How many minutes has it been since you heard someone call this the greatest country in the world? How many seconds? Did you agree? Ooops. Was it you saying that?

It used to be arguably true. We got accustomed to telling ourselves it was so. We believed it. Many of us, most of us still do.

What ruler do you use? How do we measure the relative greatness of the country? What statistics should we employ? Perhaps I should find a synonym for that last word.

Back when such a claim was believeable, we had a dynamic, growing middle class that was becoming ever better off financially. I can actually remember that far back. It began around the end of WWII. We began losing all that about 1973.

The initial kick in the stomach was the first oil embargo. Then came the second embargo in 1979. While the then price of a gallon of go juice now seems impossibly low, a sudden quadrupling of the price brought major economic disruptions and dislocations.

We weren’t prepared for the first and refused to learn any lessons before the second embargo.

Those economic inconveniences were caused by a bunch despots. They were the ones that we had forced upon people we didn’t care about in order to set our own price for stealing their only resource. We showed them that Americans could be even more destructive. The rise of own domestic neocons and the Chicago School of Tinkle Down Economics were able to accomplish what our protégés could not.

They are doing what the USSR failed to do. They are bringing us to our knees.

In 1981 we were the largest creditor nation. Now we are the largest debtor nation. Then, we were the largest exporter of manufactured goods. Now? The largest importer. Then, the largest importer of raw materials. Now, the largest exporter.

There you have it. The definition of a 3^rd-world country. Our biggest export is lumber. Georgia’s biggest export is probably white clay (I haven’t checked in the last few years). White clay? They export mostly to Japan. There it is used to make china. It’s sometimes known as kaolin, from which they also make a product like our Kaopectate.

Are We Treated Fairly?

Does our country treat its citizens fairly? The United States ranks dead last on almost all measures of equity because we have the greatest disparity in the quality of health care given to richer and poorer citizens. No. We do not have the best health care in the world. We dropped to 37^th.

That was in 2000. We dropped further but expressed out displeasure with the results, so the World Health Organization ceased embarrassing us. Money not only talks, it also can shut people up. By the way, are we still nipping at the heels of Costa Rica?

Well, how about financial fairness? Lets see. Oh. The United States ranked 64^th in income inequality (worse than Cameron, but just above Uruguay). Accounting for inflation, personal income reached its peak in 1973. Do you remember when most households needed only one wage earner?

How about freedom? According to Douglas Berman, an Ohio State law professor, “We live in a country conceived on the notion of liberty, but we lead the world in locking people up.” One of every four prisoners in the world is in our prisons. Cuba, Iran, North Korea, even China cannot match our version of freedom.

It’s Beginning To Smart

2+2=? Surely we’re the smartest, er, best educated people in the world. Out of 34 countries, the U.S. ranked 14^th in reading, 17^th in science and 25^th in math. Who was on top? South Korea. I was in Korea in the 1950s, 60s and 70s. In the 50s and some of the 60s the road from the capitol of Seoul to its international airport, Kimpo, was gravel part of the way and dirt the rest.

They have created their infrastructure almost from scratch since then. They now have the highest percentage of people with broadband and the highest internet speeds in the world. All this, and leading the world in education. We need to really work hard to come up with excuses for our performance.

The people of Minneapolis may appreciate that out infrastructure has not been one of our highest priorities. China spends 9% of their income on infrastructure. The European Union spends 5%. We spend 2.4%.

On and on, it’s the same story. it’s not easy to find something to brag about.

How Did This Happen? Why?

During the Eisenhower Adminstration the highest marginal tax rate was 91%. No one paid that much on their entire income, just on the amout above some number that few people even dreamed about.

Those “job creators” created jobs at a faster rate than at any other time. Well, at least the jobs got created faster. Those making extreme incomes don’t really create jobs. Big business doesn’t create jobs. Small business doesn’t create jobs. Government creates some jobs but consumers are the real job creators.

No business hires and invests in more production if there are no customers. The public forums are full of economic myths. Giving the wealthy and corporations more money so they will create jobs is one of the most popular, . . . and absurd.

Both parties have stocked Congress with economic geniuses. Their owners get such lunacies as NAFTA. They get tax breaks for moving jobs overseas. All this while entertaining us with campaign promises to restore good-paying manufacturing jobs.

With a few exceptions, we will not see a recovery in manufacturing jobs. They are too easy to outsource, even without tax subsidies. They are also very susceptible to loss to automation. Unless the Congress gets some members with 3-digit IQs, we will all be selling burgers and fries to each other.

If these policies are destroying the economy and not really benefiting the elite, why did they do this? It’s partly a matter of stupidity, largely a juvenile devotion to a perverted, misunderstood ideology – capitalism. We must not forget a visceral hatred of unions. They are maniacally focused on the destruction of unions.

The unions created the middle class. Even non-members profited from their employers having to compete with wages and benefits. People were able to consume. Businesses had more customers with more money. What terrible monsters those unions were.

While most were in decline, with many also losing retirement and health insurance benefits, between 1979 and 2007 the 1% increased 275%. Income disparity here is in the same range as banana republics, and worse.

How does this really benefit the elite? Do they feel safer? Is the economy more stable? While the numbers in their portfolios are larger, they are actually pissing in their own soup. Instead of owning stronger, more stable corporations, the elite are making their wealth by manipulating paper assets. Can we say, house of cards?

Our economy is consumer driven but Congress has the answer. Give the wealthy more tax cuts and impoverish the consumers.

How do the elite spend their tax cuts? They buy a private jet. Most private jets are made in Canada and Brazil. They send it to Swiss and Caribbean banks. They buy several more $7,000 British suits, $12,000 French watches, $100,000 European cars. They create jobs in the US – not.

