.
I saw a bumper sticker on a recent trip -- "End this war."
As always, I instinctively sought a definition and tested the sentiment at its extremes. What is a war? Here is one definition: "the waging of armed conflict against an enemy."
Who wants to continue the war? Who wants to end it immediately?
I am mystified as to exactly who wants to start or continue a war. Sometimes politicians use wars as ways to divert attention from other issues (remember the Monica missles?).
I can think of a lot of people who want to end the Iraqi occupation. It started as a war against Saddam Hussein and Al Qaeda in Iraq which he harbored. That war was successful and ended with a correctly deserved "Mission Accomplished."
What followed was a long, difficult nation-building period in Iraq. Is that what the person who put the 'End This War" bumper sticker on her (yes, it was a 'her') car meant?
How did she want to end this period of nation-building? Just close up shop and walk away?
There are a whole lot of people who want to end the war, the occupation, and the nation-building on honorable terms. I do not think the "End This War" bumper sticker crowd has honor in mind at all. I think they will do anything their political party asks of them to harass President Bush. And the shame of it - those "End This War" types are hardly patriots.
Tuesday, December 30, 2008
Friday, December 19, 2008
Is U.S. Democracy or Plutocracy?
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Among others Gerald Celente argues that the United States is a plutocracy not a democracy.
If we posit that a plutocracy means that wealth influences government, there may be a point here.
Consider the $1 trillion dollar candidate elected this past November. Consider the billions spent by businesses and foreign governments to influence legislation both in Washington DC and fifty state capitals.
And don't forget to consider that the votes of citizens are influenced in large part by the perceived amount of "government money" which will be spent on their personal behalf.
The real problem it seems to me is that plutocracy has a natural path of decline ... to a kleptocracy, or 'government by thieves.'
When will we citizens take back control of our own government?
Among others Gerald Celente argues that the United States is a plutocracy not a democracy.
If we posit that a plutocracy means that wealth influences government, there may be a point here.
Consider the $1 trillion dollar candidate elected this past November. Consider the billions spent by businesses and foreign governments to influence legislation both in Washington DC and fifty state capitals.
And don't forget to consider that the votes of citizens are influenced in large part by the perceived amount of "government money" which will be spent on their personal behalf.
The real problem it seems to me is that plutocracy has a natural path of decline ... to a kleptocracy, or 'government by thieves.'
When will we citizens take back control of our own government?
Monday, December 15, 2008
United States Stock Market
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I'm not an economist.
I do know how to use least squares to find a best fit curve.
Curious, I found a set of data showing the annual Dow Jones Industrial average values since 1928 and tried to find a best fit curve. Nothing really looked reasonable when the range was the entire time period, but I noticed what appeared to be a "sea change" around 1980.
To make a long story short, to my mind the best fit was to use a different growth factor starting in 1980. The curve below shows an annual 2.2% gain from 1928 through 1979, followed by a 10% annual increase starting in 1980. Take a quick look. The last plot shows the curve as it should be as of 12/1/2009 and the DJIA as of 12/15/2008. It looks like a simple 85% gain over the next year will bring us back to the curve!
What happened in 1980? Well, I simply don't know. I did find that was the year that Congress prevented banks from leaving the regulatory authority of the Federal Reserve, permitting the FED to have total control over monetary policy. I have no idea if that is a root cause or not.
I am sure of a couple of things. The 10% increase has resulted in a curve steepness too impossible to maintain, and to revert back to the mean of the curve would mean an impossibly huge market increase in 2009.
What has our government done to cause our economy to work itself into this mess?
I'm not an economist.
I do know how to use least squares to find a best fit curve.
Curious, I found a set of data showing the annual Dow Jones Industrial average values since 1928 and tried to find a best fit curve. Nothing really looked reasonable when the range was the entire time period, but I noticed what appeared to be a "sea change" around 1980.
To make a long story short, to my mind the best fit was to use a different growth factor starting in 1980. The curve below shows an annual 2.2% gain from 1928 through 1979, followed by a 10% annual increase starting in 1980. Take a quick look. The last plot shows the curve as it should be as of 12/1/2009 and the DJIA as of 12/15/2008. It looks like a simple 85% gain over the next year will bring us back to the curve!
What happened in 1980? Well, I simply don't know. I did find that was the year that Congress prevented banks from leaving the regulatory authority of the Federal Reserve, permitting the FED to have total control over monetary policy. I have no idea if that is a root cause or not.
I am sure of a couple of things. The 10% increase has resulted in a curve steepness too impossible to maintain, and to revert back to the mean of the curve would mean an impossibly huge market increase in 2009.
What has our government done to cause our economy to work itself into this mess?
