the 30,000.
This same thing happened in Viet Nam. General Westmoreland asked for 100,000 troops and President Johnson sent 36,000 and the general accepted that. Unless the strategy was changed this was a mistake and we seem to be making the same mistake again.
This same thing happened in Viet Nam. General Westmoreland asked for 100,000 troops and President Johnson sent 36,000 and the general accepted that. Unless the strategy was changed this was a mistake and we seem to be making the same mistake again.
Guns
When guns are captured from criminals in Mexico they are examined and if it appears they might be from the US they are sent back to the US. Upon examining these returned guns it appeared that nine out of ten were made in the US. Using this information Hilary Clinton said:
EXCLUSIVE: You've heard this shocking "fact" before -- on TV and radio, in newspapers, on the Internet and from the highest politicians in the land: 90 percent of the weapons used to commit crimes in Mexico come from the United States.
-- Secretary of State Hillary Clinton said it to reporters on a flight to Mexico City.
Later when more facts were available and all guns were checked the number that came from the US was 17%. By that time Hilary had made the argument that the drug problem was just as much the fault of the US as it was the fault of Mexico.
Shortly after that the AFT decided to send US made guns to Mexico hoping to keep track of these guns and lead them to the criminals. The operation was called Fast and Furious and some 2,500 guns were sent into Mexico. Unfortunately the government lost track of the guns and one of them was used to kill a border patrol agents.
There was an attempted cover up and it looks like the head of the ATF will lose his job.
Up to this point what I have stated is factual. Now I will move into speculation. Some people who are biased against Hilary suggest that she encouraged this operation in order to back up her claim that many guns come from the US. We will see how this evolves over the next few weeks. Some have suggested that if the economy continues to trend downward and Obama looks vulnerable that Hilary might challenge him for the nomination in 2012. These same people think that if it looks like Hilary might consider this the Obama administration will leak that it was Hilary who encourage the ATF to move these guns into Mexico. Is this dirty politics or what?
EXCLUSIVE: You've heard this shocking "fact" before -- on TV and radio, in newspapers, on the Internet and from the highest politicians in the land: 90 percent of the weapons used to commit crimes in Mexico come from the United States.
-- Secretary of State Hillary Clinton said it to reporters on a flight to Mexico City.
Later when more facts were available and all guns were checked the number that came from the US was 17%. By that time Hilary had made the argument that the drug problem was just as much the fault of the US as it was the fault of Mexico.
Shortly after that the AFT decided to send US made guns to Mexico hoping to keep track of these guns and lead them to the criminals. The operation was called Fast and Furious and some 2,500 guns were sent into Mexico. Unfortunately the government lost track of the guns and one of them was used to kill a border patrol agents.
There was an attempted cover up and it looks like the head of the ATF will lose his job.
Up to this point what I have stated is factual. Now I will move into speculation. Some people who are biased against Hilary suggest that she encouraged this operation in order to back up her claim that many guns come from the US. We will see how this evolves over the next few weeks. Some have suggested that if the economy continues to trend downward and Obama looks vulnerable that Hilary might challenge him for the nomination in 2012. These same people think that if it looks like Hilary might consider this the Obama administration will leak that it was Hilary who encourage the ATF to move these guns into Mexico. Is this dirty politics or what?
Get along
During the 2010 elections, controversy erupted in the Delaware Republican primary for US Senate. The establishment candidate Michael Castle was challenged by Tea Party favorite Christine O’Donnell. Castle was the going away favorite to win the seat for the Republicans but when O’Donnell defeated him in the primary she was unable to beat the Democrat and the Republicans lost the seat. Establishment experts like former Bush advisor Carl Rove predicted this would happen and they were upset.
I bring this up to point out that most politico gurus want to win the seat regardless of what the candidate stands for and it is this idea I want to examine further. If you are a newly elected official it will not be long before you face your first real dilemma. A situation will arise where your personal beliefs will be in conflict with what your constituents believe. At that point you can either follow your heart and risk not being reelected or go with the crowd and be reelected or you can resign. In most cases the choice is to go with the crowd. The reasoning behind this is that if you are reelected you can have time to bring the crowd around to your way of thinking but if you are not reelected you lose the power that comes with office to make changes.
