CapitalistMarks

Obama is wearing out his mojo. Time to stop entertaining and start working, dude!

Posted on 15. Jun, 2009 by scott.

Hey, I’ve been as interested and enthusiastic as anyone in President Obama.? Really.? But what gives?

He’s been out traveling the world and apologizing for everything Bush ever did (can’t really blame him for that can we?).? But, dudes, it wasn’t America that went haywire, it was the last administration.? His rhetoric is making us all look guilty.? That can’t be good.? And we have real problems at home.

Frankly it seems he and his handlers are so intent on his celebrity that he is losing his mojo.? BHO please stop traveling and start going to work.? The lustre of your first 100 days in office is starting to tarnish and the? rust is spreading fast.

You got a Vice-President who doesn’t know the difference between personal opinion and policy.? You got a Treasury Secretary who is beginning to act like a secretary and not an executive (make the news Mr. Giethner and stop simply reporting it!).

The problem is that BHO has became so popular so fast that he thought he was made of Teflon.? He believed he could do anything and everything and as a consequence he hasn’t taken the time to sit down with his cabinet and set priorities.

Didn’t he promise us when he was pushing his stimulus package (almost $800 billion worth) that this stimulus would keep unemployment below 8%.? What happened Prez? You dropped the ball.

The problem has always been unemployment, unemployment and unemployment.? But you have been off collecting souvenirs from around the world when you should have been sheparding in a ton of new jobs.? Too late now.? We are going to see unemployment of 11% soon, and maybe even 12%.

It could have been different if BHO had just focused, but he took his eyes off the ball and went ‘celebrityating’ far too soon.

Now he is pushing a health care plan and no one (I mean NO ONE) has any idea how to pay for it.? Why not wait until you have the economy and unemployment under control before embarking on another trillion $$ spending spree.? And don’t forget the nightmare of Social Security and Medicare/Medicaid.

Gosh I had high hopes for BHO.? But I am really disappointed and getting downright discouraged.? He isn’t making the same mistakes as Bush but he is making a whole bunch of new ones that are going to turn his popularity #’s into the same range as the those of the recent hockey playoffs.

Dangit!!? Stay home and work Mr. President there is a lot you aren’t doing yet!

Hope you are reading BHO . . . time to get? down to the real work.? Maybe even skip a date night with Michelle and pull an all-nighter!

“Save the cheerleader cheerleading” for the next term.? You got a whole ton of stuff that needs doing before you get your face carved into the blackhills, brother!!

Thanks to flickr’s james & vilija for the photo

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Economic forest. Where to start?

Posted on 02. Jun, 2009 by scott.

Obama is plugging along, well into his 2nd hundred days in office.? How’s he doing?? Generally pretty good, in my opinion.? A hurricane of fresh air compared to the last 8 years.

But . . .

He is showing signs of missing the boat in the economic and social part of his growingly complicated and wishful agenda.

Two things worry my right now.? The first is his lack of attention to the single biggest economic and social issue of our era . . . Social Security/Medicare.? The second is his continuing lack of concern about unemployment.

Some words of wisdom on both.

I believe that BHO has it right when he points at NOW as the time to implement universal health care.? How can we even consider ourselves a great nation, let alone the greatest, if we fail to provide basic health care for every single one of our citizens?? We can’t.? So that is high on his agenda.? However, he is completely neglecting the pending failure of Social Security and Medicare and they are inextricably related.? Everyone in this country who is not in the highest tax brackets has a varying degree of reliance on these social programs.? Yet, we know they will fail.? Sooner rather than later in the case of Medicare (2017 or earlier).? Our governments unfunded liabilities in these two programs make the current bailout and stimulus package pale in comparison (in the tens of trillions of $$).

The problem here is that even the government has recognized this for a least a generation.? No one wants to do anything about it.? How is BHO going to implement a ’self-funding’ universal health care system if all retirees are bankrupt and living under the nearest freeway overpass? Frankly, I’m already staking out my spot.

This problem has to move to the forefront now.? We have to stop delaying the debate and move on it before it is a bigger crisis than energy independence.

Unemployment.? Jeez Louise, haven’t I said enough about this already?? China has the bulk of their stimulus package tied up in infrastructure projects that are creating meaningful jobs.? There economy is growing still.

And, remember there is a multiplier effect with any new jobs (as in every new job created by the government’s stimulus creates another? half a job or so in the service/retail sectors — the people with new jobs are going to eat and spend somewhere!).? What has BHO done.? Any infrastructure money is limited and mostly out at least 12-18 months.? He’s more worried about the money flow than who it needs to flow to!

Unemployment is 8.9% today (later this week I believe we will see it at 9.3% or even higher).? We have to do something.?

Bail out the banks? Done.? Bail out GM and Chrysler?? Done.? Bail out other financial firms that have close ties to Washington through their lobbyists (AIG, GE, airlines etc.)?? Done.?

Create jobs for the average Joe.? Haven’t even started.?

We are still sliding down that slippery slope with increasing speed.? At the bottom is one heck of a concrete wall and we are heading right for it.

Create jobs Mr. President.? Save our retirement? funds and medicare.? Help out the average American, not those knuckleheads who pay the most taxes but don’t shop at Walmart and the Dollar Store witht he majority of us.

There is an economic forest out there.? Real thick admittedly.? But look for the biggest and weakest trees in the economic and social food chain.? Social Security.? Medicare.? Unemployment.

Please Mr. President.? Please, Michelle.

Don’t care if the markets are taking off.? Don’t care if the future looks bright to Timothy Giethner or Larry Summers or the CEO’s of our corrupt banks.?

Do care if we won’t have anything waiting for us at the end of the 66 year rainbow.

Start with the issues just discussed.?

Then, in 4 or 8 years your legacy will be genuinely positive.? Give us all a future.

Thanks for listening folks, and keep those $$ pouring into the social tax buckets, I’m going to need them sooner than later.

