Tag Archives: Geithner

2 Cents Worth On Life Its Ownself

Between morning and afternoon naps the old folks still have a thought or two that we offer at the same bargain prices…..

Well, helicopter Ben says he will print more money this morning from Jackson Hole.   But, then again maybe he didn’t.  You have to be able to translate the Greek from the ancient Hebrew and then into economic-ese.  First the market took it as a yes, he would then  folded upon further review.  But upon even further review it decided he would print up some greenbacks for us.   You make your own decision.  My bet is that he will especially because his comments about the state of the economy and the unemployment rate were not optimistic at all.   At least the Federal government has a debt ceiling limit it must adhere to but Ben has the sky for his limit, literally.

He made my day.  Sure old Clint rambled a bit and was off message a lot.  But he did make his points forcefully.  The other side can have their Clooneys and Baldwins all they want.  I’ll take Dirty Harry on my side in that dark alley of political knife fights any day.   Clint looks like he could be your neighbor, not a pretty boy on a magazine cover.

Enjoy your Blue Moon Friday.  A Blue Moon is when we have two full moons in one calender month.  Hence the phrase once in a Blue Moon.

I don’t know how some of the economic pundits can still be debating about how much China is slowing down in its economic growth.   You sure can’t trust the numbers out of China but there are some numbers you can follow that reflect what is happening there that are independent of the Chinese Commie Party influence.  The actual shipments of iron ore have fallen more than 33% this year to China.  Same is true of coking coal.  This can be verified by following the numbers out of Australia and the Baltic Dry Index.  Steel is one of those items that give a pretty clear indication of economic growth or activity.   It goes into pretty much everything from cars to buildings to dish washers.   Whatever they are doing behind the curtain in China that we don’t see, they are clearly doing less of it.  For you investments you shouldn’t be counting on China for the near term.

There was a bit of talk about the Republican Convention authorizing a commission to study the idea of a gold standard fro our money.    We should at least do that.   The egg- head economists pooh pooh the idea as old -fashioned and not flexible enough for a “modern” economy.  They always start off by pointing out that there isn’t enough gold to support the money needs.  Well, that may be true but there are still ways of making a link between our money and gold.  I have my own idea which is to set a standard that we must have enough gold to equal 50% of the national debt at all  times based upon the average price of gold during the trailing twelve month period.  At least that would make the politicians pay serious attention to our (your) debt.  The way it is now there is no “governor” on the rise of the national debt other than the whims of the politicians of the  moment.   The government should also be required to accept gold at the market price as full payment and legal tender for all debts owed it.  I am certainly open to tinkering with the concept offered here but anything like that would be a vast improvement unless you trust your future to the politicians and their desire to buy votes and voters in perpetuity.

A gold link with the dollar would prevent what we have seen the last three years where the Fed has simply printed dollars to by Treasury bills and thus allow the Feds to run a huge deficit each year. The Fed has bought over 50% of all the Treasuries during this period per their own reports and those of the Treasury.  We wouldn’t have been able to finance our deficits because no one would have bought them or more realistically we would have had to pay much higher rates of interest.  Keeping those interest rates low has been the stated purpose of the Fed.

You have to laugh when you notice that Tim Geithner the tax cheat and our Treasury Secretary has not been visible for some months now.    The BO campaign clearly doesn’t want to have him with too much face time with the media now because he is a reminder of so much that has gone wrong with their policies.  Think back to ’09 and ’10 and he was on the  tube at least once a week.  Maybe we should start a movement for people to watch out for a “Timmy” sighting.

In addition to worrying about the tons of smoke and other emissions that Man puts into our environment every day I will give you something else to worry about that the EPA is completely ignoring and offering us no protection or solutions.   Every single day thousands of tons of debris from space falls to earth.  You see them in the falling stars and meteorites but there are many more that we never see.  Just think no one is protecting us from this pollution and we don’t even know all the evil elements that are in these celestial contaminants.   This is all in addition to that deadly radiation from the Sun.   One wonders how we made it from the trees and caves to our condos.