I have heard the claim that American businessmen are very smart. We are even told we should put them in the Oval Office. Businessmen like George W. (remember his MBA)? Herbert Hoover? Four of every five businesses fail within five years. Now that takes smarts.

Kodak owned the world. They invented the digital camera. They were so smart they didn’t allow it to divert sales from their film products. Now, they are in bankruptcy court.

Those masters of the universe on Wall Street needed us peons to bail them out from the results of their intelligence. Take a few minutes and make a list of dozens of business failures caused by our super smart businessmen.

It need not be. The titans of the auto industry rewarded their own intelligence with enough to make Midas envious. They went down the tubes. With a little bit of bankruptcy, humility and government interference, a new crew was able to turn them around.

We have made too many clichés come true: our goose is cooked, we killed the goose that laid the golden egg, the chickens have come home to roost, we have seen the enemy and it is us. But we have discovered that money does not respond to the force of gravity. Rather, it responds to the force of greed.

.
.

.

Bookmark It

Hide Sites

My occasional resort to language of a somewhat bombastic flavor may lead some to believe that I generally take an aggressive stance on practically every issue. That’s not necessarily so, but in the matter of class war, I am a super hawk.

Oh, am I not being divisive? No. It’s several generations too late for that. The war has been in progress since before Old Hickory was president. And that’s just in this country. It actually began millennia ago.

For those who think that the prostitutes of the elite, otherwise known as politicians and media mouths, are on to something when they accuse the victims of fomenting class warfare, think again. Most people have failed to notice the war because they have not been drafted. The actual war has been deliberately obscured by an extensive, expensive, all-pervasive campaign of disinformation.

Wall Street was bailed out by John Q. Public in order to protect their multimillion dollar bonuses.

College students were not bailed out of their onerous student loans.

You thought you had a right of free speech? You’re getting that mixed up with the Supreme Court ruling that money is free speech. You don’t have enough money. Sorry.

Over 800 people of Occupy Wall Street have been arrested. No Wall Street executives, those creating the problem, have been arrested. Hmmm. How many arrests were made of Tea Party demonstrators that were making threatening statements and even carrying guns on federal park land? Well, anyway, we are all equal.

Homeowners who are victims of mortgage companies or the disappearance of their jobs, or both, are on their own, while the government turns a blind eye as the mortgage companies ignore the niceties and laws of foreclosure.

Have you selected your park bench for retirement?

If you think the country’s economy is the nirvana our beloved leaders and Wall Street guaranteed, go back to sleep. If you want to do something to improve the situation for yourself, your family and your country, get yourself a draft card. How’s that?

Replace your present credit cards and accounts with the Wall Street casinos with cards and accounts from local banks and credit unions. Obviously, there are a wide range of other measures you can take but his has to be a minimum, a first step.

Was the economic meltdown just one of those things? Was it something that periodically besets us that cannot be avoided? Was it an accident? Was it the result of a mistake? No. It was caused by the unbridled greed of simpletons that considered themselves and referred to themselves as Masters of the Universe. They actually thought they had triple digit IQs. If they are so intelligent, why do they worship such a simplistic ideology? How can intelligent people fail to see its absurdities?

Investment banking, if you consider it a necessary evil, cannot justifiably represent more than 3-4% of the national economy. It now represents over 20%. It rakes in 50% of all of the country’s profits. One percent of the people own as much as 90%. Four hundred people have as much wealth as 150,000,000. This represents a gross distortion of the economy. So what?

There was a similar distortion in 1929. In fact, every such major financial meltdown was preceded by this type of distortion. An economy cannot function properly when class differences are so pronounced.

The irony is that the elite are doing themselves a great deal of harm in their pursuit of this folly. They seem satisfied to be oligarchs in a banana republic. For some reason a strong nation with a vibrant economy isn’t appealing to them. By nurturing a large, healthy middle class, the economy is more stable. Business failures decline. Poverty declines. People claim to be more satisfied with their lives – people, not oligarchs.

These intellectual giants appear to be convinced that their happiness can only be based on the misery of the serfs and peons. Strangely, the elites’ happiness goes down as the people’s increases. I guess that’s okay, because the happiness levels of the majority of the elites never are positive.

If you won’t do it for your own benefit, get involved and participate in the class war for the 1%. We don’t want these brilliant people failing in 80% of the businesses they create in only 5 years. It might cause them to have self-esteem problems; problems that can only be remedied by wreaking havoc on the poor and the remnants of the middle class. They can only win the class war if they have no opponents, if you won’t fight back.

Since you persevered, I have a video for you as a reward. Enjoy.

.

Bookmark It

Hide Sites

I just wanted to share a couple of quick thoughts today.

Regular readers will be surprised at how short this post is – not too pleasantly surprised, I hope.

The common thread of these two subjects is stupidity. I promise to limit it to two, though you might be aware that we are suffering from a pandemic.

It gets a bit tiresome to be looked down upon for the sin of being educated. People glory in their ignorance. They scoff at those who have worked hard to earn credentials and labored mightily to gain experience.

When did everyone become an expert? Why does anyone bother learning anything?

I’m reminded of the short period I managed a theater. The number of employees varied seasonally but at the peak was about 95, perhaps 90 were high school students. I hung a sign on my office wall that suggested one hurry and hire a teenager, while he still knew everything.

Have people ceased growing up?

After trying desperately to find a way of explaining about job creation simple enough for a politician to understand, the guy just brushed it off as “liberal” nonsense, as though he actually understood the concept of job creation or the meaning of the word liberal.