And, you will too someday!

?

Thanks to flickr’s mgspiller for the foto

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GM, the Macro impact of Micro failure!

Posted on 29. May, 2009 by scott.

This is a brief lesson in macro & micro economics.? It is a friday evening musing about the failures of America’s once giant automakers and the impact these failures will have on the future.? Read this before next monday so you can watch the reality of greed versus need.

Then let me know if you think what you will learn from this is important, correct or even interesting.

En garde!

Many months ago I told a macro economic class I was teaching that GM was going to file bankruptcy (last September to be exact).? Now about $40 billion of taxpayer money later, the government and the company have come to the same conclusion.? How sad that it took this long.? I wish we had let this process go on during the trauma of late ‘08 and early ‘09 so it would be over by now.? But then our government knows best (uhhuh, like Madoff knew best).

Here is the quick catch up lesson.

Macro economics is the economics of a nation (geo macro in the case of multiple nations).? The stuff you have to understand here is GDP, interest rates, monetary policy (how the fed determines interest rates), fiscal policy (how the congress taxes us and spends our money), unemployment rates and such.

Micro economics is the economics of consumers (ultimately).? It is all about how companies manufacture, finance and market products or services and how consumers interact with those decisions.? The stuff you have to understand here is supply and demand, elasticity of demand, prices, labor costs, profits and such.

It doesn’t take a genius to figure out that the two are closely related.? Government policy helps determine whether business can afford to grow (or not).? Corporate decisions help determine whether consumers can afford (or want)? a product or service (or not).? The relationships go far beyond these obvious ones, but I am sure you get the idea.

Now, something on GM.? In an act of full disclosure I will tell you that I have not spent any money on a GM product since I bought a (very) used Pontiac Chieftain as my first car (for $200 by the way).? A second disclosure.? I have spent money on American made cars (three Jeeps) in the last 20 years but I haven’t been happy with any of them.? They break down, cost a fortune to fix, have horrible warranties that require a law degree and the patience of Job to deal with and are generally unreliable.? On the other hand the Hondas and Toyotas I have bought (about 5 so far) have been reliable though expensive to fix (even more than my Jeeps to be honest — but they last at least three times as long — one of them has over 200,000 miles on it and keeps on going!).

Next lesson.? Why the micro economic failure of GM (and Chrysler)?? These are also obvious.? Things like making the unreliable cars they believed people wanted, making cars getting less than half the average mileage efficiency of foreign competitors, making cars so big you can’t park them in a mall (in Europe I saw THREE of their cars parked in a single space next to a honkin’ big old Hummer that took two!) and so on.

Hey, Ossama Bin-Laden captured a Hummer and we’d capture him easily if we just waited for him to ‘park’ the sucker by his caveor try to fill it up at the local terrorist gas depot!

Who is to blame for the GM failure?

Management, yes.? Government, yes.? Consumers, yes.

In a world where we are using exhaustible resources (gasoline) like they were unlimited, where we import so much oil that our national defense is at risk, where middle-class consumers are continually falling down the economic ladder, where consumers allow the greed/pride pressure of ‘advertising’ influence decisions . . . we all have failed.

GM should have known better, Bush-Clinton-Bush should have increased mileage standards long ago (as promised but NEVER with follow-on), Joe Plumber should have been satisfied with a trailer for use as needed rather than a truck capable of hauling an M-1 Abrams tank!!

It is too late to pass the blame around and accomplish anything, but, it is NOT too late to learn from this lesson and make changes going forward.

GM today is a lost cause.? The market cap of the whole freaking company is less than the cost to build a good bridge.? Nobody in their right mind wants a Hummer (excepting the afore mentioned Bin-Laden).? And yet, when they declare bankruptcy next week the macro impact is going to be humm(er)dinger.? Jobs will be lost, investments will be lost, confidence will be lost.? I expect the markets will take in with benign indifference.

But they will be wrong to do so.

Jeez Louise, the president of GM was asked to resign by Obama and his team.? Are we really going to let the government run the ‘new’ company that will come out of bankruptcy?? Afraid so but sure as heck don’t want to see it.

How badly do you want to buy a car from a guy like Joe Biden, Harry Reid, or Orrin Hatch?? Its carcinogenic to even think about!

We have two choices as a nation.? Let this happen and watch from afar or let our elected officials (and our ‘retailers’) know that we want real macro change as a result of this particular micro failure.? This is bigger than the banks (CITI) , the mortgage companies (Wachovia) or the insurers (AIG).? This is about our future (i.e. more than five years down the road).

We have to stop abrogating responsibility and take power from our government.? We the people have to stop buying gas hogs.? We have to insist on cars we can park with one hand and a broken rearview mirror.? We have to stop paying attention to the ads and make decisions for our own good.? And, by the way, we have to stop using plastic shopping bags and just recycle the ones we pull off branches of trees on the way to the grocery store!

Did you think I was going to write about rising unemployment?? Lost investments?? Angry union workers?? Really?

If you did, then you are part of the problem.

The real macro impact of this failure has to be the considered response of more than 300 million American consumers.? If the government won’t do what they should, then we must shine the light for them.

Think about it . . . what kind of car do you want your children or grandchildren to be buying for their first car out of highschool?? Not a Pontiac Chietain (about 11 mpg and big enough for a mainsail and a jib).

Nope, a Prius or something like it and hopefully made in America.

The macro impact is ours to make.? Don’t miss this opportunity to stop sending our $$ to Venezuela and Saudi Arabia.? Take this opportunity to save $$ and time and our future so that our grandkids can afford to play golf or go camping.

You are the ‘micro’ in micro economics, but shoot you can also be a part of the ‘macro’ in macro economics.

I’d love to hear your opinion (but you dang well better agree!!).

Thanks to franco folini for the flickr photo

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Global Thermonuclear War!

Posted on 26. May, 2009 by scott.

