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Secretary of the Treasury Geithner appeared before Congress this week. The advance scoop was that he would be proposing new regulations for the financial industry. What a great idea! You might have said, “It’s about time!” Otherwise, what will prevent another round of crises and meltdowns? But, our hopes were dashed. Geithner simply asked for more authority to take over and bail out an even bigger number of companies. That’s not going to put a stop to the wild speculation that is tantamount to gambling by the financial industry. In the business of fire fighting, it would be far better to prevent the fire than to fight the fire. Geithner reminds me of a fire chief who wants to buy bulldozers to clean up after the buildings have burned. Maybe Secretary Geithner has a prevention program up his sleeve. Maybe it’s too early to judge the executive branch. One can still hope for rules for higher reserve requirements, elimination of naked gambles by bankers and insurance companies, etc. On the other hand, the Congress has been around for years and years. What have they been doing? Your representatives and senators in the U.S. Congress have thousands of people working on their staffs. The Congress has no excuse whatsoever.
Click here to contact your representatives in Washington, D.C.: – Byron |
Where’s the Financial Fire Prevention?
March 29th, 2009After The Bonus Uproar, Stay Mad!
March 22nd, 2009|
This week’s hullabaloo over the AIG bonuses is an indication that the public is paying attention. However, the public may simply be going after the wrong people. In other words, chasing a red herring instead of attacking the real problem. One can only hope that the anger now turns toward the source of the real problem. The real problem people are the members of Congress. For thirty years, the Congress has gone along with the mentality of the corporate finance community. The mentality said regulations are bad. In fact, it looks as if criminal enterprise is now a part of the definition of free enterprise. Just look the other way and say, “Let the buyer beware.” AIG, and the rest of the financial industry, sold options to their customers which weren’t covered. It’s like selling insurance and hoping that claims wouldn’t come in. Why? Because AIG and the rest didn’t have the money to pay off. And Congress looked the other way. Albert Einstein told us, “Intellectuals solve problems; geniuses prevent them.” The good news is that Congress doesn’t have to be a genius, nor even very smart, to put back all the financial rules of the New Deal. Most of the legislation was written 75 years ago. The “financial crisis” started last year. Have you seen one effort by Congress to put the honest controls back in the system? Have you heard of one piece of legislation? It seems like we’ve seen lots Here’s what one wise man observed as the problem with Congress. Mark Twain boasted,
Click here to contact your representatives in Washington, D.C.: – Byron |
A Samurai Congress
March 17th, 2009|
Did you hear what Senator Charles Grassley said He may have meant that literally or just figuratively. But, Senator Grassley is on to something. That might apply to the Congress, which brought us all the deregulation. Ultimately, the House and the Senate brought about the meltdown of the financial system. It was done by undoing the old regulations and choosing not to control new practices. Warren Buffett said that the new highly complex financial instruments are time bombs and “financial weapons of mass destruction” that could harm not only their buyers and sellers, but the whole economic system. And he is certainly right. The ultimate price of a trillion dollars (and still counting) is being paid by each and every American. Look first in the mirror, Sen. Grassley. Then, address your fellow politicians in the Senate and the House. Here’s the message that’s appropriate:
Click here to contact your representatives in Washington, D.C.: – Byron |
Job Picture: Worse Than They Say
March 6th, 2009|
Today the Labor Department released the results of its survey of the employment situation in the United States. The “official” unemployment rate (their words) is now 8.1%. If you earned $10 last month, you’re counted as employed. Their “official” rate is the rate you see reported in the newspapers and on TV. In one sense, it’s the rosy statistic that has been used for decades. However, if you wanted to get a better feel for the true misery rate of America, you’d have to look at the underemployed as well as the folks who said they just didn’t bother to look for work anymore. The reference link below will show you better measures. The official rate, that 8.1% number, is called U-3. Take a look at a second statistic called U-6. That measure of misery says the unemployment rate is 14.8%. That measure is also worthy of mention in the media. It tells us that one person in seven can’t find a full-time job. For years, my rule of thumb is to double the official rate of employment to get a sense of how many people are doing poorly in the U.S. To get the exact number for U-6, you’ll invariably have to visit the website of the Dept. of Labor. They don’t even have a name for it except “U-6.” Let’s just call it the “Comprehensive Misemployment Rate.” Just remember the next time you hear the “official” rate that it is just not the whole miserable story.