He felt he had offered the ultimate in dismissive retorts by stating that even his 3-year old granddaughter could understand how to create jobs. I simply replied that his problem was in depending upon his granddaughter for his understanding of economics.

Next

It appears that, once again, Obama is going to compromise by giving the opposition everything they asked for. I’m concerned for the day when they realize that they could have gotten much more, if only they had asked for more.

Obama seems ready to fully capitulate to the oil industry. Canada has the second largest energy deposit in the world. The problems are that it isn’t oil and it is locked up in what are called tar sands. US coal is the world’s largest energy deposit but they haven’t found an economical way of running our cars on it.

All you need to do to get oil from the tar sands is to rape a delicate ecosystem, cover huge expanses of land and water with toxic chemicals, provide fire for people’s kitchen faucets, create the pollution equivalent of 13 refineries to extract it from more than a mile beneath the surface, convert it into oil and pipe it across Canada and the US to Texas, where you’ll have to build more refineries in the most polluted state in the country. I’m speaking of their air and water, not their politics.

We have passed the peak of oil production. The end of oil is predictable and foreseeable. The sensible path would be to find alternatives to petroleum. The entire ecosystem that we call home is already suffering tremendous damage and global warming is both the result and an additional environmental insult.

Instead of spending tremendous efforts to continue developing what is just another delay, another source for petroleum, we should be concentrating our efforts on types of energy that might possibly allow us to stop further damage.

It’s all about money and a refusal to mess with the comfort zone of the energy tycoons. It’s as though they were the business equivalent of couch potatoes. They could direct their massive profits into alternatives but just want to sit on their, uh, . . . money.

Instead, we get assaulted with a constant stream of commercials trying to convince us that the dirtiest, most ecologically dangerous form of energy is the cleanest and safest.

Okay. It isn’t short but it is briefer than usual.

.

.

Bookmark It

Hide Sites

Don’t listen. They are all saying the same thing, so it must be wrong. There aren’t that many intelligent people in finance, politics and the media.

We are assured that the crash of the stock market is the result of our massive debt. Really? The market, whose computers are among the fastest in the world, took four days to react to the government’s failure to really address the debt.

Well, then the drop in the market was caused by Standard and Poor downgrading our government’s credit-worthiness. You haven’t been paying attention. That rating is supposed to tell you how good of a chance you have of getting your money back if you loan it to the government. It is not directly related to the equity markets.

Standard and poor are often referred to as average and below average.

When people sell their stock they usually buy another. That’s not what is happening right now. People are selling stock and . . . get ready for this . . . loaning it to the government. These capitalists actually think their money is safer with the government than with the private sector. Irony, thy name is capitalists.

Treasuries come in 3 forms. T-bills mature in 28 days to 1 year. T-notes mature in 1 to 10 years. T-bonds mature in 20 to 30 years. The 10-year note is the one usually referenced when the media quotes rates.

The Treasury holds auctions and the winner is, quite naturally, the one who makes the highest bid. The closer to 100 that one bids, the lower the effective interest. The government pays 100% of the face value. If the winning bid is $97, that is what the government gets.

So much money has been bidding up the prices that the last interest rate I heard, 2.14%, was an all-time record low. Lower rates mean that the government borrows money at lower interest rates. That’s to our advantage.

That was just a little side trip to educate those unfamiliar with the bond market. Despite what S&P may suggest, those putting their money on the line feel that the US Government is the safest bet. As T-bills are traded every day, it is also the most liquid asset one can hold.

The chart below is just a little further evidence that the size of our debt is not as critical as the debt hawks in Congress think it is. I removed some countries but left some that may make for interesting comparisons. There are other methods for calculating the relevant data, but in no case does the US rank higher than 6^th. If you are unconcerned about the futures of Japan, Germany, France and the UK, don’t lose too much sleep about the US debt.

Source: CIA World Factbook – updated 07-25-2011

.

.

Bookmark It

Hide Sites

Ah. The good old days are returning. If you can remember The Great Depression, get ready for déjà vu.

Eighty-odd, very odd, imbeciles have done more damage to this country than we can presently foresee.

You thought that you lived in a democracy. If you count Pakistan, Mexico and Iraq as models of democracy, then you’re right.

Didn’t we once have a democracy we were proud of? Now we know that an out of control minority can get their druthers by blackmail and obstruction of the democratic process.

Everyone paying attention knows that our foremost problem is the insufficiency of money flowing through the economy. So, Washington’s answer is to take another two and a half trillion dollars out of the economy.

The basic problem of too little money in the economy means the hole of unemployment gets even deeper. The only way to increase the amount of money in the economy in the long term is to create jobs. That’s important to the jobless but it is important to the country. Cut government jobs. Cut jobs of government vendors. Cut jobs where all of the newly jobless used to spend their money.

The estimates I’ve heard are for a million or so jobs lost. I think those people are wearing rose-colored glasses or have graduate degrees in wishful thinking.

The word seems to be that, even though the debt ceiling will be raised, interest rates will rise. I’m not quite certain it will but that is a possibility.

With unemployment definitely going to increase and the prospect of increased interest rates, the most obvious reaction will be a lot of red arrows in the bottom corner of your flat screen.

Stocks will fall. I’m admittedly not a fan of gambling in casinos where the house ensures you lose and counters your bets with their own. Even if you are far more reckless than I, you must realize that now is the time to cut your losses.

It would be easy to say that the direction of the stock market is irrelevant. That’s not true. It should be but it’s not. People have been trained to look at the Dow Jones. Emotion is the dominant factor in the market. That means the market reacts based on perceptions.