Wednesday, December 10, 2008
The Chinese model of capitalism
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As readers undoubtedly know, Bank of America proposed a loan extension to Republic Window and Door employees, in part no doubt to avoid undue criticism over the Holiday season, but there may be a more fundamental cause. I found this quote from a longer article concerning Newt Gingrich's observations.
Last night the Asian market reporter on Bloomberg noted that the US has abandoned pure capitalism for the Chinese model in which the government is the largest shareholder in what are otherwise capitalistic enterprises. The US government is part owner of the banks, and will soon be part owner of the US auto companies.
We have just seen in the Republic Window - Bank of America situation what happens when the government has part ownership. They are an owner with massive influence both real and in terms of access to the press. Thus sound business decisions take second place to politically motivated choices.
Assuming these ventures, and I am sure others in our immediate future, begin to turn a profit for the government how -- given their avariciousness for money in the form of taxes -- will the government willingly redeem their ownership?
It may be that pure capitalism is long gone in the United states. When we look for the administration which started this ball rolling, it is surprising that it was that of George W. Bush.
As readers undoubtedly know, Bank of America proposed a loan extension to Republic Window and Door employees, in part no doubt to avoid undue criticism over the Holiday season, but there may be a more fundamental cause. I found this quote from a longer article concerning Newt Gingrich's observations.
On Election Day, voters did not reject conservatism. On the contrary, they rejected the Bush administration for expanding executive power, increasing deficit spending, conducting a far less than prudent foreign policy, and displaying a general lack of competence. Of the financial bailout package, Nobel Prize-winning economist Joseph Stiglitz said: "If this isn't socialism, then I don't know what is." Conservatism, indeed, was not tried and found wanting — it was not tried.
Last night the Asian market reporter on Bloomberg noted that the US has abandoned pure capitalism for the Chinese model in which the government is the largest shareholder in what are otherwise capitalistic enterprises. The US government is part owner of the banks, and will soon be part owner of the US auto companies.
We have just seen in the Republic Window - Bank of America situation what happens when the government has part ownership. They are an owner with massive influence both real and in terms of access to the press. Thus sound business decisions take second place to politically motivated choices.
Assuming these ventures, and I am sure others in our immediate future, begin to turn a profit for the government how -- given their avariciousness for money in the form of taxes -- will the government willingly redeem their ownership?
It may be that pure capitalism is long gone in the United states. When we look for the administration which started this ball rolling, it is surprising that it was that of George W. Bush.
Tuesday, December 9, 2008
What is a lender's responsibility?
.
Lets see, the analogy would go something like this:
1. I own two homes, one in Chicago and one in Iowa.
2. I take out a Home Equity Line of Credit (HELOC) on the Chicago property.
3. I hire a gardener for the Chicago property.
4. My income is reduced so the bank closes my HELOC in Chicago.
5. As a result I lay off the gardener and prepare to sell out the Chicago house.
6. The gardener occupies that house in Chicago saying I owed him a sixty day notice plus back vacation pay. Further, the gardener says that this is all the fault of the lender of the HELOC.
7. The president elect says the gardener is right. Jesse Jackson, seeing a case of community activism, visits the gardener and gathers some public relations points. The governor of Illinois suspends all state business not with me but with the bank involved.
8. Meanwhile, I take out a HELOC on my Iowa property and hire a gardener there.
9. The bank says the real problem is that I had reduced income in Illinois and became a bad risk for them. They imply its my responsibility to pay the gardener.
Folks, from what I understand, this is pretty much an analogy for the Republic Window and Door situation. One of the things that got us in the current economic mess was political interference in the process of making loans, requiring home loans be made to those who otherwise would be poor risks. Now, our soon to be government, is insisting that the lender, in this case Bank of America, take another risky move and lend more money to Republic in order to pay its employees.
If we are going to cure our economic ills, we must insist that our banks go back to firm risk assessment. The "solution" desired by the Democrats is a very, very bad one -- its a reason that politicians should not be involved in lending. But their solution is "populist induced economics" - and it shows us what "sharing the wealth" really means.
.
Lets see, the analogy would go something like this:
1. I own two homes, one in Chicago and one in Iowa.
2. I take out a Home Equity Line of Credit (HELOC) on the Chicago property.
3. I hire a gardener for the Chicago property.
4. My income is reduced so the bank closes my HELOC in Chicago.
5. As a result I lay off the gardener and prepare to sell out the Chicago house.
6. The gardener occupies that house in Chicago saying I owed him a sixty day notice plus back vacation pay. Further, the gardener says that this is all the fault of the lender of the HELOC.
7. The president elect says the gardener is right. Jesse Jackson, seeing a case of community activism, visits the gardener and gathers some public relations points. The governor of Illinois suspends all state business not with me but with the bank involved.
8. Meanwhile, I take out a HELOC on my Iowa property and hire a gardener there.
9. The bank says the real problem is that I had reduced income in Illinois and became a bad risk for them. They imply its my responsibility to pay the gardener.