Go Curiousity.  It has started moving and exploring.  Can’t wait to see if we learn something really new or its just a dusty place with boring geography and elements.

“Only in states in which the power of the people is supreme has liberty any abode.”  Cicero.  Good words and a warning.  http://www.olcranky.wordpress.com

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2 Cents Worth On Life Its Ownself

We offer fodder for the bored and aimless mind, at bargain prices…..

Twenty odd years ago when Greece was applying for and finally admitted to the Eurozone they demanded and received a special “bailout” as their price to vote for the admission of Portugal.  They didn’t transfer to the Euro until about 10 years ago and now are on the brink of financial collapse and demanding more bailout from others.  A quote just this week from a “man on the street” in Athens pretty well sums up their problem and their attitude.  He said that all they needed to do was take the money from the rich people and everything would be fine. Of course that money would last less than a year with their public employee payrolls and pension benefits.  After that what is their next plan–to take the money from the rich in other European countries?   Good luck with that.

Do you recall what the public welfare plan was for Jamestown when it was first established?   Some of those earlier settlers didn’t want to work the fields, build the cabins and hunt for food and provide for defence.   The welfare program was pretty simple–you don’t work you don’t get to share in the food or housing.  Only those physically unable were exempt and the community provided charity but not as a government requirement.  They had a rough go of it for a couple of years but the Tidewater area of Virginia continued to grow over the years from 1609 onward until Virginia was the most populous of the Colonies.

I am going to start throwing my shoe at the TV if the commentators and pundits don’t quit using the phrase “same exact” or its more elegant version “exact same”.  Darn, doesn’t anyone at those places know how to use proper English and syntax.   Could there possibly be a more redundant phrase.   One word or the other will be quite sufficient.

Some expert continue to predict that China growth will be the engine for global economic expansion and help raise the US economy.  You might want to check the Baltic Dry Index for the last few months.  The Chinese have significantly reduced steel production, they have slowed their shipments or iron ore and coal and have even delayed or simply defaulted on a number of such shipments.  They don’t apparently plan on building nearly as much at least in the near term and thus that growth will be a pretty small engine of world growth.  Everyone best re-think that strategy.   It doesn’t hurt to remember that the Chinese economy is there for the pleasure and amusement and benefit of the Communist Party.  They still have a tight rein on that country.  If you don’t believe me, ask Bo.

Are you surprised that a member of the NLRB appointed by a Democrat just resigned and took the position as general counsel for the AFL-CIO?   One can only guess what side he was on in every issue brought before that bureaucratic board.  

Geithner says that raising questions and concerns about increasing, again, the National Debt cause people to doubt the full faith and credit of the US and its  ability to pay its bills.   I believe that that is exactly why the question should be raised and that the National Debt must be controlled immediately–so we WILL be able to pay our debts on time.  If if keeps going up there is a limit to how much our creditors will advance.  The Fed has been buying over 60% of all our new debt and the others are bound to be getting nervous.   I just wish for once the Democrats would agree that there has to be a limit on its size.  I mean can it go to 35 trillion, 50 trillion?  Surely any rational mind would agree that the sky is NOT the limit.   The current budget proposals of BO already project the Debt to almost hit 30 trillion within a decade.   If not now, when are we going to address this problem.   Cut just 1 %, a measly 1% of the actual expenditures, not projected growth rate increases, across the board and it could balance out over a few years.

Gold and the Gold standard has many critics.  They claim it has no inherent value; that it does not represent a storehouse of value.  They believe the fiat currency  is the modern world and the only way to advance and manage  a modern economy.  Certainly not all but many economists tout this approach.  But, but, but, what causes me pause is that the fact that numerous central banks around the world have been accumulating gold for the last couple of years and continue to do so even as we speak.  Those central banks are run by the same economists and left-wing politicos who denounce gold.   Do actions speak louder than words.