Remember that great movie with Matthew Broderick?? War Games?? A computer ‘hacked’ by a teenaga whiz goes crazy and the world is almost destroyed?

It was scary but turned out to be a game.? Albeit a very dangerous game.

I think that is what is going on in North Korea.? Their bankrupt economy is forcing them (i.e. the great leader Kim Il jJung ) to play games with geo-politics in order to garner attention and justify aid.? Ahmadinejad in Iran too.

Sad thing is they have nothing to lose.? Except a potential war . . . in which case they would expect U.S. and U.N.? economic intervention to resurrect their corrupt nations. I have to interject though that Iran is certainly a few steps above the bargain basement craziness of NK–great history, sorta open, educated and intelligent people, if misguided by religious zealots.

Anyway, how many nations have American taxpayers funded introduction into the developed or developing? world?? Oh yeah, there’s Germany, Japan and South Korea for sure.? Whoops, Vietnam, Iraq and China too (China by the round about way of paying premium $$ for everything they could make for twenty or so years).? A bunch of others if we really focused.? Is North Korea next?

Holy mackerel batman, I hope not.

Up to us, the U.S. of A.? Finally President Obama has something on his table that is not economic.? He has a full-blown international crisis that can’t be pushed down the priority ladder.? This is the biggest geo-problem of his administration so far.

What is he to do?

For one thing he has to bring his current popularity in the world to bear and especially in China and Russia (if such popularity exists there).? These nations have us by the oil and dollar vise-grip and certainly don’t have to cave to pressure from Washington (at least in their minds).

On the other hand, with our dependence on China to keep buying up trillions of $$ of loans from the government to support or ‘debt fix’ and Russia providing a significant part of the oil and gas needs of our allies in Europe, we are not playing from a position of strength.

So what?? We’ve been there before and risen to the occasion.

There come times when you do what is right regardless of the potential economic implications.

So, don’t let it bother you, Mr. President.? Do what is right and let the consequences follow.

We must not be blackmailed as a result of our failed energy policies and greedy economic failures.? After all, the previous three or four administrations caused most, if not all, of those problems.? Make your own tracks here BHO, and use the opportunity to force energy independence and fiscal responsibility on a nation that needs both desperately!

Take heart and take action now BHO.? Let China and Russia know that we will act without them if necessary.? Let them know that any inaction on their part will be widely publicized throughout the world as irresponsible so they wil be judged in the court of public opinion (I bet THAT thought has them shaking in their boots and slippers!).

Another thing.? Don’t be afraid to play the ‘race card’? if needed.? That is always a big threat nowasdays isn’t it?? This time though it is even more, as in the ‘arms race card.’? North Korea and Iran are pariah nations.? They don’t seem to care about the United Nations or public opinion.? But they can’t be all THAT stupid can they, criminy they DO have nuclear programs!? Does any one think they want an arms race aimed at them?

Make them think twice.? Or three times if it takes it.? Heck they are dictatorships and everyone knows that.? Elections in either nation are nothing more than publicity stunts.? All decisions are made by only one person in either country — ‘the great ladder, uh leader in North Korea (he needs a ladder to talk face to face with just about anyone) — and the ”grand I, uh told ya’, oops, Ayatollah, in Iran. Man, I despise such despots, does it show?

So, make sure these two morons know you are serious.? Make sure they know that stand-off military action is imminent (what they heck do we have stealth bombers for anyway?).? Let them know our next bomb and missile tests just might go off course like theirs have.? That our ‘bunkerbusters’? just might end up in the ‘burrows’ those crazies live in . . . not the ocean.

I abhor the thought of any military action but, you get the idea and ‘they’ must too.? Military action is on the table . . . it has to be for the safety of our allies and our own nearby forces (more than 200,000 of our military are in proximity to these two ‘yahoo’ nations.? For world peace, as far too many Miss America contestants remind us.

Global thermonuclear war?? Jeez, Louise, of course not!? But we have to take action now or it will be too late to do so without serious alternatives in the mix.

Sure, I hope China and Russia will get on board, and I sure hope South Korea will be 100% supportive. You are either for ‘world peace’ or against it.? Make ‘em chose and damn the economic consequences.? They have at least as much to lose — they need our $$ for their toys, electronics and oil.? Without those $$ their economies would fall like a house of cards.

Man am I looking forward to the international news during the next week!? I sure hope the Prez is as good as he has looked the past few months.? This could be interesting!

Thanks to flickr’s agutsi for the photo

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Capitalism redux!

Posted on 13. May, 2009 by scott.

Today I make a seminal effort based on my current opinions. This may be long but I promise you it will be worth it (to me if not you).

My ideas have not come easily or quickly but they are the result of a lot of thought, observation and experience. If you had asked me just a few years ago about this I would have opposed it vigorously. How time and circumstances change things!

Here it is.

Capitalism has failed.  Plain and simple (well not so simple . . . it has taken a few generations).

The capitalism that I grew up with was traditional Adam Smith ‘laissez faire’ and it worked for a good long time.  No longer.  Too much laissez and not enough ‘fair.’

We have returned to the middle ages with a privileged ‘royality’ of overpaid selfish executives, stars, athletes and politicians and a vast middle class who are moving steadily down the economic ladder.  Capitalism has made it so.  It isn’t right, it isn’t American and it can’t continue.

The royalty of the twenty-first century are those born to great wealth (or power/influence) as well as those who reaped great wealth (power/influence) without genuine effort/sacrifice and have failed to use a good part of such wealth (power/influence) for the common good (charities, jobs etc).  For them life has become all about ’self’ and nothing about ‘us.’  Worse, this plague of selfishness is spreading further down the food chain.

Not far from my neighborhood are houses as big and fancy as medieval castles (one was even built to look like them!).  Too big for function and need.

So why?

Pride ? Singular distinction?  One-upmanship?  Keep up with the Joneses? You get the idea.

