CEO Salaries

The salaries of CEO’s have risen dramatically over the past 30 years and one of the reasons is that the system has been corrupted. Specialists are hired to determine salaries and they base their recommendations on other CEO salaries. This has led to a case of the dog chasing the tail and higher and higher pay is the result. Over this time the average pay has gone from 25 times what the regular employee makes to over 250 times. The average CEO today makes $10 million dollars where the average employee makes $40,000. As I was mulling over the unfairness of this caused by the free market being corrupted I discovered that this week a baseball player signed a $325 million dollar contract that will pay him $25 million per year for 13 years. He gets this money even if he cannot play due to illness or injury. This young man is 25 years old, half the age when a CEO gets his job and at twice the pay. CEO’s rarely stay in their jobs for 13 years so the ball player will have his money at a much younger age and earn it for more years. This comparison is somewhat unfair since it compares the average CEO against the highest paid player but there are only 40 CEO’s who earn more that this young man.

New congress

As the new Republican controlled congress takes over in January, I have some suggestions to take place in the first 100 days. First of all seal the southern border and follow that up with a promise to offer citizenship to all the illegal aliens who are in the county except for those with criminal records and they will be dealt with, on a case by case bases. Change the existing immigration laws to allow foreigners who get their advanced degrees here to stay here if they choose. Second, open up the Green River Formation in the west and start the energy revolution that will provide good paying jobs, reduce the trade deficit and solve the problem of CO2 emissions. Approve the 16 permits to build LNG (liquefied natural gas) port facilities so the US can ship LNG around the world to Europe to reduce their dependency on Russia and to China to help with their smog problem. Pass legislation encouraging the move to natural gas for the entire transportation industry. Offer low cost loans to build natural gas stations at all truck stops and further low cost loans to retrofit all trucks to use natural gas. Begin the process of installing natural gas pumps at all car stations while setting the ground work for manufactures to produce cars that run on natural gas. Encourage industry by way of the EPA to move all power plants to natural gas. Lay out the plans to start utilizing methane hydrate, the almost unlimited supply of natural gas, found just off shore and use the process to sequester CO2 as they mine the gas. Recommend and approve the cost for The President to destroy ISIS using whatever means the military experts deem necessary. Increase economic pressure on Iran to halt their nuke program. On a piece by piece approach repair, change and delete Obamacare and build a program that will cover the poor using the existing Medicaid program. Tax reform to lower corporate tax rates and simplify the code. Allow US companies to bring home the two trillion dollars tax free that they now hold overseas.

Free press

I have said in the past that the free market capitalist system is the best in the world. I have further said that corruption is the enemy of this system and we must rely on government to police this system. If the regulators and the regulated get in bed together the system will fail. This happens on a regular basis but still relatively unusual. Here is one example. SAN FRANCISCO (KCBS)— A consumer-advocacy group says one of the recently-released emails between PG&E and the California Public Utilities Commission shows the commission’s president pushed a backroom deal to award the utility tens of millions of dollars in exchange for political contributions. Note in this case it was not the constitutional free-press watch-dog that uncovered this situation but a consumer advocacy group. It is dangerous when the press begins to take sides on political issues and this seems to be happening all too often. The press is supposed to challenge the government at every stage and much of our press has been co-opted by the government. I want a press that causes politicians to be wary of all that they do and all that they say. I want them to know that our free press will be shining the light of transparency on their activities.

Pipeline

When told that the Keystone Pipeline would create 40,000 jobs the administration responded by saying that those jobs are only temporary and would end once the project was finished. That is true but the same administration is always calling for infrastructure jobs like roads and bridges and those jobs are also temporary and will end when the project is finished. This pipeline is only a small part of the many things that could be done regarding energy, the most important being opening the Green River Formation for drilling.