Well, did you get rich and retire on your Facebook stock?  Never have understood why there is much money in teenage girls talking about Fluffy their cat and their new hairstyle or clothes purchase, except other teenage girls.    No matter how many gazillion users it may have it seems from a business standpoint that it is now at least a niche market with limited upside.   But what do I know, if you think it is great then bet the farm on it.  But I would recommend if you do,  that you sharpen your other job skills and learn to like living in an efficiency apartment.

One can only laugh at the outer limits of political correctness in vogue today.  The other day on a NPR show a caller to a scientist suggested that Black holes should be called “gravity holes” to eliminate negative connotations.  Well, even on NPR the scientist was taken aback a bit.  Firstly we could note that they are called Black holes because no light can escape from them and thus they are black.  That is why they are harder to discern by astronomers.  Where is Alice, this must be Wonderland.

“I have noticed that nothing I never said ever did me any harm.”  Calvin Coolidge www.olcranky.wordpress.com

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King Dollar, Gold and Globalization

Our economy faces vexing problems today regarding the value of the dollar compared to the other world currencies and its effect on our own economy.  We’ve been off the gold standard now for decades and the lack of a linchpin for the dollar has allowed the Federal Reserve to print money based on its “feel” for what is best for the US economy.  Gold is high today and you can find a variety of opinions about where it will go from here.  Some predict a crash in the price of gold and that only fools would own it now others take a contrary position.  Whatever the future for gold it is interesting to note that all the major central banks still own substantial gold reserves as does the US government and even many other major institutions.  The University of Texas Endowment Fund for example is reported to own almost a billion dollars worth of gold at present.

During the War Between the States the Yankees went  off the gold standard to finance the war.  That was the first use of the “greenbacks” to pay government debts and for private use.  Shortly after the war under pressure from European creditors the US returned to the gold standard to bolster the dollar value and its credit standing in the world.  In fact the period after the war until WWI saw tremendous growth in the US economy (with the South lagging far behind due to the effects of the war).  There were panics and downturns to be sure but the overall trend was moving up substantially.   By the 1890’s there was a great deal of anguish over the value of the dollar and the peg to gold.  This was the cause celebre for William Jennings Bryan and his cohort of mainly farmer followers. 

They wanted cheaper dollars so they could pay off their debts with those cheaper dollars to the bankers and industrialists back East.   We were still a mainly agrarian society in raw numbers of population but changing with each decade.  It was a battle between those groups.  Of course that over simplifies everything.  Those bankers and industrialists also produced all those jobs back East that the working men loved.  As grim as their existence was often in the factories and mines and on the railroads it was a vast improvement over the grinding poverty most had known only a generation before on the farm. 

Even then we had globalization.   Those farmers were concerned with the costs of their loans and the transportation costs to move their crops to market back East or even exported.  Europe was still mostly self-sufficient agriculturally but that was changing and our wheat and corn were much cheaper and more abundant than theirs.   It was more of  city versus rural dispute rather than the classic class warfare so often described.   The price of crops had been dropping and thus the revenues of the farmers and they were pushing hard for a move off the gold standard so more money would flow into the economy and they could use those de-valued dollars to pay their loans.  This was when Bryan made his famous “Cross of Gold” speech.  The European creditors were becoming increasingly alarmed over the threat to the value of the dollar.  They started moving gold out of the US.  Literally taking it and putting onboard ships and moving it to London.   As the gold stocks sunk the confidence in the dollar began to sink also.  The House of Morgan with support from its London office and few others stepped in and bought gold and issued gold backed bonds.  They had to move quickly to prevent a collapse of the dollar.  It worked temporarily and some gold was actually taken off ships and returned to the Federal Reserve in New York. 

But capital and confidence in the business atmosphere on any government are not cast in stone and must be maintained.  The threat kept returning and the gold was drained more.  But then we found gold in Alaska and the Europeans had a couple of really bad crops.  The price of US agriculture zoomed for a while and the price of both gold and the dollar stabilized.  It really wasn’t any brilliant government policy that stabilized things but frankly sheer luck.  But that state of affairs managed until WWI when we underwent a real boom in industry to build everything needed for the War and that lasted through the ’20’s before the Great Depression came along. 