It also means that reactions of businessmen and the general public are dependent upon their perceptions of what the market is doing. These two aspects feed on each other. The market will go down. Businessmen and the public will be pessimistic. They will help push the economy lower.

A failure to raise the debt ceiling would have had a more immediate and obvious detrimental effect on the economy but not necessarily worse. Comparisons are not needed here because the policies being followed by Obama and most members of Congress are headed in the same direction. It seems now that a double-dip is unavoidable.

Who’s to blame? All of us. No, we’re not all as stupid as a Washington politician but we are culpable. We are not equally guilty but, in a democracy, we, the society, get the government we deserve. Perhaps we shouldn’t have tried to get education on the cheap. We have produced too many people unable to think for themselves, unable to discern nonsense, unwilling to put any effort into parsing the spiels of con men.

Well, at least we have The Housewives of Beverly Hills and the largest butts in the world. What more could you want?

Our national trait of assuming we are the greatest in all things is insufficient to maintain the illusion much longer.

Greece, Rome, France, England. They enjoyed centuries leading their worlds. The US will not get to spend a commensurate period basking in the sun.

Unless we are willing to discard those fun house mirrors and face reality, the middle class will atrophy to a point that it can no longer be the propulsive force of the economy. We will have to get used to eating the dust of those nations that respect education, intellect and other attributes that are alien to our politicians and our electorate.

.

.

Bookmark It

Hide Sites

It’s about time someone got serious. It obviously isn’t going to be anyone inside the Beltway.

The politicians consider their careers and their juvenile ideologies more important than the well-being of the nation and its people. Why are we not blanketing this country with recall petitions. Why are we not exhibiting a similar, reciprocal disdain for their jobs and their well-being?

Have they finally emasculated the American people? Have they accomplished what al-Qaeda failed to do?

Lets break this down into three parts.

Who is destroying jobs?

How do you create a job in the economy? By putting money into play in the economy. How do you destroy jobs? By taking money out of the economy.

So, what are our genius leaders doing? They are cutting the money that the governments put into the economy. They may end up having to eliminate some jobs.

To ensure that, if there are any jobs created in the future, they will not put much money into the economy, they are eliminating the unions.

For some reason those teachers, firemen, policemen and other government employees don’t spend as much money when they lose their jobs. That means that those places where they used to spend money can’t afford to maintain their full staffs. The business may even fail. Who woulda guessed?

The idiots are screaming for smaller government. They are claiming that the government has grown uncontrollably under Obama. The truth? The number of  federal employees is less now than under his predecessor. Am I confused about what smaller means?

Some might claim that smaller simply means spending less than previously. Well, salaries are a significant share of expenditures. This is the second of three years that Social Security is frozen. The broken economy’s only positive is that our interest payments on the debt are smaller. Maybe they could scream at a slightly attenuated decibel level.

There wouldn’t be too much of a problem in this hour of need if we had not lived on a credit card during more normal times. Instead of paying our troops’ way in various foreign wars, we elected carny hustlers who promised us we wouldn’t have to pay for anything.

Had we behaved responsibly back in those days, we would have plenty of credit to draw on to juice the economy now. The stimulus was less than half what it should have been and only about 40% was used effectively.

An estimate expects the loss of a million more jobs if the debt ceiling is not raised. My own guess would be far higher. Also, it would mean an increase in interest rates. That would be the same as a major tax increase but the money would be going to the banks, rather than to help the government pay its bills.

Who is refusing to make jobs?

Have you tried to get a loan lately? A car loan? Okay. A loan to start a small business? You’re kidding. A loan to expand a business? No way.

The banks have nearly $2 trillion dollars available. They borrow money from the Fed to purchase T-bills. Those T-bills don’t pay much interest but they’re doing enough volume to help create record profits. By the way, those investment banks want the debt ceiling raised so they can continue their “investments.”

The non-banking corporate sector is sitting on even more funds. They are using some of it to buy back their own stock. Some is also being used to acquire other companies at fire-sale prices. These mergers and acquisitions usually result in significant job losses.

While both the banks and major corporations are flush, by ensuring the general economy stagnates, they can use that as pressure to encourage further deregulation.

Who can create jobs?

There are two parties that can create jobs and help us recover from this mess. The first is the government. They have the ability to both create and borrow money. Most of that creation is through the auspices of the Fed. That needs to be changed. The Fed needs to be eliminated or so transformed as to be unrecognizable.

The newest estimate is that we need an investment of at least $3.1 trillion in infrastructure. Actually, that’s just in highway infrastructure. Why should we spend our money that way? Because it’s not our money. Our kids and grandkids will have to pay for it. Since they have to pay for it, let’s spend their money on something that they will be able to use – while we get some jobs now.

Depending on the government to get us out of this mess is necessary to get us started; a stimulus, if you will. There is another source of jobs. It is far and away the largest source of all.

What is this mysterious economic sector? Is it the big corporations? Absolutely not. Is it the wealthiest two percent of the population? Wait while I stop laughing. Is it small business? Far less than most people believe and far less than we need. So, who? It’s the middle class.

Our economy is known by the professionals as a consumer economy. Why? Because at least two-thirds of our entire economy is based on consumption. The more we consume, the greater the number of jobs required.

Politicians of both parties have either contributed to the decline of the unions or stood by while it happened. I have never belonged to a union but one must be blind or stupid not to see their economic importance and the role they played in creating the middle class. As the unions have declined, the middle class has declined. First, it lost the race with inflation, reducing its purchasing power. Recently, there has been a marked decline in the number of people composing the middle class.

.

.

Bookmark It

Hide Sites

Eureka!