Wood burning

There is a 60 year old coal fired power plant in Marquette, MI that supplies the Upper Peninsula with most of its electricity. The plant lost its biggest customer and the owners want to close. The other alternative is to raise the electric rates to the people in the area and they cannot afford the increase it would take to make the plant profitable. It is suggested by a group of environmentalist that the area use wind and solar but there is a problem when the wind stops and sun goes down. Since electricity cannot be stored these energy sources need a back-up. Normally they use the grid and put excess power back and then withdraw when needed. The group, suggest that since there is ample wood in the area that a wood burning plant be built to augment the solar and wind. Wood, of course produces pollution but overall it would be an improvement over the coal plant. Checking with experts in wood burning it appears it takes more than most realize. How about in the UP, where we surely have lots of wood? The Presque Isle coal plant in Marquette needs replacement. It generates 450 megawatts annually. Replacing that coal with standing timber would require the annual growth of 4.5 million acres of forest land, or clear-cutting 112,500 acres (180 square miles) a year. There has to be some more planning before the use of wood to back up wind and solar proves feasible. This concept of moving ahead with wind and solar without adequate forethought seems to be prevalent as plan after plan has fallen apart.

Out-sourcing

The ultra wealthy get $2 trillion wealthier That is the headline in the news today. It goes on to say that the top .004% or 211.275 of the people in the world comprise these wealthy and their wealth increased by 2 trillion dollars. Just looking at that it seems patently unfair but to add to my previous argument that you cannot solve the problems of the poor by taking money from the rich, just look at the math. If you took that money and gave it to the rest of the people in the world they would each get $400. Now in a country like Bangladesh that would be several months pay but it would be an almost impossible task to get that money to the people not only because of logistics but many of those poor countries are so corrupt that the governments would keep the money. The standard of living in third world countries has improved dramatically over the past 20 years and that is the result of out-sourcing from western countries. The best way to help the poor people of the world is to keep the economic engine of the west alive and healthy. Currently one of the best ways to do that is to take advantage of the natural gas and oil reserves in the western United States. This will initiate an economic boom here and it will spread to the rest of the world. 14 March 2013 – The rapid growth of developing countries is propelling millions out of poverty on an unprecedented scale and radically reshaping the global system, according to a flagship United Nations report launched today.

Immigration

Immigration is once more in the news. As we stand now we have students who come here from places like India who major in science and engineering and when they finish many want to stay here and work but they are forced to go back home. On the other hand we have people come across the southern border illegally allowed to stay. More often than not they do not have the technical skills we so desperately need and many do not speak English. We have a program called H-1B that allows a limited number of high tech people to stay here and work but many want that program expanded to help cover the shortage of engineers and scientist we are currently experiencing. The answer to the current problem is to first seal the border and then offer amnesty to the illegals who are now here. President Reagan legalized 3 million illegals with the promise from congress that the border would sealed but that promise was not fulfilled. While many see this as a humanitarian problem most understand that it is all about politics. The proof is that if the people coming across the border were going to vote Republican then all the Democrats would be demanding that the border be closed and the Republicans would be pleading for the humanitarian treatment of these illegals.

Moral hazard

After the financial meltdown of 2008 caused by too many big banks getting themselves in trouble by selling worthless mortgage bundles, the government stepped in to prevent the country from going into a depression. Good arguments can be made that the solution to bail out the banks was wrong and a better approach would have been to help homeowners stay in their homes but that is water over the dam. The government approach is exemplified by the passage of Dodd-Frank legislation designed to reduce the threat of what is called “too big to fail”. This means that the banks were so large that their failure could bring down the entire country. As a result of this law the big banks are now bigger than before. This bill of over 5,000 pages, which dwarfs Obamacare at 2,100 pagers, has caused new expenses for banks including small banks and is little understood by most banks. It has also caused new headaches for non-bank businesses. The congress caves to bank lobbyist and now we just wait for the next time they need a bail out and the government is aiding and abetting by easing up on restrictions for home buyers. This is how it all started the last time around. "Too big to fail" is the cancer of moral hazard in the financial system. Moral hazard is a term used in banking circles to describe the tendency of bankers to make bad loans based on an expectation that the lender of last resort, either the Federal Reserve domestically or the International Monetary Fund globally, will bail out troubled banks.