Here’s yet a third way to see what the average working person is up against. The U.S. has an increasing population. In 8 years the population went from about 281 Million to 306 Million. So just to stay even in jobs for Americans, new jobs have to be created at the same rate. In the last 8 years, Americans have been falling behind. Here’s the slow decline for working men and women:
When was the last time you heard that phrase “full employment?” It’s a by-gone concept. In the 1970’s, the Congress defined “Full Employment” to be reached when the “official” unemployment rate is “only” 4%. That definition puts a seal of approval on a lot of misery for Americans. Remember, when you have 4% “official” unemployment, the “Comprehensive Misemployment Rate” U-6 is around 8%. Let’s have a wild and crazy dream. Let’s shoot for a full employment rate of about 105%. That would be a good indicator that jobs are going begging due to a booming economy in America.
Click here to contact your representatives in Washington, D.C.: – Byron
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Fix Our Broken Medical System!
February 28th, 2009|
Doctors, nurses, and hospitals are killing people. It’s not intentional murder. But, dead is dead when you’re the victim of their medical “mistakes.” This goes on year after year. How many? The Institute of Medicine estimates that the number of dead people is as many as 98,000. This is just from “mistakes.” If you killed someone due to a driving “mistake,” you’d expect to do jail time. Is this level of misfeasance something new? Something just learned? No, this awful rate of death has been known even before the Institute of Medicine published its famous report in 1999. Did you ever hear of state or federal commission being established to investigate why so many Americans are being killed? Maybe this death rate is related to the quality of medicine in the U.S. Try this one. In 2000, the World Health Organization found the United States ranked 37th in the world in its health care, just ahead of Cuba and Slovenia. In 2006, the U.S. was spending 16% of the nation’s Gross Domestic Product on healthcare. That’s more than any other country spends. That’s like spending $50,000 for a car and driving home a beater. And the costs have been continuing to rise . . . big-time. How did our can-do country get itself into such a dead-end trap? Finally, those awful numbers about the cost of health care don’t even include the Americans who do NOT get health care. The accepted statistic is that 27,000 Americans have to die each year because they do not have health insurance. And, they just can’t afford basic care from their own financial resources. End of story. What more would you need to know to get “mad as hell?” The Congress could face the problems and create the solutions. In health care, any state legislature has the authority to face the problems and create the solutions. But, they seem to always find an excuse to look the other way. You can let them know your position. The financing scheme for universal healthcare is almost another topic. But, if that is of interest, here’s one way to do it:Universal Health Insurance.
Click here to contact your representatives in Washington, D.C.: – Byron
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The Bailout Congress
January 12th, 2009|
In November, Bill Maher had a great line regarding the “financial fiasco”:
“New Rule: Hank Paulson must drop the $700 billion in bailout money from a plane and let everyone scramble for it on the ground. Sure, it’ll be chaos, but at least this way we have a chance of getting our money back.”
Yes, it’s a funny line. But, the satire does not need to stop with the
Try this one. Since the 1970’s, every candidate for president, for the
One part of the program was to establish some standard for gas mileage for a car manufacturer to meet. It was a standard for their “fleet” so the And, then the Congress outdid themselves using the tax code. They gave an incentive for businesses and self-employed people to purchase gas-guzzlers. Thus, folks could take a 100% deduction of the costs immediately. For example, anyone purchasing a $75,000 SUV wrote off $75,000. In the highest tax bracket, that meant the federal government gave the owner $25,000 plus. And, the government borrowed the money from China to fund the giveaway for Americans to buy more gas-guzzlers. Next, how about that foreign oil? Well, the Congress approves of going to war in Iraq to protect the foreign oil supply. World’s only superpower, you know. So, the federal government borrows more money from China to pay for that war. (Are we seeing a pattern here?) And, guess what? The price of gas soared above $4 per gallon. Now few people want to buy such vehicles. Thus, the auto companies are losing money because they staked their success on gas-guzzling big-ticket vehicles. So what happens now? Well, the Congress says it has to bail out the auto companies. And, of course, to do that they have to borrow more money from China. Maybe Bill Maher is actually on to something. Maybe throwing money from airplanes, or maybe from skyscrapers, should be discussed in Congress. All things considered, it might have cost America less. In 1928, on his radio program, Will Rogers observed: “No nation in the history of the world was ever sitting so pretty. If we want anything, all we have to do is go and buy it on credit. So that leaves us without any economic problems whatever, except some day to have to pay for them,” he told America. “But we are certainly not thinking about that this early.” One year later, the stock market crashed big-time. Oh, yes, it rose to new records before finally settling to a new low in 1932. Stocks had lost 90% of their value.