There; I said it.

While everyone else is looking at pieces of the problem, I found the crux. Therein, I also found the solution.

The only catch is that our leaders have not the intelligence, inclination or interest in fixing it.

Unless you have slept through the entire debt ceiling debate you have heard someone claim that 48% of Americans pay no tax. Those who wish to protect the wealthy and the corporations from the IRS consider it to be the ultimate argument. It would still be a stupid argument even were it true.

Follow this, step by step. In their ignorance or prevarication, they have inadvertently pointed the way.

That 48% are not paying income tax, as defined by the IRS.  They don’t make enough. Don’t you envy them? They do, however, pay FICA (Federal Insurance Contributions Act).

FICA is composed of 12.4% of your salary going to Social Security and 2.9% dedicated to Medicare. Ones paycheck will reflect half of that 15.3% tax. In order to not scare people so much the law says that the employer covers the other half. That half is also a part of ones compensation. It is simply a hidden tax for the employee.

As a point of interest, compare that 15.3% the capital gains tax of 15% for those who gamble rather than work.

That 48% pays sales tax, state income tax, gas tax, excise taxes, real estate tax, car tax, numerous fees and more. They pay no tax? Bat feces.

Social Security and Medicare taxes are generating surpluses, which are put into trust funds, until Congress replaces them with IOUs. That means those entitlement programs are paying their own way and making loans to those programs that don’t.

Cutting back on those programs hurts those programs and makes more money available in the trust funds for the Congress to borrow. Making their slush fund larger will not encourage congressmen to economize. It solves nothing for the government nor for the people, just for the politicians. They will be back for more cuts in the future.

Well, there’s no solution there.

That leaves increasing revenue. The parasites on Wall Street are adamant they will not pay their share. So, does that mean we suck more out of those on the bottom rungs of the economic ladder? Yes.

What?

‘splain yourself, Lucy.

The cost of the federal government as a percentage of the Gross Domestic Product is close to a post-WWII low. Then why are we running such debts? Because of a shortfall of revenue. This is not a problem that began in this millennium.

Some of that is easily explained by the Chicago School of Economics’ trickle down theory, an impractical joke. Cut taxes and job creators will create more jobs. But, in the real world, we have lowered their taxes and they didn’t produce; at least not in this country.

The wealthy and the corporations not pulling their own weight makes us justifiably angry but something else they have been doing is of greater import. Something else has been far more insidious, far more destructive of the country, the economy and the people.

You’re angry that we bail out the gamblers, the freeloaders, the parasites. You wonder what they could have done that was worse.

They set about to destroy the unions. They largely succeeded. The middle class was the strength of our economy and thereby the foundation upon which our status as the superpower has been based. The middle class came about only through the existence of the unions.

They didn’t stop with their victory over the unions. They set about dismantling the entire middle class. Our highest inflation-adjusted personal income happened in 1973. The oil embargoes of 1973 and 1979 started the descent. Trickle down and deregulation turned a temporary setback into a decline and fall of at least a couple of generations.

The relative size of the middle class has shrunk. That 48% not earning enough to pay income taxes is your proof. Masses of people continue to be booted from the middle class. Wages and salaries are not keeping up with inflation. Fewer people make enough to contribute to the non-FICA revenue.

So, the government remains the same relative size while revenue decreases. Simple subtraction. Too much subtraction. Too many negative notations.

The real solution is to make it possible for more people to attain and remain in the middle class. Then they will make enough to get the attention of the IRS. Then the government will have sufficient revenue. Wow! A revenue increase without a tax increase.

Our leaders can try this and try that. They can try all of the solutions they want. Some may work. Most won’t. Regardless, unless we reverse the decline of the middle class those other solutions will just buy more time for us to endure the decline of our country and its economy.

I didn’t promise an easy or quick solution. It will take time. But, it is the only long-term solution. Will it happen? Not unless we try something new – electing competent grownups.

.

.

Bookmark It

Hide Sites

What caused the debt? That sounds like an easy question. Could that be the problem?

One would hope that our “leaders” could get their arms around a simple question. Well, apparently we never learn.

The short-bus riders on The Hill are pretending to deal with what to do about the debt. It seems logical to ask the question in the title of this article before addressing any possible solutions. Knowing how you got here might be helpful in finding your way back.

Back to the initial debt question.

Even conservative economists acknowledge the role the tax cuts of the early aughts played in eliminating the surplus and creating a major portion of the debt. No rocket science required. No dispute, except among those who prefer playing politics and maintaining “Their” seat in Congress.

Rule of thumb: If a politician considers his career more important than the well-being of the people or the country, he/she does not belong in any public office.

Should American corporations enjoy loopholes that let them snub their noses at our country? Other countries aren’t so considerate. They use our government’s protection, services, infrastructure, airports, ports, education of their employees and enjoy other benefits of being and operating in our country.

Over two-thirds of the largest paid no corporate tax. They are freeloaders. They are parasites. And, many still get subsidies. Even some foreign corporations have discovered how to do the same. That means that you are paying their way. It means you are subsidizing them to send our jobs overseas and pay taxes to other countries. It’s difficult to fully appreciate your generosity.

Our glorious new Secretary of Wars is visiting our money in Iraq and Afghanistan. He tells us that we are close to defeating al-Qaeda. After only 10 years and we are close to defeating them? All 24 of them? Why not throw in another couple of hundred thousand and finish them within this decade?

They tell us they are drawing down a couple of squads this year from the 100,000-plus US troops over there. Why didn’t they mention our mercenary forces? They actually outnumber our troops. Whatever, I have been told in the utmost of secrecy that those military operations added somewhat to our present debt.