What happens over time is that you move the crowd slightly in your direction and the crowd moves you a good deal in their direction. The long term result is after many years you have moved so far away from where you started that you no longer have any strong personal convictions. You are always getting reelected but you are just going along to get along. All your bright eyed bushy tailed idealism is long gone and you are just another politician.
I bring this up to point out that most politico gurus want to win the seat regardless of what the candidate stands for and it is this idea I want to examine further. If you are a newly elected official it will not be long before you face your first real dilemma. A situation will arise where your personal beliefs will be in conflict with what your constituents believe. At that point you can either follow your heart and risk not being reelected or go with the crowd and be reelected or you can resign. In most cases the choice is to go with the crowd. The reasoning behind this is that if you are reelected you can have time to bring the crowd around to your way of thinking but if you are not reelected you lose the power that comes with office to make changes.
What happens over time is that you move the crowd slightly in your direction and the crowd moves you a good deal in their direction. The long term result is after many years you have moved so far away from where you started that you no longer have any strong personal convictions. You are always getting reelected but you are just going along to get along. All your bright eyed bushy tailed idealism is long gone and you are just another politician.
Press
Last week an event occurred that reminded me of something that happened to Hilary Clinton right after her husband was elected president. I will get to the event later. When Hilary became first lady one of the first public things she did was to object to poor people having to pay for immunizations. She announced that the government would pay. Only later did she find out that all communities offered shots at no cost to those who could not afford them. The whole thing just quietly went away and that was that.
Now to last week: Sara Palin noted that Paul Revere rode to Lexington to warn the British and the intellectual elite in the east immediately pounced on her remarks. It was later revealed that most of these intellectuals had confused what happened with the poem by Longfellow and within two days the whole thing disappeared from the news.
Revere rode quietly from town to town not wanting to alert the British troops but he did warn local leaders who were mostly British colonist about the planned moves of the British Army. He most certainly did not yell that the British were coming. The press seemed to have confused the colonist with the army or at least considered them on in the same.
This sort of thing happens to the press on a regular basis but no one makes a big deal out of it and that’s OK with me since they are not public officials and I take what they say with some degree of doubt. More and more people are distrusting of the press
Now to last week: Sara Palin noted that Paul Revere rode to Lexington to warn the British and the intellectual elite in the east immediately pounced on her remarks. It was later revealed that most of these intellectuals had confused what happened with the poem by Longfellow and within two days the whole thing disappeared from the news.
Revere rode quietly from town to town not wanting to alert the British troops but he did warn local leaders who were mostly British colonist about the planned moves of the British Army. He most certainly did not yell that the British were coming. The press seemed to have confused the colonist with the army or at least considered them on in the same.
This sort of thing happens to the press on a regular basis but no one makes a big deal out of it and that’s OK with me since they are not public officials and I take what they say with some degree of doubt. More and more people are distrusting of the press
Economics
Economics 101 tells us that one way to measure the Gross Domestic Product (GDP) is to multiply the money supply by the velocity of money. The money supply used for this formula is cash, checking accounts and savings accounts and is called M3. The velocity of money means how many times each dollar is spent. Let’s say I pay a painter to paint my porch $100 and he uses $80 to buy paint and the paint store spends $20 to stock the paint. My original $100 has turned into $200 and the velocity of money is 2. If there is 700 billion in the money supply (M3) then MV = 1,400 billion and that equals GDP.
Recently in the news there has been a lot of discussion about Quantitative Easing (QE). The Federal Reserve Bank also known as the Central Bank last year had QE1 and this year QE2. The Fed adds money to the account of large banks and they in turn use this to purchase Fed bonds. The bank gets the money at zero interest and buys bonds that pay 3 or 4% interest. As long as that is all that is done the money supply does not increase so the threat of inflation is not increased. However banks are allowed to create money. If the banks instead of buying Fed bonds would loan this money out then the money supply would increase. This happens because banks are only required to hold 10% in reserve to cover their loans. It works like this. The bank gets $100 from the Fed and then it loans out $90 and the money supply increases by $90. Up to this point the banks have not been loaning since they prefer the 3% no risk return from the Fed as opposed to a higher risk to a private party. When the economy recovers from this slump and the banks start lending to business then the money supply will increase rapidly and inflation will follow.