Health care ACA style

One of the more disturbing aspects of health insurance has always been the reliance on averages. Instead of treating patients, as individuals as most doctors would like to do, the insurance says we will pay for certain procedures, based on some statistical analysis of similar situations. This concept will be greatly enhanced under Obamacare. There will be a group of experts who will set the guidelines for treatment and doctors must follow those in order to have insurance coverage. If you are self-insured you can still get all the treatment the doctor recommends since you will be paying. The less flattering phrase for this is rationing. While people may not like this idea it is absolutely necessary in order to control cost. We live in a world of limited resources and cannot provide every individual with every service. Here is one example of what this panel of experts will be evaluating. It has to do with one type of cancer. As Dr. Conroy explains the process, first, doctors must determine the “Stage” or extent of the disease. The most common system for determining classification of malignant tumors and the extent of a person’s cancer is called the TNM system. “T” measures the size of the tumor and if it’s invaded nearby tissue. “N” determines regional lymph nodes that are involved. “M” measures the distance the cancer has spread from one part of the body to another. These measurements are critical in determining how sick the patient may be. In fact, there are four stages, classified under the TNM system, with multiple possible results determined by a large variable of TNM data. With an adenocarcinoma cell type under the microscope, there are about 40 pathological (histology) types which could lead to as many as 36,000 possible variable combinations of the cancer. The grade or aggressiveness of the cancer is 10 grades. So, 10×36,000 = 360,000 possibilities. Next, hormone sensitive status = 8 possibilities. So, 360,000 x 8 = 2,880,000 and menopausal status = 5,760,000 possible computer input combinations. These are the possible combinations on just one page of data in staging. So the computer system has to evaluate these combinations. Like the old adage says, “don’t worry, I’m from the government and I am here to help”.

Climate and China

With Climate Announcement, Obama Gets a Win -- and Maybe A Second-Term Legacy This was the headline on many of the news sites today. The agreement states that [China] must add 800 to 1,000 gigawatts of nuclear, wind, solar and other zero-emission generation capacity by 2030 — more than all the coal-fired power plants that exist in China today and close to the total electricity generation capacity in the United States What is not emphasized in this report is that this agreement is non-binding and has no enforcement mechanism. Pollution will continue to increase over the next 16 years in China while they implement these new energy systems. Meanwhile the United States will immediately reduce pollution. The US will meet its goals by moving from coal to oil to natural gas and if China makes any progress it will be because it follows the same path, not because of solar and wind. Many coal fired power plants are 50 years old and very inefficient and the price of natural gas keeps coming down so there is a natural transition from coal to gas that has very little to do with agreements or laws. If and when the government opens up lands to drilling this transition will accelerate and the earth will be cleaner and the Chinese people will benefit the most.

Students

In the Minneapolis Schools there is a brewing controversy around the number of black students who are expelled. There is an investigation going on to find out what is happening and I offer a possible reason. One of the many things that children should learn from their parents is respect for authority. In homes where the mother is alone and must work, often times two jobs, to support the family she often times is not able to handle the discipline problems that arise with children. When children do not learn respect for authority at home they do not respect teachers and this leads to problems in school. After they get through school the disrespect shown to law enforcement brings more trouble and leads to a disproportionate number of blacks in prison. It is most prevalent with boys as they need a father to teach them respect for authority. A mother can do this but not if she is worn out from working and trying to keep up a home. The problem not only manifests itself in the number of students expelled but also in test scores and graduation rates. The disintegration of the black family leads to poverty which leads to crime and drugs. It is only recently that this explanation can be made without the cry of prejudice. More jobs and better jobs will help solve this problem but better jobs means education and if you drop out you will be left out. Everyone does not have to go to college because the coming energy revolution will demand trades people who can work with their hands. There are plenty of tech colleges where students can learn plumbing, pipefitting, welding along with electricians and carpenters but they first have to get through high school.

Big banks

Today in the news there was a lot of hoopla about six big banks who were accused of price fixing and were fined 4 billion dollars. The combined assets of these banks are 7,300 billion. I have no idea how much money these banks made from these illegal activities but that fine is meaningless. If we are going to have changes in the behavior of these white collar criminals some will have to go to prison. Royal Bank of Scotland 1.9 T HSBC 2.7 T JP Morgan 2.4 T Citi Group 1.8 T Bank of America 2.2 T USB 0.3 T

Military spending

I have written the past about how the country tends to cut back on military spending after a war and used the example of how troops were sent to Korea without proper equipment. Yesterday on the radio they interviewed a Korean War veteran and he explained how his group arrived in Korea and did not see any action. Then at 2 AM they were awakened and told to get ready to go to the front. They were given their rifles but they had no ammo. The sergeant told them to use their bayonets. At the end of the cold war the military was cut back because the thinking was that any new wars would be high tech with air power and the need for troops on the ground would be minimal. When the next war came along the troops had to go three and four tours of duty because we were short on ground troops. The armor on the vehicles was inadequate and had to be replaced as many lost their lives and limbs. Then came the complaints from the American people about the shabby way our troops were being treated and many of these people were the same ones who demanded we cut back on the military.