With the Depression Roosevelt removed the gold standard for debt payments and required everyone to turn in their gold for dollars.   The Depression lasted until WWII.  Making those cheap dollars again and killing off what the Feds considered “excess” hogs and cattle and plowing under crops the bolster prices for everything didn’t seem to help much.  Some think it did.  I don’t think you would find many ordinary folks and farmers of that era who believed those  government policies improved their lot.

Maybe we’ll get lucky again before the Feds come up with programs that aim for the stars but hit us in the backside.

“When we hear news we should always wait for the sacrament of confirmation.”  Voltaire www.olcranky.wordpress.coml

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US Debt Default And Doomsday

In Dr. Strangelove the world was threatened with the Doomsday bomb  the Commies had built to destroy everything in the event the US attacked and defeated them.  But the Commies had built secret underground caves to sustain live for years to come and they would emerge years later to rule the world–or so that theory went.   We were left to wonder the ultimate outcome of that scenario as we watched Slim Pickens ride the nuke down to its intended target with an unknown result.  Timmy Geithner our star tax cheat has preached hard and often of recent days that failure to lift the debt ceiling for the US will be the equivalent of the Doomsday bomb on our economy and the world’s.

Paying and honoring our debts goes back to the very foundation of the US.  Hamilton was insistent that we had to honor all our debts incurred during the Revolutionary War and he and others even made that part of the Constitution.   It was a good decision.  We repaid the debts owed and the “speculators” made a lot of money on those bonds that they bought up cheaply before the issue was resolved.   Technical default of sovereign debt has happened many times over the years whether national or at the state or provincial level.   Mexico defaulted in reality only about 12 years ago but was bailed out by the US which fact most have already forgotten.  The list of Latin American countries that has defaulted is too long to list.  Historically, the Kings and Empires defaulted numerous time over the centuries, but you must realize that they eventually satisfied their creditors and those same creditors uniformly came back later to loan them even more.  The Rothchilds, the great banking house in Milan and Venice repeatedly loaned funds as did the Dutch to various sovereigns even after default.

There is also a great deal of talk about some of the States defaulting on their debts such as California and Illinois to mention the most notorious.   They darn sure might and it will crimp their style for a good while to say the least and the unions and special interest groups that depend on government largess for their existence.   They will have to really trim their sails but they will have to do it so they can have access to credit otherwise they will have no credit.  This would not be the first time it has happened.

In the 1830’s the US was still an up and comer, a wannabe.  We weren’t powerful or influential yet in world affairs.  Our industry was still dependent on Europe for our capital.  We desperately needed capital to build infrastructure in our expanding nation.  The canals, post roads, and then the railroads all took tremendous amounts of money.   The US and the States borrowed money from Europe.  The center of lending was England.  Most Americans resented having to borrow from England but we had no funds ourselves to finance the growth of our country.  The individual states borrowed lots of funds on the European market and it was administered from London.  Several of our states in the 1830’s defaulted on the bonds owed to European interests.  The Europeans and the English were very angry.  The value of the bonds dropped like the proverbial stone.  Some of the defaulters were Maryland, Pennsylvania, and Mississippi.  Maryland sent a delegation to London to negotiate with the creditors.  Many of the Maryland politicians didn’t want to pay anything on the bonds.  The Revolutionary War was only a generation old and they didn’t want to punish their voters with higher taxes or cuts in expenditures.   Sound familiar? 

Cooler heads ultimately prevailed.  The lead negotiator for Maryland worked out a new deal to pay the entire amount but restructured the time period for the loans.  Many were very angry about the deal back in the US.  That negotiator was a man named Peabody.  After the deal was done he bought up a lot of the debts of the States for pennies on the dollar.  When the bonds were paid and even when it became clear that the would be paid the value of the bonds soared and he became rich, very rich.  His wealth ultimately was the founding of the JP Morgan company.  Morgan became his partner years later.   Peabody’s wealth was over  one million pounds sterling which was an unimaginable amount of money in those days but he still rode the penny horse carriage to and from work every day.  He was the perfect Scrooge.  Indeed in “Scrooge” you can read the part where Scrooge is horrified that his assets have been turned into “US securities” which were deemed like Confederate money was a generation later.    Ultimately all worked out, but for years the states were cut off from credit and we as a nation were vilified with good reason in the financial markets and in the gentleman’s clubs of England.  We were pariahs for a while.  Like Buffet would have said it was our own damn fault.