Recently in the news there has been a lot of discussion about Quantitative Easing (QE). The Federal Reserve Bank also known as the Central Bank last year had QE1 and this year QE2. The Fed adds money to the account of large banks and they in turn use this to purchase Fed bonds. The bank gets the money at zero interest and buys bonds that pay 3 or 4% interest. As long as that is all that is done the money supply does not increase so the threat of inflation is not increased. However banks are allowed to create money. If the banks instead of buying Fed bonds would loan this money out then the money supply would increase. This happens because banks are only required to hold 10% in reserve to cover their loans. It works like this. The bank gets $100 from the Fed and then it loans out $90 and the money supply increases by $90. Up to this point the banks have not been loaning since they prefer the 3% no risk return from the Fed as opposed to a higher risk to a private party. When the economy recovers from this slump and the banks start lending to business then the money supply will increase rapidly and inflation will follow.
College
The only reason to go to college is to get a diploma. The only reason to get a diploma is that employers require one. Let’s remove that requirement and say that when you applied for a job, no one asked you what kind of formal education you have but instead they spent two full days interviewing you. Now let’s take two people. The first goes to college and gets a BA. To do this requires about 15 hours a week of class time plus another 30 hours per week in study time. This continues for four years. Now the second person spends 45 hours per week in self-study using the Internet. Let’s say the position is for an engineer.
What can we deduce about the character of the second person? He has to be at least as smart as the first. He has to be a self-motivator. He has to be very disciplined.
Now let’s suppose you interviewed these two people and found them to be comparable. Would you have a bias toward one because he had a diploma? Perhaps you would be biased toward the self-educated person. Point is that the diploma is only there to help perspective employers choose applicants.
Why bother with all this? It’s simple. It’s a matter of money. The college person graduates with a large debt and the self-educated person does not.
I personally can tell you that without a doubt, I would choose the self-educated person because anybody that can do this on their own, has all the qualities I want in an employee and they have demonstrated that they have these qualities.
I admit that I have a personal prejudice in favor of kids who work their way through school vs those who have parents who pay their way. I realize I am generalizing here but that is my bias.
What can we deduce about the character of the second person? He has to be at least as smart as the first. He has to be a self-motivator. He has to be very disciplined.
Now let’s suppose you interviewed these two people and found them to be comparable. Would you have a bias toward one because he had a diploma? Perhaps you would be biased toward the self-educated person. Point is that the diploma is only there to help perspective employers choose applicants.
Why bother with all this? It’s simple. It’s a matter of money. The college person graduates with a large debt and the self-educated person does not.
I personally can tell you that without a doubt, I would choose the self-educated person because anybody that can do this on their own, has all the qualities I want in an employee and they have demonstrated that they have these qualities.
I admit that I have a personal prejudice in favor of kids who work their way through school vs those who have parents who pay their way. I realize I am generalizing here but that is my bias.
Keynes
Most Liberals follow the economic ideas of John Maynard Keynes. Keynes said that when the economy is in the slumps the government should deficit spend and then in good time the government should collect money and pay back the debt. I always felt this was a good way to do things but unfortunately in practice the government was only half Keynesian. In down times they would spend the country into debt but in good times they would not repay the debt. Instead they started up new programs to provide benefits and the net result is we have too many programs and too much debt. Surprise!
It is another one of those ideas that looks good on paper but doesn’t work in the real world, sort of like socialism. When elected officials see some extra money they cannot control themselves and must spend it to gain votes in the next election. Then the people who get the benefits reelect them. We have the government we deserve. It seems the only way to get people to behave in a responsible manner is through force and thus ideas like The Balanced Budget Amendment and term limits are gaining in popularity. They are both bad ideas but considered the lesser of two evils. It seems there is not a lot of difference between our elected officials and our children.
It is another one of those ideas that looks good on paper but doesn’t work in the real world, sort of like socialism. When elected officials see some extra money they cannot control themselves and must spend it to gain votes in the next election. Then the people who get the benefits reelect them. We have the government we deserve. It seems the only way to get people to behave in a responsible manner is through force and thus ideas like The Balanced Budget Amendment and term limits are gaining in popularity. They are both bad ideas but considered the lesser of two evils. It seems there is not a lot of difference between our elected officials and our children.
Greece
In the Greek parliament the Socialist and Communist control 180 seats and the conservatives control 90.