Folks, from what I understand, this is pretty much an analogy for the Republic Window and Door situation. One of the things that got us in the current economic mess was political interference in the process of making loans, requiring home loans be made to those who otherwise would be poor risks. Now, our soon to be government, is insisting that the lender, in this case Bank of America, take another risky move and lend more money to Republic in order to pay its employees.
If we are going to cure our economic ills, we must insist that our banks go back to firm risk assessment. The "solution" desired by the Democrats is a very, very bad one -- its a reason that politicians should not be involved in lending. But their solution is "populist induced economics" - and it shows us what "sharing the wealth" really means.
.
Sunday, December 7, 2008
Staggering Numbers
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The current administration has "created" $700 billion dollars to rescue the banking, insurance, and probably automotive industries. The new administration is proposing to "create" another $700 billion dollars in public works projects. The total debt "created" in the last few months will be $1.4 TRILLION dollars. So what?
Well, according to the Tax Foundation, there are just over 135 million Federal tax filers with a positive adjusted gross income (AGI) - those who will actually pay taxes to the Federal government. Their average AGI is a bit over $59,000 and average tax payment is $7,543. That means that on average the Federal tax rate is 12.6%. Yes we have a progressive tax, so those who earn more pay a higher percentage of AGI, but for our purposes in this post lets just discuss the average taxpayer.
This theoretically average taxpayer "owes" an additional $10,315 in taxes to pay off the total current bailout packages. In order to pay that off in one year, that taxpayer's average tax rate would have to increase by 137% or more than double. If we were to amortize the payback over ten years, the average tax rate would have to increase by about 14%.
Since those are averages, I think we can ignore the popular political rhetoric of just charging high income earners more, since the increase would be across the board. So an average earner would see his/her real rate go up about 1.8%, while a top bracket taxpayer would see a rate increase of over 4%. I know, its confusing: we are discussing a rate times a rate there. But the basic idea is that we can use averages here to understand the magnitude of the problem.
We are told that our total debt is now nearly $7 TRILLION, or $51,577 per average taxpayer with a positive AGI. We would have to pay over 98% of our income (average taxpayer) in one year to pay this off. If amortized over ten years, we would see an average tax increase of SIXTY EIGHT PERCENT.
This whole situation seems rather unmanageable to me. We need to reduce, not increase, government spending but neither the Republicans nor Democrats seem willing to do so. We cannot raise taxes enough to pay this debt and still keep a reasonably thriving country under our feet. No-one will risk popular unrest over super high tax increases which will affect all of us - not just some mythical group called "the wealthy."
How do we pay this debt? The value of our currency will decrease, which means we will see inflation perhaps on a scale we have never seen before. I hope each of you is prepared for that.
The current administration has "created" $700 billion dollars to rescue the banking, insurance, and probably automotive industries. The new administration is proposing to "create" another $700 billion dollars in public works projects. The total debt "created" in the last few months will be $1.4 TRILLION dollars. So what?
Well, according to the Tax Foundation, there are just over 135 million Federal tax filers with a positive adjusted gross income (AGI) - those who will actually pay taxes to the Federal government. Their average AGI is a bit over $59,000 and average tax payment is $7,543. That means that on average the Federal tax rate is 12.6%. Yes we have a progressive tax, so those who earn more pay a higher percentage of AGI, but for our purposes in this post lets just discuss the average taxpayer.
This theoretically average taxpayer "owes" an additional $10,315 in taxes to pay off the total current bailout packages. In order to pay that off in one year, that taxpayer's average tax rate would have to increase by 137% or more than double. If we were to amortize the payback over ten years, the average tax rate would have to increase by about 14%.
Since those are averages, I think we can ignore the popular political rhetoric of just charging high income earners more, since the increase would be across the board. So an average earner would see his/her real rate go up about 1.8%, while a top bracket taxpayer would see a rate increase of over 4%. I know, its confusing: we are discussing a rate times a rate there. But the basic idea is that we can use averages here to understand the magnitude of the problem.
We are told that our total debt is now nearly $7 TRILLION, or $51,577 per average taxpayer with a positive AGI. We would have to pay over 98% of our income (average taxpayer) in one year to pay this off. If amortized over ten years, we would see an average tax increase of SIXTY EIGHT PERCENT.
This whole situation seems rather unmanageable to me. We need to reduce, not increase, government spending but neither the Republicans nor Democrats seem willing to do so. We cannot raise taxes enough to pay this debt and still keep a reasonably thriving country under our feet. No-one will risk popular unrest over super high tax increases which will affect all of us - not just some mythical group called "the wealthy."
How do we pay this debt? The value of our currency will decrease, which means we will see inflation perhaps on a scale we have never seen before. I hope each of you is prepared for that.