The oil industry needs subsidies? Enough said.

There have been various other expenses. We average consuming 170 pounds of sugar every year for every man, woman, child in this country. Aren’t we sweet? But, that just isn’t enough. Somehow, that industry just can’t survive without my pocket change. Ooops! They do survive without it. They get some of that Chinese money that puts us in debt.

If it were only the sweet guys. But, no. You either don’t have enough fingers and toes to count those struggling to get by on corporate welfare, or you belong in Ripley’s Believe It Or Not Museum.

Luckily, I already had 3 years of Chinese language courses in grad school. I can beg in their native tongue.

Cargill, Archer-Daniels-Midland (ADM), Land O’Lakes, Monsanto, Dole, Chiquita, Perdue Farms. These are needy family farmers that can’t afford to increase their fleets of corporate jets as much as they would like unless you go deeper into debt. Please, consider helping your neighborhood agricorp.

One more biggie; the drug lords. Medicare Part D. That needn’t cost the government any money, except they agreed to refrain from negotiating with the pushers and pay whatever their asking price is. Medicare is much larger than the Veterans’ Administration. They could have a lot more bargaining weight than the VA, which pays half as much as Medicare.

So, where do we cut?

That’s easy. First you cut Medicare and Social Security. Why? Because old geezers don’t need no stinking private jets, or sufficient and decent food (cat food is cheap and convenient), or full doses of their meds. They can move in with their kids. If those kids are unemployed they can squeeze out a little to help with the mortgage.

Neither Medicare (except Part D) nor Social Security has added a single nickel (or yuán 元) to the national debt. They are paid completely from taxpayer contributions via the payroll tax. Both are, and have been, running large surpluses. Those surpluses are projected to disappear in the future; Medicare, in about 12 years, or so. Social Security in several decades. Whatever, neither has contributed to our present debt problem.

We can save a few farthings by cutting the funding to such frills as air traffic control, highway maintenance, matching funds to states and local governments for practically everything they do (cops on the beat, firemen on pumpers, education, etc.), courts, passports, parks, prisons, paychecks for the troops we claim to support, the FBI, airport security, medical research, subsidies to hospitals and too many more to list.

The President says the Social Security checks may not go out on time next month. I might get upset if they decide not to send my Social Security checks. The IRS charges penalties if my taxes are late. Does anyone have any ideas about what size of a penalty I should impose?

Are our “leaders” serious? Are they planning and preparing for any of those doomsday scenarios that  are no longer unthinkable? Since it has never happened before, we really can only guess at what we will face. No. They are not planning and preparing. No. They are not serious.

Pay Up.

That first item I mentioned as playing a major role in creating our present mess needs revisiting. We have the lowest income tax rates in more than 60 years. Low taxes means the creation of jobs, so we are told. Then why are we creating the fewest jobs of the last 6 decades in the decade since the latest tax cuts? Because that old saw is a lie. With all of the misinformation, ideological nonsense and other lies getting the attention of the media, it’s time to cut through the BS and look at the realities.

For real? That’s the top marginal rates for the wealthiest taxpayers? Actually, not. That fails to take into consideration two fairly important factors. The wealthy have more deductions than those seniors without a private jet (by the way, those jets are deductible). They have so many it pays them to compensate CPAs and tax attorneys very well to make sure they don’t miss any.

The other factor is that most of the wealthiest don’t work for most of their income. They let their money work for them. That’s called capital gains. That little scam is taxed at less than working for a living. The capital gains tax rate is only 15%. Money gets a nice little benefit when it works. You don’t when you work.

You might be interested in a couple of further points about the other countries listed on these graphs. First, surveys have shown that the citizens of each of those countries are significantly happier with their lives than are Americans. Second, the overwhelming majority in each of those countries prefer their health care system to the American system. Are we missing something?

But, Mitch McConnell just repeated on the tube, with 9.2% unemployment, it isn’t the time to raise taxes, particularly on those poor benighted job creators. Well, have I got news for you. All of those other countries in the graph above that have much higher taxes, are all also doing better with employment. Look for yourself.

Note: Since this graph was constructed US unemployment has increased .5%. The others are the same or lower.

Social Security and Medicare are entitlements. We are entitled because we pay for them and were promised, by law, that we would receive them.

So, our “leaders” decide to make those who are entitled to be paid bear the burden while those who are not entitled cavort in their private jets and enjoy unconscionable incomes and subsidies. The 400 wealthiest are worth as much as 150,000,000 Americans on the other end. Yet, many pay no income tax.

We partied on a credit card for the past 30 years and the loudest voices scream for more tax cuts. I’m getting just a mite upset with some of my fellow Americans for wanting more tax cuts so we can consume our way out of debt, while damning everyone but themselves for the debt and proclaiming their patriotism. The new American motto seems to be, “No pain, just gain.”

I was not totally into the celebrations of this 4^th of July. I am not quite in the mood to lead everyone in a chorus of, I’m Proud to Be an American.

Will our honorable representatives treat us fairly? Surely, you jest. I’m inclined to agree with Jay Leno, “If God had wanted us to vote, he would have given us candidates.”

. .

Bookmark It

Hide Sites

Oh, how I wish this were the knockout blow. Sorry, it’s not. Nothing will ever get through the thick skulls of the ideologues.

How many times must I tell you? Ideologies are oversimplifications by the intellectually constipated that appeal to the intellectually lazy and are usually wrong? Harsh? Hardly. Regrettably, my vocabulary is inadequate to do that subject justice.