Click here to contact your representatives in Washington, D.C.: – Byron
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Fix America First!
January 9th, 2009|
There are about 600,000 bridges in the United States. The most recent
There are over 4 millon miles of highways in the U.S. Note that the
Let’s skip all of the mind-numbing statistics. The above two paragraphs
In a letter to Speaker Pelosi, the American Society of Civil Engineers How much planning does it take to start re-surfacing? It’s “shovel-ready” today! Once started, why stop? In the Sun Belt, the work can continue year-round. Tougher projects like bridges are also ready to go, but just need funding. Meantime, the new engineering projects can be put to blueprints. And, the full program will be a dynamic growth engine for at least 5 years.
A 50% increase in the per gallon user fees would put us on the road to
This “infrastructure” program fits nicely into the “fiscal stimulus” being Fixing America first is a great way to go.
Click here to contact your representatives in Washington, D.C.: – Byron
Testimony of The American Society of Civil Engineers
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Job Creation Magic
December 24th, 2008
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The government class doesn’t grasp the reality of the typical, middle-class American. President-Elect Barack Obama states that his goal is to create 2.5 million jobs. With 10 million men and women in the official unemployment line, and millions more underemployed, a couple of million new jobs doesn’t cut it. If this is the serious economic crisis that the government class, the economists, and commentators accept almost unanimously, why should one adopt a goal that at best leaves us in a crisis? So let’s shoot for getting 10 million American men and women back to work. Here’s how.
First, the federal government has an obligation to remove the illegal immigrants from this country. There are at least 10 to 12 million illegals here. Let’s take a guess that at least 5 million have jobs that could ICE (Immigration and Customs Enforcement) removed a record 349,000 illegal immigrants in 2008, a 21 percent increase over last year and a 77 percent jump since 2005 according to the San Jose Mercury News. That is an improvement. It sounds good. However, the influx of illegals is about 1,000 per day. So ICE is barely keeping even. There still remain over 10 million aliens who are subject to deportation.
Second, if you add in the LEGAL immigrants, there are over 38 million foreign-born people in the U.S. today. The rate of influx has been, and remains, a shock to the American system. There is an alphabet soup of Third, how many jobs have been directly and legally outsourced to foreign countries? Think of the call centers in India as just one example. One commentator put it this way, “If the data can travel down the internet, the job can be done just about anywhere in the world.” These are not manufacturing jobs. The global companies simply want to make an extra buck. All these jobs can be returned to the United States of America. The jobs belong to American men and women who deserve them. Fourth, the U.S. has an enormous foreign trade deficit. It alone could bankrupt this country. The response of the Congress is simply to ignore the problem. To stop the hemorrhaging, the U.S. should and can take action. Let’s start with a 10% tariff on all imported goods and services and raise it until the U.S. at least has an even balance of trade. I can hear your objection that the the U.S. must respect the World Trade Organization rules which prohibit that. That’s not true. The WTO treaty says that no country should single out particular industries. As long as the tariff is applied to everything, each country is entitled to apply import taxes. Until Americans take this most basic step, we’ll continue to become weaker and weaker. Let’s call it a serious matter of national security.
Living in the U.S., do you ever feel that you’re in an asylum that’s being run by the inmates? Remember the oft-quoted definition of insanity?
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Madoff Madness
December 19th, 2008
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What hasn’t been said about the Madoff firm running a $50 Billion Ponzi
First, any investment company of any size must have an outside auditor. The entire “system” failed time and again at every step. For the securities industry, the policing of Madoff is rather like the handling of Hurricane Katrina. Just picture President Bush (or Clinton) saying to the head of the SEC, “Brownie, you’re doing a hell of a job!” That sarcasm and contempt can be directed to all levels, as “Congress people, you do a great job for people like Bernard Madoff!” At the ground level of the system, there is the run-of-the mill policing of a company that should catch shenanigans. That is done by an outside independent and competent accounting firm. They match a random sample of accounts and transactions. They “follow the money.” But, the firm auditing the Madoff firm could not have missed every irregular exception all the time, could they? Wouldn’t you think something would have shown up by the time the first billion went unaccounted for? Well, the audit function failed. (This is not rocket science, is it?) The auditing firm may simply be neither independent nor competent. One reasonable solution would be to require by law that a new audit firm be selected every year or two. And, why not have the SEC give Madoff a choice of 3 randomly selected audit firms?
At the next level, the SEC and NASD are also police. The job can be as
This is definitely not rocket science. Has anyone else come up with this as a solution? If you’ve seen it, please take a moment to post it as a |