That is a big part of the problem.  Pride cometh before the fall.  Jealousy too.  Bad news.

The protestant (puritan) ethic of Adam Smith’s capitalism no longer exists.  Selfishness and pride have taken its place.   All you have to do is look around, watch TV, listen to the radio, go to a movie, shop in the mall.  The thesis that hard work along with social responsibility leads to true success have been replaced with the proposition that money is power and power is right and that both are good.

This is true in politics, in business and even in religion.  It has infiltrated the minds of retired grandparents living someplace warm and far from family responsibility, of adults with no desire for children or sacrifice, of teenagers whose greatest desire is fame and fortune, clergy who lust after money or power.

Jeez, Louise people!  Do you think Edison did what he did for money?  Did Washington seek out the great power he was given?   Bhudda?  Muhammad?  Christ?  Isaiah?  Krishna?

American businessmen and politicians are more like Russians of this century (think Putin and his fellow oligarchs — greedy, self-serving and egotistical).  Those who idolize, envy or look up to them are joining the madness.

Selfishness, selfishness selfishness . . . red is blue, green is black, taking responsibility for your own actions or words are things of the past.  We hear daily of entitlement for the masses and greater wealth and power for the elite (the rich and powerful).  And, we let it go on.

The wealthy democrats don’t really care, they are set for life.  The wealthy republicans just want more.  Where does it end?  Most of us fit in the ever growing middle losing hope.

I am well aware this sounds like Marx and Engels.  Shoot, I’ve read all their stuff.  Thought it was rubbish too.  They didn’t get it right but they sure as heck didn’t get it completely wrong.

Power corrupts and absolute power corrupts absolutely.  Sadly today power comes from wealth–not intelligence, compassion, capability or wisdom as it has in the past.

This is not to say all those with wealth are corrupt.  There are a few who at least try to demonstrate a modicum of gratitude and social responsibility.  But the others?  What do you expect when wealth is handed to you or taken (given) in immoral and dishonest ways?  If you don’t really work for something it has little or no value.  Give someone a hundred-million dollar salary and they won’t think cheating on a measly hundred-thousand dollar shower curtain is wrong.  Give someone a fortune for putting a ball in a basket four times a week and they won’t care about frequent indiscretions.

NO ONE. I REPEAT NO ONE, is worth what our public companies pay their CEO’s, what owners pay athletes, what studios pay actors, what talking-heads make on TV or radio.  It isn’t right when people are going hungry–not in Christian belief, not in Muslim belief, not in Hindu belief, not in Jewish belief, not in any sane person’s mind!

And it is not part of any capitalism that I want to engage in.

The uniquely American form of capitalism is a failed model as it now stands.  It worked magically when it was left to the masses.  Individuals, and small organizations, took advantage of opportunities.  When larger organizations (including the government) started joining the the ‘band’ things went haywire.

How did we come to the point that thinking executive leadership alone (decision making really) is the be all and end all?  Where is the work ethic?  What good can come from sitting in meetings or going to two-martini lunches all day?  Leaders for leadership’s sake leads to empty promises and misguided decisions.  At the top of ANY organization bigger than fifty people or so committee trumps executive decision ANY time.   I believe that literally anyone with an IQ in the normal range can run a big company–or a nation.

Adam Smith (Milton Friedman, John Galbraith and others as well) never contemplated incredibly enormous international corporations with revenues bigger than most nations (influence bigger too what with their PAC money, payoffs and such).  The founding fathers never contemplated a legislature hamstrung in partisan politics.

We ended up with a social/economic society that saw profits and money/power as the ‘only’ goal.  Individually and organizationally.  Large corporations started setting goals for execs that were measured in dollar terms and rewarded short-term.  Imagine anyone making over $100 million a year let alone the CEO of a publically held company.   The guy that makes a few decisions every so often but never,ever sweats about a house payment.

The very thought is obscene.

Who is the real boss?  Stockholders. Those with investments of hard-earned money that came from their own sweat and tears.  Not fancy Board of Directors or CEOs.

How did this happen?

What about so-called ’stars’ or athletes with incomes in the tens of millions annually?

Politicians who change parties or laws to get elected?

Marx must be turning over in his grave laughing at us.  Lenin is shaking his head.  The founding father’s are shedding tears!  I am sickened at what the last few years have shown us about our society.

Our large public companies and our politicians have NO social conscience.  And they have proven that they aren’t operating for the common good of shareholders or the public.  How could they create huge losses or deficits and they still pay gigantic bonuses or provide immoral perks?  They want only what is best for them such as higher pay, special treatment at airports, incredible retirement, private jets, big staffs and on and on and on.

It isn’t right.

Now the good news.  It doesn’t have to be this way.

It is time for capitalism to reinvent itself.  Capitalism II.  Capitalism redux.

Lets get back to basics.  If you want to get rich in this country lets make it possible to do it the old fashioned way.  Work for it.  Do it with innovation and job creation.  Do it with new and better products and/or productivity.  Don’t do it on the back of the middle/working class.  Don’t do it by transferring the wealth (what’s left of it) from the workers to the slackers.

If you want to get rich in corporate America do it as a shareholder or entrepreneur.  Don’t do it with huge salaries and undeserved bonuses . . . or with golden parachutes or back dated options.  Do it by earning it over a long time and do it honestly.

If you want to ’serve’ the country, do it for a few (very few) years and then get back to what you should be doing.

We have to change the background to make capitalism II work.  It will take (and I can’t believe I’m writing this) new laws that will limit (or tax) the amounts executives or stars or athletes make.

We have to have a political and economic environment where innovation, creativity and effort are rewarded.  We have to have a society where a person lacking legitimate skills can earn fortunes for ‘playing.’  We have to shun the idea that executive leadership (in business or politics) is deserving of inordinate reward.

We have to reward small business, entrepreneurs and everyone for honest effort.