China oil

The President made an agreement with China that promotes the reduction of green-house gases by 2030. The US will easily make their target by replacing coal fired powered with natural gas, a process which has been going on for the past 10 years. China is quickly buying oil on the world market as the number of people owning cars and trucks increases each year. The people living in the cities in China are choking to on air pollution and as the number of cars increase the problem will get worse. There is no stopping the increase in auto production but China can go a long was to reduce pollution by switching power plants to oil. They know this and are buying oil on the open market and the US could be part of this if the US would open government lands to drilling. China is snapping up unusually high amounts of crude oil as global prices hit their lowest level in years,Wall Street Journal reported Monday. The US could be a major supplier of oil to China if the government would allow drilling in the Green River Formation in Western USA. This would excite our economy with new high paying jobs for white and blue collar workers and offset our negative balance of payments. It would help China meet their new air pollution goals and drastically improve the health of the people in China.

Health care

A recently released video of Jonathan Gruber, a MIT professor, considered one of the architects of Obamacare, has casts some unflattering light on the whole process. Here is a quote from his speech given at the University of Pennsylvania in 2013 and it just surfaced this week. This bill was written in a tortured way to make sure [the Congressional Budget Office] did not score the mandate as taxes. If CBO scored the mandate as taxes, the bill dies. OK? So it's written to do that. In terms of risk-rated subsidies, if you had a law which said healthy people are going to pay in — you made explicit that healthy people pay in and sick people get money — it would not have passed. OK? Lack of transparency is a huge political advantage. And basically, call it the stupidity of the American voter or whatever, but basically that was really, really critical to get the thing to pass. Look, I wish ... we could make it all transparent, but I'd rather have this law than not. Recall that this bill was written in secrecy by the Senate and passed both houses with no Republican votes. This was when the Democrats had a super majority in the senate and majority in the house so the Republicans could not stop the bill. The last two Senators to come on board were Landry from Louisiana and she later bragged that she got 300 million for her state for her vote. The other hold out was Senator Ben Nelson from Nebraska whose state received 100 million. It was later admitted that these elected officials did not read the bill and recall Nancy Pelosi’s now rather innocuous statement that we should pass it then read it. I tend to agree with the statement about the stupidity of the voters because The President said right from the outset that the plan would insure 31 million new people at no additional cost. This was one of those half-truths that government is famous for as the cost in dollars would not increase but deductibles would and along with rationing the cost savings would be achieved.

Drug cost

Once again Walmart has come to the aid of the poor and middle income people with their agreement with Humana to offer low cost drug plans for Medicare recipients. The plans premium is $12 per month with no deductible and one dollar co-pays on over 1,500 common prescriptions. I do taxes at the senior center each year and this group uses a lot of prescription drugs and it consumes a significant part of their income.

Gridlock

It is pretty well established that the national press has a liberal bias but recently a perfect example of this bias has come to the forefront. For the past five plus years we have been told that the gridlock in Washington was caused by the Republican Congress. During this last election it was revealed that the do nothing congress had passed 372 bills and they all sat on Harry Reeds desk or in committee because he did not bring them to the floor of the senate. The reason being, that these bill might cause some embarrassment for President Obama if they passed. Many of the bills were in senate committees where they died so Reed did get them that far. 55 of these bills were introduced in the house by Democrats. Most of these bills will be brought up in the new congress and since the senate is now controlled by the Republicans they will be brought to the senate floor and sent on to the White House.