Greek wages are set at artificially high levels and the result is poverty and unemployment. These effects, however, are partly counteracted by the profligate spending of the Greek government. To finance the spending, the Greek government simply prints bonds. (sound familiar)Transferring new funds to the Greek government, the banking system buys these bonds and uses them as collateral for new loans from the European Central Bank (ECB), which thereby monetizes the government deficit. The Greek government uses the new money to pay for early retirement schemes, an army of public servants and generous social benefits. The Greek economy’s lack of competitiveness is thereby sustained and increased.
Among the benefits are free tuition and text books for all public education.
Free health care for all citizens
Full retirement benefits at age 61and earlier for certain professions. Benefits are 80% of working pay
Government provides disability benefits and unemployment benefits
There are many other strange benefits I will not list except one as an example. If you are a hair dresser you can retire at age 50 because it is deemed a hazards profession
To quote Margaret Thatcher: when you have a socialist government sooner or later you run out of other people’s money
Greek wages are set at artificially high levels and the result is poverty and unemployment. These effects, however, are partly counteracted by the profligate spending of the Greek government. To finance the spending, the Greek government simply prints bonds. (sound familiar)Transferring new funds to the Greek government, the banking system buys these bonds and uses them as collateral for new loans from the European Central Bank (ECB), which thereby monetizes the government deficit. The Greek government uses the new money to pay for early retirement schemes, an army of public servants and generous social benefits. The Greek economy’s lack of competitiveness is thereby sustained and increased.
Among the benefits are free tuition and text books for all public education.
Free health care for all citizens
Full retirement benefits at age 61and earlier for certain professions. Benefits are 80% of working pay
Government provides disability benefits and unemployment benefits
There are many other strange benefits I will not list except one as an example. If you are a hair dresser you can retire at age 50 because it is deemed a hazards profession
To quote Margaret Thatcher: when you have a socialist government sooner or later you run out of other people’s money
Pensions
I received an early morning call to come down to the plant right away. When I got there I found a large group of people had gathered outside in the plant parking lot. They were government employees protesting cuts in their pension plan. I asked what they were doing at my plant and wouldn’t they be more effective protesting at the offices of their elected officials. They responded by saying that their officials cannot get any money because people like me don’t want taxes on the rich increased and that is where the money would come from to pay the pensions.
I told them that 30 years ago I was in the same position they are in and I started a business. I used all of my savings plus a second mortgage on my home to get a loan to cover start-up cost. I worked 16 hours a day seven days a week for ten years and built up a successful enterprise. I currently employ 100 people and they are people just like you. They are happy to have jobs with benefits. Now you are here to take money from me to pay you. Would you come into my house and take my belongings? You would never do anything like that but instead you go through the government to come and take my money out of my pocket and put it in your pocket. If you do that it puts my employees at risk as I may have to lay off someone or at best I will not be hiring any new people. I realize that there are some people who inherited large fortunes but most small businessmen like myself, took great financial risk and worked hard to make a comfortable living. Most of us pay 40 to 50% in income taxes while one half of the American people pay no income tax. Look around at your friends and ask yourself which of these friends can offer me a job. Does it really help our country to put my employees economic safety at risk to protect your pensions?
It appears that you were promised more than your employer can give and that is a very sad situation but the answer is not to “tax the rich”. The answer is to get your financial house in order and that will require sacrifice but in the long run it will protect pensions for future employees. Mistakes were made but correcting them by making more mistakes is not the answer. I realize every day that a down turn in the economy or a change in technology can ruin my business but if that happens I will not expect you to take up a collection for me to cover my loss.
There are times when we all need a safety net. This is especially true when unexpected illness or accident arises and we are no longer able to care for ourselves but being shorted on our pension plan is not one of those times.
I told them that 30 years ago I was in the same position they are in and I started a business. I used all of my savings plus a second mortgage on my home to get a loan to cover start-up cost. I worked 16 hours a day seven days a week for ten years and built up a successful enterprise. I currently employ 100 people and they are people just like you. They are happy to have jobs with benefits. Now you are here to take money from me to pay you. Would you come into my house and take my belongings? You would never do anything like that but instead you go through the government to come and take my money out of my pocket and put it in your pocket. If you do that it puts my employees at risk as I may have to lay off someone or at best I will not be hiring any new people. I realize that there are some people who inherited large fortunes but most small businessmen like myself, took great financial risk and worked hard to make a comfortable living. Most of us pay 40 to 50% in income taxes while one half of the American people pay no income tax. Look around at your friends and ask yourself which of these friends can offer me a job. Does it really help our country to put my employees economic safety at risk to protect your pensions?