Friday, December 5, 2008
Atheists in the state of Washington
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The story from Olympia Washington is that an atheist group won the right to place a placard next to a traditional Christmas creche.
The placard reads:
Lets look at this statement by statement:
1. "At this season of the winter solstice may reason prevail." -- OK, that's fine. If there is a group who wants to celebrate the winter solstice so be it.
2. "There are no gods, no devils, no angels, no heaven or hell." -- Well now, I think there were gods of a sort honored during the winter solstice celebrations. Even Wiccan celebrates the holiday as the rebirth of the Great God, who is viewed as the newborn solstice sun. So the atheists are quite wrong on this statement in its connection to their first point.
3. "There is only our natural world." -- and cannot a sense of the Creator, as defined and understood by the individual, be part of the "natural world"?
4. "Religion is but a myth and superstition that hardens hearts and enslaves minds" -- Not much evidence here to show how minds are hardened and enslaved, or if they are always made so, or just sometimes. In short nothing much more than a direct attack on Islam, Judaism, Christianity, Shinto, etc. etc. Why would a government in the state of Washington permit this last point at all?
Oh yeah - its next to a creche -- the government must have wanted to permit a direct attack on Christianity.
The story from Olympia Washington is that an atheist group won the right to place a placard next to a traditional Christmas creche.
The placard reads:
At this season of the winter solstice may reason prevail. There are no gods, no devils, no angels, no heaven or hell. There is only our natural world. Religion is but myth and superstition that hardens hearts and enslaves minds.
Lets look at this statement by statement:
1. "At this season of the winter solstice may reason prevail." -- OK, that's fine. If there is a group who wants to celebrate the winter solstice so be it.
2. "There are no gods, no devils, no angels, no heaven or hell." -- Well now, I think there were gods of a sort honored during the winter solstice celebrations. Even Wiccan celebrates the holiday as the rebirth of the Great God, who is viewed as the newborn solstice sun. So the atheists are quite wrong on this statement in its connection to their first point.
3. "There is only our natural world." -- and cannot a sense of the Creator, as defined and understood by the individual, be part of the "natural world"?
4. "Religion is but a myth and superstition that hardens hearts and enslaves minds" -- Not much evidence here to show how minds are hardened and enslaved, or if they are always made so, or just sometimes. In short nothing much more than a direct attack on Islam, Judaism, Christianity, Shinto, etc. etc. Why would a government in the state of Washington permit this last point at all?
Oh yeah - its next to a creche -- the government must have wanted to permit a direct attack on Christianity.
Vague terms cost taxpayers
.
On a TV business news report this morning I heard an Obama staff person speak concerning how Obama is focused on the middle class. This was a non-answer in response to a specific question about whether or not the president-elect should publicly involve himself in the Detroit automotive industry quagmire.
It make me think: we have no real means of determining who or what is the "middle class." Do a definition look-up yourself then try to tell me how anyone would be able to look at an individual, their finances, or maybe their lifestyle and say 'Yes, there is a middle-class person."
We delude ourselves when we vote for politicians who will in some way or another provide tax cuts to the middle-class because, at best, we have no idea what group that politician is referring to. Are we in that class? Who knows.
The best I could find was that "working class" meant those who were either manual laborers, or who worked for wages (the last definition surely includes a whole lot of us). "Middle class" referred to skilled labor and professionals (OK teachers, do you work for wages, or are you professionals), but who lack political power, which certainly excludes the unionized educators in America. The "upper class" appears to be the monied elite who use their wealth to influence public policy.
There is not one of those definitions though which I would feel comfortable using to sort out the group of people I might meet in a day.
If we are going to use those terms, we need a more specific definition.
On a TV business news report this morning I heard an Obama staff person speak concerning how Obama is focused on the middle class. This was a non-answer in response to a specific question about whether or not the president-elect should publicly involve himself in the Detroit automotive industry quagmire.
It make me think: we have no real means of determining who or what is the "middle class." Do a definition look-up yourself then try to tell me how anyone would be able to look at an individual, their finances, or maybe their lifestyle and say 'Yes, there is a middle-class person."
We delude ourselves when we vote for politicians who will in some way or another provide tax cuts to the middle-class because, at best, we have no idea what group that politician is referring to. Are we in that class? Who knows.
The best I could find was that "working class" meant those who were either manual laborers, or who worked for wages (the last definition surely includes a whole lot of us). "Middle class" referred to skilled labor and professionals (OK teachers, do you work for wages, or are you professionals), but who lack political power, which certainly excludes the unionized educators in America. The "upper class" appears to be the monied elite who use their wealth to influence public policy.
There is not one of those definitions though which I would feel comfortable using to sort out the group of people I might meet in a day.
If we are going to use those terms, we need a more specific definition.
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