It won’t be easy nor quick.

Here are some basic ideas to get the ball rolling.  I’ll confess I’m no angel but I can think at least as clearly as our best economists, politicians, and business leaders.  So can most of you.  Our country was not founded by geniuses.  It was founded by hard-working patriots who were also citizen soldiers willing to shed their own blood for principles they believed in.

What a great example.  How do we use it?   Simple and straight forward.  Those are things are leaders might not understand and so we have to make them do so.

Change will come from the bottom up and we are responsible for it.

So.

No public CEO or executive of any kind should make more in a year than the President of the United States of America makes during a four year term.  At least not in direct compensation. Allow such folk to earn more ONLY with legitimate stock options that last at least 5 years ( and put limits there too unless they buy stock with their own money!).

On top of that change the law so that the President makes about ten times the average wage of American workers (thus CEO’s can only make 30 times the average American wage).

As to ’stars’ and athletes and such?  Let them make what the market will bear, but tax the living daylights out of them and anyone willing to pay them more than ten times the average pay of American teachers of grades one through twelve (then use the taxes to increase pay for teachers, make classes smaller or improve our schools).

We have to loose the false vision of a privileged and royal class who are above the law and make sure everyone is a real part of our society.

Don’t get me wrong.  Wealth isn’t bad.  Live long and prosper, someone said.  I agree (and thank you Spock).

But, prospering doesn’t mean living like King Solomon while tens of thousands in America are homeless, or lack decent healthcare, or have no real education, or don’t have jobs etc, etc, etc.

Next solution.  A shadow government.  This creates jobs and will completely guarantee that Congress (and all politicians) will make better, if not perfect decisions.

It works like this.  Every single elected official must have three advisors appointed (by independent means to be determined, but randomly from all walks of life and subject only to the meanest of qualifications — i.e average joes).  They will be only from the general public of the politicians constituency and will take the part-time job for as long as the politician holds it (which should be no more than two terms in ALL cases).

Under this system NO politician will be able to cast a vote or make a binding decision unless the majority of these advisors agree.   They will be paid a salary nearly equal to one-half of the politician’s and will also have access to all his records and dealings (with PACS, influence peddlars, lobbyists etc.) to insure transparency.

That’s nearly 2,000 high-paying jobs for the Federal government alone!  Sure it increases the size of government, but it also increases the influence of ‘us’ on that government … for the people, by the people.

As a matter-of-fact we can do something similar for top executives of ALL multi-national corporations.  Wouldn’t that be something?  Hey, imagine if every single pro-team had to have a few average athletes and they had to play? Cool huh?  Man would this equalize the world!

We have to make America great again and don’t you believe it when some radio or TV knucklehead rants that it is going to come by free market economics or government control. Free markets as we know them have failed.  Now we have to try something else.

Let’s make individual self-reliance, effort and reward popular again.

Let’s find a way to ‘tax’ our way out of the incredibly huge deficit that Bush, Obama and those ‘gems’ in Congress have created for us.  Don’t believe it when you hear more laissez for big business will accomplish that.  Small business?  well that’s a whole different story.

Let’s end the coming class warfare before it starts.  Let’s not have any royalty or American idols.   All men were created equal (women too).  Let’s not change that premise.  Throw those who won’t play by the rules, the crooks, in jail be they CEO’s, Senators or janitors.

Real capitalism relies entirely on individuals.  We need a social/political/economic environment that both realizes and rewards that.

Capitalism II.

Capitalism redux.

Capitalism can rock again!

IF WE LET (make) IT!!

The picture is from flickr’s aussiegall

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Don’t hang your hopes on the market . . . yet!

Posted on 12. May, 2009 by scott.

Frankly, there has been far too much enthusiasm for the stock market lately.? The markets are up (at least the Nasdaq) for 9 straight weeks.? Time for a pull-back.

I stick with my prediction of DOW 10,000 but I am moving the date back to July (maybe August).? The old saying is ’sell in May and go away’ but don’t look for that to be true this year.

Sell now, but be prepared to get back in within a few weeks.? I expect a pull-back of 15-20% and possibly a little more.? When the wheels start rolling again the bull will take off for real.

Why?? The stimulus hasn’t really had a chance to take affect yet (and it will), confidence is building (and will only get better), earnings are beating estimates (but from very low expectations) and most of the bad news is in.? Yet the thing that will bring markets down for a few weeks is the financial sector . . . not triggered by real estate again but by consumer debt.? Sadly we haven’t heard the beginning, let alone the last, of this looming problem.

So, my saying for this year is:? “sell in May and wait for only for payday”.? Payday is the aforementioned 15%+ decline.? Pile on after that.

Dow 10,000 this summer.? Dow 13,000 by the end of the year.

After that all bets are off.? Obama doesn’t walk on water and though he is batting about .500 right now that pace is not possible to maintain in our politically charged environment that has just been exacerbated with the news that Medicare will be unfundable very soon.?

That deficit is just a precursor to the Social Security disaster coming down the road . . . a real battle of the titans on that. ? “Conservatives vs. liberals” will seem like the good old days when the baby boomers get hold of that!

Thanks to flickr’s kevinzengli for the photo

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China — nefarious or nice

Posted on 26. Apr, 2009 by scott.

A few weeks ago I thought China was merely ’stretching’ (read non-threatening)? in it’s appeal to dissolve the use of the US $ as the international reserve currency (i.e. the currency upon which international trade is based).? The Chinese Premier Wen Jiabao, in preparing for the recent G20 (the 20 leading economies of the world) conference, stated that the use of the dollar (and by inference the United States) was to blame for increasingly frequent (and ever more serious) financial crises.? His suggestion then was to find a new reserve currency.? It doesn’t take a lot of brains to figure out he would like the reserve currency to be the Chinese Yuan, though I think he would settle for anything other than the dollar.? Keep reading.