Most people are merely victims. The powers that be control the media, the curriculum, the government. Sadly, any alternatives are available almost exclusively from questioning the almost universally accepted. It’s no surprise that everyone accepts such tripe as engraved on stone tablets.

I saw a report today. It stated that states making drastic budget cuts were experiencing worse unemployment and economic results than states that increased spending to deal with our financial crisis.

Wisconsin’s Governor, Scott Walker made himself the poster child for laying the blame on state employees while giving tax breaks to business. However, he wasn’t the only practitioner of this ideological absurdity.

From the report there were 24 states that took similarly drastic steps. Twenty-five didn’t. Yes, I know there are 50 states. Perhaps the statistics from that last one were not available in a timely manner. Or, it may have neither increased nor decreased spending.

Those numbers are sufficiently comprehensive for averages to account for any outliers due to a unique circumstance in this state or that. I am aware that imposing budget butchery on a state is not the only possible variable. But those variables are often found to go hand in hand with the mindset that is willing to apply such cuts.

Let’s take a look at the numbers first. Then we can analyse them.

My first thought was, of course. You cut that many state employees; the unemployment rate rises. The unemployed tend to spend less and the state cuts other spending. That means less money flowing through their economy, so it declines. Simple.

Then I looked at the numbers. The states that increased spending saw decreases in unemployment of .2%. The cost-cutting states? Increases of 1%. Was that solely due to state employees? No. Private sector employment went up 1.4% in the 25, while employment dove 2.1% for the budget cutters.

The difference in economic growth was also dramatic. There was a .5% rate of growth versus a contraction of the economy of 2.9%.

We were assured that those budget cuts would juice up the economy. They would mean that the private sector would create so many jobs we would be begging for college-educated immigrants. So? Were are the clowns jobs? We know where the clowns are. They were elected.

These little goofs probably believed what they were saying. They have never been accused of being geniuses. After all, they were just parroting the lines provided by the Koch brothers and friends. They remind me of Joe Theismann’s famous quote. “Nobody in football (substitute politics) should be called a genius. A genius is a guy like Norman Einstein.”

So why didn’t it work out as promised? There are many reasons; none of which fit in their bumper sticker ideology. One factor that is essentially a mandatory partner to such heavy-handed budget cutting is fear. The businessmen, some of the very ones ordering those cuts, saw such drastic action as portending the worsening of the economy. Ironic, is’t it? They helped create a self-fulfilling prediction.

It’s called leadership, even if is incompetent leadership. Those evincing some faith in an improvement, by investing even just a little in the economy, led the business community in the direction of hope, and engendered enough confidence to instigate growth.

The same ideology, the same people that urged the drastic cuts are the very ideas and people that created the global economic meltdown that is approaching 4 years of age, with no end in sight. Why do we listen to these people? We should be able to forget about them until their parole hearings come due.

It really is simple. The problem with the economy is too little money flowing through it. The answer is not to further reduce the flow. The consumer will hold on to what little they have until they feel the economy is improving.

The banks are making record profits without investing and with no risk. Their arms can be twisted to encourage them to invest in America and its people. The ideologues will scream that it is anti-capitalist. Good. Because that is just where the answer is hiding. Laissez faire capitalism is the problem not the answer.

Corporations have been and are being led by trepidatious leadership that inspires neither hope nor expectation of growth. The leadership on The Hill and in the Oval Office needs put the county above the Beltway games. They need to face the facts and convince business and consumers that we all need to sacrifice and invest in our futures, while kicking Wall Street out of their offices and back to Lower Manhattan.

While we seem to be lacking the intelligence to escape the clutches of ideologies, we must have leadership. None of the candidates for president nor any of the officers of Congress have ever shown any. A soft voice is acceptable . . . if it is accompanied by a big stick, and a willingness to wield it. Where is Teddy Roosevelt when you need him? Obama thinks he can handle it by being a teddy bear. It’s not quite the same.

.

.

Bookmark It

Hide Sites

I am not a fan of ceilings. Well, at home is good. Maybe in most any building.

But that’s not the kind that we have as the subject today. We’re talking about the debt ceiling of the federal government. It’s possible one or two people may not be as familiar with this issue as they think.

For instance, we are the only country in the world with a debt ceiling. Another minor point is that a debt ceiling is unConstitutional. Now, are you ready for some football . . . er, uh, facts?

Yes, Virginia, the Congress of these United States, in their infinite wisdom, made us the only country in the world subject to such a nonsensical, unnecessary and useless stricture.

It isn’t merely a matter of embarrassment. It represents a potential threat to this country, and the world, that can only be guessed at. Why would they put us in so precarious position? Why would they so jeopardize us?

The debt ceiling took years to develop. It was intended to help the United States Treasury. The original intent was laudable. Its present misuse as a political weapon is despicable.

Until the time of WW I, ‘The Big One,” Congress would authorize each specific debt that was incurred. For a couple of decades, efforts were made to provide the Treasury an easier way of dealing with debts. Those efforts were formalized into a law in 1939 that provided for a debt ceiling. No good deed goes unpunished; particularly when the good deed doer has no idea what they are doing.

Most debt is incurred by action of the Congress. However, the executive branch can cause some debt. Even the courts can subject the government to debts, intentionally or not, as the result of some rulings.

However debt may be incurred, if it is legal, the Treasury must, by mandate of the Constitution, pay that debt. The Constitution makes no allowance for failure to pay any and all legal debts.

Additionally, while the above is stated quite explicitly, the Constitution is what the Supreme Court says it is. In 1935 the Supreme Court very clearly ruled that Congress did not have the power to cause any legally incurred debt to go unpaid. There would, otherwise, be no way to promise the “full faith and allegiance of the United States” to any obligation.