Gas price

It is common knowledge that politics interferes with most everything and the energy business is no exception. All the talk now is about the Keystone Pipeline and in reality it is only a minor player. The big oil fields are in the Green River Formations of Utah, Wyoming and Colorado. A recent report by the U.S. Government Accountability Office estimated that if half of the oil bound up in the rock of the Green River Formation could be recovered it would be "equal to the entire world's proven oil reserves." The biggest aid to the so called middle class during the Obama years has been the recent decline in gasoline prices and this is the result of increased production primarily in Texas and North Dakota and the current administration has done nothing to help to promote this. It has happened in spite of administration policies designed to move away from fossil fuels. Now The President is claiming this as a success for his administration.

Liberal and Conservative

In order for America to grow and prosper both liberals and conservatives are needed. Conservatives see economic freedom as the foundation for other rights. Usually it is the push for these economic freedoms that raises the standard of living for everyone. Once people feel that they have a reasonable income with some degree of job security, they then feel comfortable looking at other benefits and this is where the liberals come in to the picture. It is the liberals that emphasize the importance of things like safety nets and voting rights. Once the economy is producing good jobs then people are willing to look outside of their immediate lives and want to help those in need and those who are discriminated against. When a man cannot feed his family he is not interested in gay rights. It is only when he feels economically secure that he will look around to help others. Conservatives looking at the business world must keep in mind the concept of doing good while doing well and liberals must remember where the money comes from to help others. When both groups know that the best welfare program is a good job then progress will follow.

Solar

Another solar business is in trouble. The world’s largest solar plant Ivanpah Solar Generating System cannot produce the projected amount of electricity and in spite of burning natural gas to increase its production it cannot pay back the loans it received from the government. It is now asking for an additional 500 million in grants. One of the reasons given is that there was less sun than projected. I don’t know who did the projecting but average annual sunshine for a given area is well established. After already receiving a controversial $1.6 billion construction loan from U.S. taxpayers, the wealthy investors of a California solar power plant now want a $539 million federal grant to pay off their federal loan.

Ebola terrorism

There have always been compelling reasons to secure the southern border but there is a new one on the horizon. Instead of suicide bombers sneaking across, consider people deliberately infected with the Ebola virus coming into the country and moving to the slum areas of the big cities where street people could be easily infected and they in turn could spread the disease. The homeless and the drug addicts would be easy prey for this type of terrorism. The effect of one man coming here with the disease caused enough concern but if dozens from several different cities suddenly showed up at local hospitals it could seriously upset the entire country and this is the goal of the terrorist.

Lower health care cost

When I first looked at Obamacare plans I said they would reduce the overall cost of health care by rationing care and high deductibles and I saw both of these changes as necessary. Here is an example of rationing. Hospitals were initially penalized with reduced Medicare reimbursements if they had higher rates of readmission for patients with heart disease and pneumonia. Last week, the list was expanded to include serious lung conditions and hip and knee replacements. Hospitals will seek to keep such patients in emergency rooms rather than admit them. Why? The simplest way to avoid readmission is not to admit a patient in the first place. But substituting ER services for hospital stays will only increase the chance that patients will deteriorate and return with more complication Here is an example of deductible sticker shock. When ObamaCare patients learn their deductible is so high they’re unlikely to get any reimbursement, they often wind up in places like the Denton, Texas Community Care Center. "There are quite a few, and I saw another one today, where their deductibles are so elevated that they can't afford them," said Dr. Flippo Masciarelli, chief physician at the center, which was designed to treat indigent patients. Robert Laszewski of Health Policy and Strategy Associates noted, "You're going to the doctor, you're paying (a) premium, and because of this really high deductible, you're not getting any benefits." The administration pushed insurance companies to keep premiums low, but that also created high deductibles, about $5,000 per person for the least expensive plan, as well as narrow networks of providers. But most people buy based only on premiums.

Panel on climate change

A meeting of the Intergovernmental Panel on Climate Change was held this past week and two things jumped out at me. First they said the new date for disaster is 2100 which means they will not be around if things don’t turn out as bad as they say. This is different from other predictions such as Al Gore saying the Arctic Ice Cap will have melted by 2013. The second thing is that they say we must get rid of fossil fuels but without saying what they should be replaced with and the assumption is wind and solar. Nowhere in the report do they talk about methane hydrate. Mining methane hydrate provides an almost unlimited supply of natural gas and the process stores CO2 under the ocean floor meaning no more global warming. The absence of even a discussion on this valuable fuel source indicates a close mind on the issue and causes a loss of credibility in the rest of the report.