In point of fact, the last few years have found some countries (primarily oil exporting nations — OPEC and others) using the Euro (because it was temporarily stronger — but sure as heck not more stable).? This was a natural impact of the $’s weakness during the economically misguided ‘Bush’ Presidency.? This proved to be a short lived and wrong move.? The $ has strenghtened and is still the international ‘reserve’ currency, while the Euro has declined a lot in the last few months.

I didn’t worry too much about Premier Jiabao’s posturing, considering it a sort of warning to the U.S. to better manage its currency and banks (one must remember here that China owns about $1 Trillion, with a ‘T’, of U.S. debt — Treasury bonds, Fannie and Freddie bonds, and such).? Hey we are obligated to treat our creditors pretty well.? Face it, we need their money to finance the incredible deficit Obama’s stimulus and social programs are creating.

However, yesterday’s announcement by the IMF (The International Monetary Fund — set up and funded by the ‘richer’ countries of the world to help finance development of the ‘poorer’ countries) was the kicker for me.? I am? seeing the writing on the wall.? The IMF was trying to raise an additional $500 billion to help in their ‘charitable’ efforts ($100 billion each from the U.S., Euro-Zone, and Japan . . . with the rest coming from the other G-20 nations, including China).? The money was supposed to be by way of a loan and President Obama has been pushing Congress to approve ‘our’ $100 billion.

This changed yesterday–at a meeting in Washington D.C. no less.? China (along with India and Brasil . . . but we all know who the mover was) pushed to have the money provided by way of bonds, not loans.? And China prevailed.? They will be funding their ‘bonds’ right away.

There are subtle differences between loans and bonds.? Bonds are typically guaranteed, while loans most often are not.? Bonds can be traded and loans usually can not.? There are other differences too but the important thing is that China got all the attention and the ?win? while our Treasury Secretary (who spoke earlier in the day) appealed for follow-thru on the loans and was ignored.? The win is symbolic of China’s up and coming power and stature among the ‘developing’ nations.

This is dangerous stuff.? We needn’t worry about China trying to cash in on their $1 trillion of ‘bonds’ owed by us–they sell us way too much and they know we need their money to buy their exports (at least right now).? But we had better start worrying about their influence in world-wide financial and economic markets.

All of this is really fitting together.? China was not merely ’stretching’ a few weeks ago.? China was setting the table.? They are tired of U.S. and U.S. Dollar domination of world markets.? The recent comments by China’s Premier must be added to the recent writing of Zhou Xiaochuan, the governor of the People’s Bank of China.? Together, they can only be construed as attacks on the Dollar (and our economy).? Zhou Xiaochuan writes that he wants a new kind of currency to replace the $ — something he calls ’special drawing rights’ or SDRs that is managed (read controlled) by the IMF.

Now, you must be starting to see the danger.? Give China nominal control of the IMF (and that is the direction things are going) and they will control the SDRs (here is a bet:? about a year after they have control of the IMF they will change the name from SDR to Yuan — and have complete control).? Yikes.? These guys are smart, they are aggressive and they are throwing logs on the fire!

President Obama is a nice guy, and he is getting the reputation of being too nice.? He can’t let this latest (no longer subtle) move by China play out.? Taken in total, these words by Chinese leaders demand action.? It is time for this administration to step up to the plate and take a full swing at the threat.

America simply can’t permit these attacks to go on without some kind of firm rebuttal.

I don’t want to be spending Chinese Yuan the nest time I go to Mexico on vacation, or Italy (or Cuba for that matter).

There is a reason the mighty $$ is the world’s reserve currency.? It is more stable and more reliable, over time, than any other currency.? Our government is also more stable and more reliable, over time, than any other government.? Together those facts trump anything China can bring to the plate.

In the case of currency and economics, stability and reliability are paramount.? Think about the multi-million % inflation in Zimbabwe if you aren’t sure.

Secretary Giethner, and Larry Summers (the President’s key Economic advisor) need to start responding with tough but honest rhetoric of our own.? The President should step in as well, particularly if Premier Wen Jiabao starts spouting off again.? Let’s start touting the $ and touting our response to the recession.? Both are good and effective (in America the recession will end this year, probably this quarter, due to the massive stimulus).

Allowing the Yuan to become the reserve currency in third world and developing nations would be a huge mistake and a huge threat to our economic system.? The Yuan is controlled and manipulated by the Chinese Government with absolutely NO transparency.? We can’t let China become the ‘best’ partner to every third world, or developing nation.? We have to start taking positive and lasting economic action in those countries too.? We have to create an atmosphere of credibility that will enhance our own international stature.

The Dollar, and our economic system, may have faults but, by golly, they are safe, sound, secure, and are not manipulated unmercifully at the whim of a single leader (or powerful and secretive minority).

Don’t permit China to think they can get away with this nefarious plot.? Let’s make nice, but do it firmly.

I like the Yuan and have a bunch of them that I have kept from various trips dating back into the ‘8o’s.? But I don’t intend to ever spend them.? They are strictly for show-and-tell.

I like the Dollar even better.? My dollars I intend to spend . . . and I intend to keep on spending them wherever I travel in the world.? They are not for show-and-tell, they are for spending!

The Yuan: prettty and interesting.

The Dollar: important, valuable and easy to spend anywhere, anytime.

Just another thing that makes America great.

Let’s keep it that way!

Thanks for the photo to flickr’s jimmiehomeschoolmom

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No wonder the Republicans are dropping like flies!

Posted on 22. Apr, 2009 by scott.

As I have said before, I was a proud conservative for many years.? A real believer.? I voted Republican with gusto.? Not always a straight ticket vote but close.? Not any more.? Of course I am not a democrat by any means (heck, I worked hard to make a living as an entreprenuer and business owner, so how could I vote for THOSE guys?).