Those great patriotic worshipers of the Constitution may tell the Treasury that they can’t pay any bills once the ceiling is breached. They need to actually read the Constitution. It would help if they would also read an occasional ruling that the Supreme Court hands down.

While the above is true and easy to understand, there is a political consideration. It is very unlikely that any Secretary of the Treasury would be willing to be seen as defying Congress. It’s a sure bet that Secretary Geithner and any of his predecessors and successors see, or saw, their only option being to bow to Congress and pretend they have the final word.

Hey. We have a president who used to be a professor of Constitutional Law. Surely he’s familiar with the original part of the Constitution. Surely he read all of way down to Section 4 of the 14^th Amendment. But, even though he may know better, he has no more political room for maneuver than the Secretary of the Treasury.

We are stuck under the thumbs of the super patriots who don’t understand most of the Constitution and disagree with everything they do understand.

Now, we hear that there is a certain amount beyond which the Treasury will be barred from borrowing. We are told that once the cash on hand runs out the Treasury will be barred from paying any bills or other obligations. Were that it was that straightforward.

They say that our armed forces personnel, those on Social Security and many others cannot be paid . . . but guess who can. Did you say banks? You are either absolutely brilliant or at least have a realistic perception of the way our system works.

How do they justify that? Ask them. The IRS collection personnel will continue to be paid as you and I will still be required to come up with the wherewithal to keep those bankers bonuses flowing.

Okay, you say. What’s so bad about not raising the debt ceiling? The truth is, we don’t know. I can recall nothing even close to this happening before. We have no real analog for guidance. We must depend on educated guesses.

Some of the guesswork can provide a relatively high degree of confidence. We know the level of greed that guides the majority of players. We know the inane ideology they will use to rationalize their actions. We know that fear mongering will likely set new standards. Put them all together Dr. Frankenstein.

Usually, interest on the debt is one of the largest items in the annual budget. It continues to be while significantly diminished. You may have heard that interest rates are at historic lows. That has allowed us to borrow at very low cost for the past few years. It is obviously to our government’s, and taxpayers’, benefit to extend those low interest rates as long as we can.

That makes sense, you say. Won’t we? Many in and out of Congress are determined that we pay higher rates. How could they be so unconcerned for our country’s economic well-being? Some because they are ideologues. Some for putative political advantage. Some for both reasons.

It is difficult to understand the ‘thinking’ of some politicians. They are owned by the banks. The banks love the essentially free money they can borrow now. The banks have told their representatives not to shut down the government. They likely will obey their orders but for the sake of their ideology and their ever credulous constituencies they want to push it to the brink.

The banks, our creditors and other major financial entities relying on our “full faith and allegiance” will begin to get fidgety at some point before the actual deadline. The automatic, ideologically-based response will be to raise interest rates. Our government, we the taxpayers, will lose those low interest rates ahead of the final due date.

Here we have the true believers screaming that the debt is too large. They threaten massive cuts to every program that helps the middle class and sustains the poor. Though our taxes are the lowest in more than 60 years, they bemoan such an intolerable tax burden on the top 2% and are willing to increase the debt for their benefit.

Now comes the kicker. They are willing to cause the government’s interest rates to increase incurring additional debt in the hundreds of billions. Don’t forget to send these self-described debt haters a thank you note.

Why all of the concern by the banks, China, the Saudis, the Brits and all of the other major players? Because the US Dollar is the currency of the realm. Everyone puts their “full faith and allegiance” into the Dollar. Everything in international trade is denoted in the Dollar. There is the stability required for the financial world to function because there is a common coin.

So, just replace it with the Euro. You may not have heard that several members of the European Community are experiencing even greater financial discomfort than are we. Greece, Ireland, Iceland, Portugal and others. This is putting heavy stress on the stronger national banks of the Community. There is not inconsiderable talk of some members leaving the Euro. Some even talk of abolishing it.

That doesn’t sound to me like a promising alternative. What about gold? Give me a moment. Let me stifle my paroxysm of giggling.

The Washington Monument measures 55 feet on each side at its base. It stands 555 feet high. All of the gold ever gathered by mankind in its entire history would equal about one-third of the volume of the Washington Monument. That doesn’t seem to be all that much. Use that as the basis for finances of the entire world? And that doesn’t even take into consideration how much would be needed for the egos of both the rich and poor in Rolexes and teeth.

Allow me to translate that for sports fans. The playing field for football is 300 feet long and 160 feet wide. This, of course, doesn’t include the end zones. All of the gold gathered in the history of mankind would stack up on that playing field a bit less than 11½ feet high, barely higher than the crossbars on the goalposts.

People usually fail to take into consideration how advantageous it is to have our currency accepted as the de facto world standard. When OPEC quotes prices in Dollars we have both a slight real and a psychological advantage. We are, to a degree, insulted from most of the zigs and zags of currency values. In many cases, the cost and convenience of currency exchange works to our advantage as tourists or direct buyers from other countries.

If the world holds our credit worthiness or solvency in question, the pedestal of world superpower will start to crumble at an alarming rate. Our national strength has always been intimately yoked to, indeed based on, our perceived economic dominance.

It is impossible to quantify the potential damage from shutting down the government, to us and everyone else. The loss of the standard will mean economic turmoil around the world until a new system can be developed. The present system developed in the aftermath of WW II and was possible because the rest of the world was prostrate. I don’t recommend revisiting those conditions.

The politicians, most of them, are presently playing games with this issue for some expected political advantage. It’s time to realize that it isn’t a game and hope some adults come to the fore.

.

.

Bookmark It

Hide Sites