It appears that you were promised more than your employer can give and that is a very sad situation but the answer is not to “tax the rich”. The answer is to get your financial house in order and that will require sacrifice but in the long run it will protect pensions for future employees. Mistakes were made but correcting them by making more mistakes is not the answer. I realize every day that a down turn in the economy or a change in technology can ruin my business but if that happens I will not expect you to take up a collection for me to cover my loss.
There are times when we all need a safety net. This is especially true when unexpected illness or accident arises and we are no longer able to care for ourselves but being shorted on our pension plan is not one of those times.
Liberals
Here is a quote from a recent news item:
PROVO, Utah (ABC 4 News) - A new Harvard University study finds that July 4th parades energize only republicans, help boost voter turnout for GOP candidates and entices children to become conservatives.
Liberals are often accused of being antimilitary and this item highlights that accusation. The question is there any basis for such belief. If we assume that liberals are generally more interested in social programs that is government aid then this would be accurate. Liberals see military expenditures as direct competition for social dollars. Over the years this belief has fostered the idea that liberals see the military as taking away money from social programs. The result is that they have some hesitancy in appropriating funds for defense. Thus the findings of this report seem to accurately portray the liberal position on guns vs butter. They lean toward
PROVO, Utah (ABC 4 News) - A new Harvard University study finds that July 4th parades energize only republicans, help boost voter turnout for GOP candidates and entices children to become conservatives.
Liberals are often accused of being antimilitary and this item highlights that accusation. The question is there any basis for such belief. If we assume that liberals are generally more interested in social programs that is government aid then this would be accurate. Liberals see military expenditures as direct competition for social dollars. Over the years this belief has fostered the idea that liberals see the military as taking away money from social programs. The result is that they have some hesitancy in appropriating funds for defense. Thus the findings of this report seem to accurately portray the liberal position on guns vs butter. They lean toward
Miranda
Last April the US picked up a suspected terrorist off the coast of Somalia and held him of a US Naval vessel for two months during which time they interrogated him. Then they shipped him to the United States and turned him over to the FBI who promptly read him his Miranda rights. I think it was a little late for that but now they say he is going to be tried in civil court. Last year the congress passed a law stating that no one could be sent to the US from Gitmo and tried here in civil court so this was Obama’s way to get around this law. Having witnessed this little tactic the congress will now broaden the law to include terrorist coming to the country from anywhere.
I believe that if you question someone for two months with no lawyer present and then read them their rights and take them to court you should have a slam dunk case and my guess is that is just what Attny Gen Eric Holder wanted. This whole thing looks like a sham and makes a mockery of the Miranda Act.
I believe that if you question someone for two months with no lawyer present and then read them their rights and take them to court you should have a slam dunk case and my guess is that is just what Attny Gen Eric Holder wanted. This whole thing looks like a sham and makes a mockery of the Miranda Act.
Mass health plan
Since Mitt Romney decided to run for president the Massachusetts State Health Care Plan he installed has come under scrutiny. The plans main benefit was that it increased the number of insured from 94% to 98% but at what cost. The first thing that happened was a shift of the cost of health care from the employer to the employee. Between 2005 and 2009 employer cost declined while employee cost increased by 21%. Individual bankruptcy filings increased by 35% from 2007 to 2009. Rising overall costs continued to increase and are expected to double in nine years. The people are wondering if the cost to insure that additional four percent was worth the benefit. Stay tunned!
Econ 101
In economics 101 I learned that S=I. Savings equals Investment. What brought this to my mind was the recent news about the rich paying more in taxes. When a man has a lot of money there are two things he can do with it. First he can spend it and this of course is good for our consumer powered economy. The second is that he can save his money. It is from savings that banks accumulate the money that they lend. When a business wants to invest and expand they need money so they go to the banks for loans. If the banks have customers who have put money in savings then they have money to loan. The more money the banks have to loan the lower interest rate they can charge and the more incentive there is for business to expand. If you take money from a man who has a lot you are taking money right out of the economy and making it more difficult for business to operate. Now every day in the news a different expert comes out saying that businesses create jobs though expansion yet some of these same experts are suggesting that we raise taxes on the rich. Did they never learn about savings equals investments or did they just forget what they learned. Or maybe they just don’t know what they are talking about. I vote for the latter.
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