Ah, that leads us to the present.? The elephant may not be dead, but it is on life support and the powergrid is getting ready to shut down.? Take the article by Newt Gingrich in the April 13 copy of Newsweek.? Sure shows how for out of touch those guys (republicans) are.? Ever hear this cheer?? Probably not, since I just made it up.? But it works.? One, two, three, they’re old, they’re stuck, they’re dreamin’, they’re NUTZ!

The former Speaker of the House is trying to position himself for a run in 2012 (boy wouldn’t that be a great ticket Palin & Gingrich — one for the ages!).? Anyway, the article was titled “Our Tanks Are On Full” and subtitled “The energy crisis is an articficial one, created by bad politics.”

On what planet is this political/economic guru living?? I won’t debate that fact that the energy crisis was, in large part created by bad politics (any intelligent person knows it was–and is), but how can he even imagine that it is artificial.

Dang, dude, this energy crisis is real.? Check the figures, read the papers, watch the news, get out and talk to some real Americans who have to buy gas for their cars, oil to heat their homes, electricity to run their TV’s.? Energy demand is growing and energy supplies ARE NOT keeping up.? My utility bills prove that (our local Electric utility just raised rates another few % points today . . . and it is going to hurt a lot of people).? More importantly, in a few years America won’t even be the largest consumer of energy, China and India will fill those not-so-enviable shoes (and that will cause a whole bunch more problems).

Still, Gingrich does have some valid proposals.? He wants America to utilize all possible energy resources (as we should).? But he also misses the boat when he fails to suggest that we must also manage the environment.? Energy, yes!? Energy at any cost, no!? We can utilize all available energy resources but we can’t abuse the environment or risk the future to do so.? What we have to do is find a ‘golden-mean’ of energy and enviromental policy (and neither party has that figured out yet).

The most egregious proposal is one that fits Newt’s right-wing conservative history and capitalist leaning, but it also fails to recognize that ‘free-market’ capitalism beats ‘incentive-market’ capitalism anytime, anywhere.? By the way, I love his name Newt, it fits him when you remember the ‘Newt’ character on the great TV mini-series Lonesome Dove or the slippery little critters we used to catch in the pond out back.

Newt suggests, blithely, that a prize of $1 billion (yeah, that’s a ‘B’) be offered (tax-free no less) for the first hydrogen car that can be mass-produced at a reasonable price.? Boy, this chap is not for me!? He needs desperately to spend a summer herding cattle, throwing bales of hay, or working at Burger King.

He’s a Republican for crying out loud, a captialist, a conservative, and a discredited teacher and congressman.? Don’t listen to him.? I don’t think we really have to worry about that though.

Capitalism works when organizations are free to choose, economically and politically, what ‘process’ works best (and thereby generates the best return . . . or profit if you will).? If hydrogen cars are such a great idea, then free-market economics will provide them over time.? You can’t force it through a prize that makes the Noble Prize (about $1 million) seem like chump change.? For example, you might get economical hydrogen cars, but no way (safe especially) to fuel them.

You can read it all yourself.? His article is neo-classic republican mish-mash.? All for show but little for go.? Go on read it, you might even agree.? But, take it from me.? The author is as out of touch with American reality as the rest of his ‘Grand Old Party.’? Newt Gingrich needs to go back to writing books that are sold exclusively on O’reilly’s TV show (or given away by Glenn Beck on one of his comedy tours).

Newt, stay out of politics and economics.? Leave the real business to people that care, think, and work at real jobs.

Gimme the paddles, kick up the power, we got to try and revive the Republicans or this will be a one-party country for a long time to come.

thanks for the photo to flickr’s bobster1985

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Pirates, a sensible multi-faceted solution!

Posted on 16. Apr, 2009 by scott.

Pirates are a huge?and expensive issue.? The issue is political, economical and social.? It has to end.? Millions?are paid to pirates each year in ransom.? Millions more are spent to evade or avoid them.? Yet, millions more to bring a naval presence to bear.? Nothing has been effective.? Sure we got lucky last week.? But, we can’t expect that to continue in the enraged environment our justified action has caused.? There has got to be a way.

To start, check out Ron Pauls’ solution (not bad either) and there are of course other ideas out there.? I am adding mine to the mix and it is the best yet, as you will see.

One thing is for sure, politcally and economically we (the U.S.) can’t let this awful situation continue, let alone get any worse.? It could end next week, or month, if we implement this plan and?bring the problem to a screeching halt.? The plan solves other problems as well, including?economic, political and more importantly unemployment (it will generate thousands of jobs . . . albiet with an?element of danger).

Here it is.

Our government, in collaboration with the U.N. or other governments (if they are willing, but without if they are not), declares a state of war against ’stateless’ pirates (Ron Pauls’ idea sort of gets to this but falls far short).? Then with the declaration in effect?we create lots of jobs by hiring?and training?guards (somebody has to train them — more jobs)?to accompany every American ship that travels in dangerous waters.? This will be like the sky marshal program?and will instantly be effective, cost efficient and most importantly ‘job creational’.

The pirates criminal acts need to be responded to legally, effectively, immediately, and overwhelmingly.? This plan would accomplish all of the above.? It just might?need a few refinements but it would work and work well!

Frankly, I would volunteer for training tomorrow and I would gladly take several?voyages each year as a guard.? Of course, my wife would come along to keep the weapons clean and in every port we would gladly spend money as tourists (further helping the world economy).

These jobs would have to be well-paid (a good full-time salary for limited part-time work–say no more than six months a year).? They would also have to employ only persons willing and able to do the dirty-work when it is required (please note here that I would consider it an honor to protect a vessel flying the American flag from pirates!).

The guards would in effect be deputized or enlisted so their actions are legal.? They would get training on all necessary weapons (up to and including anything necessary to outmatch the pirates) and be provided with such weapons and ammunition in sufficient quantities to get the job done.? A seperate note here:? every American vessel should be equiped with electronics to ‘jam’ communications from pirates so ‘mother ships’ and others won’t know what is happening.

Further, as an adjunct to this program, the involved navies would have to provide backup support with everything needed (including aircraft)?to ‘blow’ the pirate ships out of the water whenever called upon (including the so-called ‘mother ships’).? This plan would make piracy stupid, dangerous and with no economic benefits.

The new jobs would be good justification in their own right.? In the gulf of Aden alone there are about 20,000 transits per year?and this is not the only place where piracy takes place.? Say, 100,000 jobs at $100,000 per year and you have a $1 billion cost.? The benefits, worldwide, are far?greater than the total cost? and this does not include the benefit from the jobs that would be created (consider ransoms, increased insurance, risk of life and limb, increased costs etc.).?

Let’s do it.? Let’s stop piracy dead in the criminal’s tracks.? Let’s increase employment.? Let’s give veterans that need them a job (they should get preference).? Let’s spread money around the globe as the guards (and spouses if desired) get to see the world.? I admit the last one there is just my way of getting free (even paid) cruising benefits and I doubt the risks would be high after the first month or so.? Pirates would lose interest pretty fast.

Come on President Obama, this is the kind of creative thinking we need in Washington D.C.? and not just for this problem, but for a bunch more we face.? I am just a call away and there are thousands more like me.? The best ideas don’t come from D.C. they come from the ‘heartland’, so make the effort to get ‘our views”.

Capitalism rocks!?

Pirares suck!?

Sign me up, I can blog at sea!!

?

Thanks to flickr’s randy son of robert for the photo

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How long to recovery? How about NOW!

Posted on 13. Apr, 2009 by scott.

I have heard (and read) a lot lately about how long a?recovery from the currrent economic crisis (recession) will take.? The ‘pan-dits’ (pundits with perpetually negative views–about 90% of those on TV and radio) have given us the discouraging estimates of anywhere from 2-3 years to 20 years or more.

Don’t believe it.

It is happening NOW!? In earlier posts I stuck out my neck and predicted an early?recovery of the markets (as in stock).? That seemed pretty aggressive a month or two ago.? No longer.? Markets are leading indicators.? A five week run on the positive side seemed unthinkable six weeks ago.? A 25% gain in that period was dream-stuff.? Now it is real and building.? A further 25% will put the Dow Industrials at the 10,000 level I wrote about as the target for June.?

Not so unthinkable is it?

Why is this all happening?? Is it the incredible stimulus and bailouts invested by our government?? Not really.? Only a tiny (and I mean a miniscule tiny here) of those have had time to take affect.? Capitalism works, without all the outside intervention, and we are watching it go on its merry way.

The markets are like a pendulum, and a wild one at that.? Almost always we can expect the market pendulum to swing (way) too far one way or the other.? This is caused by the herd mentality of our populace, enhance by far-out predicitions from the media.? This pendulum effect is far worse today than fifty years ago.? Blame that on the media, the internet, the Congress, the Fed (Reserve), the Treasury (Department), your local newspapers (if you have any left).

I remember once in college, I got to a class a little early and a couple of students were waiting outside the door.? I joined them, not even thinking about it.? After ten minutes the entire class was waiting.? Pretty soon the Professor arrived and started waiting too.? After ten more minutes someone thought to open the door and look inside.? The room was empty.? What a bunch of morons! And sheep.? These are the same people we are ‘following’ today.

Jeez Louise, how I wish we all thunk (plural of think in my odd universe) for ourselves.?That would be?cool, fool.

Yet, economically the tide is turning, the pendulum has started the move back, and it will pick up speed.? The new administration has stopped ‘nay saying’ and started to be more encouraging . . . on all fronts.? Confidence in building.? Spending will pick up and the economy will get back on track.? A whole bunch of American sheep will be piling on soon (most of them too late to enjoy the full benefits of the current upward?move).?

Follow the ‘crowd thoery’ and watch with wonder.? I won’t trouble you with analysis of all the leading indicators but they are swinging the right way too.? This I will reconfirm: Dow 10,000 by June.? Positive GDP growth in the third quarter for sure (I actually think we can see positive GDP in this, the second, qaurter).

The recovery has started.? The stimulus helped, primarily because it gave people hope and then confidence.? Did we need it?? Probably (but not for the reasons you think).? Do we need all the ‘rest’ of it now?? Probably not (let the free markets take over).?

It will take two years or so for all the stimulus and bailouts to take affect.? We will be far into the next expansion by then and frankly all that extra spending (investing) will be wasted.

I wish we could pull a bunch of the spending off the table.? Possible, and not likely.??When has Congress ever made a timely AND?right decision?? I read about one on December 8, 1941 . . . haven’t heard of one since.? Need I remind you that we need TERM LIMITS!? That would be the best change of all.

Stimulus?? Bailouts?? Tax cuts?? Deficit spending?? Fiscal and monetary action?? That’s the old news.? The new news is refininancing at much lower?rates, buying homes at 75% of their value from two years ago (and at rates as low as 4.5% for 30 years),?people saving for rainy days (and hopefully putting some of that savings into good equities?that will help protect against the coming inflation (yikes!).?On top of all that we stood up to the pirates and pulled a John Wayne on them!? Way to go BHO.? So!

Doctor, the patient is alive and well, just give him a few months to start running again.?

I’m fully invested and I don’t care about the ups and downs the market will experience in the next year or so.? But, I am sure it will be a good 50% or more higher in a year than it is right now.? I’ll hang on for that gain and count myself lucky to have had the opportunity.? By the way I bought some oil trackers and so as oil goes up (as it will) my profits will more than pay for the extra cost of gas.

This next year is going to be fun, exciting and provide a myriad of opportunities to the confident and brave.?

Cautionary note:? by 2010 inflation could be a bugaboo, by 2011 it will be awful (double digits is possible).? Then watch out for a whole new set of problems.

Ain’t life fun?

Thanks for the flick photo to army.mil

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