It is not good to default.  Of course it is not good to borrow so much in the first place that you have to even consider such a possibility.  That is the real shame with our current situation.  Why the devil did we borrow beyond our means?  Refusing to raise the debt limit is not default.  The government has income.  Just like you and me it decides how it will spend what is in the checking account.  Our history is checkered.  We can do the right thing and get our house in order.   It is not our debt that is the problem it is our continuing plan to keep living on borrowed money.  Geithner should worry about future borrowing more than the current debt.

“Never a lender or borrower be”  B. Franklin.  www.olcranky.wordpress.com

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Hamiltonian Lessons For Geithner

The nightly news for two years has been filled with comments and proposals for the smartest guys in the room about our economy and what it should be and how it should function.  Even pretty arcane matters such as the purchase of Treasury notes by the Fed have become common fodder for the pundits.  Economists are regular guests on the news broadcasts offering conflicting views about how things are and what course of action or inaction should be taken to improve our economic health.  Ultimately, economic health is the foundation of our freedoms and prosperity.   Universities, foundations and the halls of government are loaded with PhD’s in economics who are guiding or misguiding economic policy of Government, Inc.  It is a complicated subject and it is easy to have one’s head twisted by the minutia of the discussions.  But the fundamental concepts aren’t that hard and the basics for a free market system can be understood by most.   It would be a help if some of these experts would spend less time studying the Great Depression and the recessions of ’81 or ’01 and studied the history of our economic beginnings as a nation.

Over 220 years ago we had just approved the Constitution and the first government under Washington was formed.  There wasn’t a formal cabinet the way we think of one today.  Jefferson was Secretary of State and had five employees under him, Know was the Secretary War with a handful of people under him, the Attorney General had not staff and was a part time employee who continued to have a private practice.  Hamilton was appointed Secretary of the Treasury.  He quickly had a staff of about 50 because of the paperwork needs to collect and process the import taxes from thirteen states which was the only source of revenue for the country and that was spotty.

Hamilton had no PhD in economics, there was no such discipline at that time.   He did have books on commerce and trade and studied the British system of commerce, trade and public credit.   He was starting with a blank slate and genuine economic turmoil.  What we face today is picayune compared to the troubles our new nation faced.  The
Revolutionary War had made the states run up enormous debts to fund the fight.  Theyd issued bonds for the money received.  Many of the buyers were the soldiers themselves and small farmers and merchants.  But some wealthy individuals such as Morris of Pa. had also advanced considerable sums to pay for the war effort out of their own pocket with a promise of repayment from the Continental Congress.

Economic activity during  the War and after was stagnant because there was no universally accepted medium of exchange.  We had Continental dollars but they were not worth face value.   The bonds issued were heavily discounted because most have serious doubts they would ever be repaid.   Business transactions were conducted in a true hodge podge method.  Spanish pieces of eight, Dutch Guilders, British pound sterling, the Continentals and bonds were all used to pay for goods and services.   It was a mess to say the least.  This was the economy that Hamilton faced.  He naturally studied the British model since it was the one most Americans were familiar with and it had in fact helped expand and preserve the British empire.  It worked better than chaos.  For this he was later blamed for being “pro British” and a closet monarchist.

He studied everything he could for a few months.  He was acutely aware of the political pains of any decision made.  Many of the bonds issued by the states had been bought by speculators.  They were gambling that the new country would succeed.  The sellers needed money and had lost faith in the future.  Stark philosophical issues abounded with the political mix.  Our Constitution recognized the need for paying the debts and is embodied in Article 6 of the Constitution for the debts of the Continental Congress.  There was much public outcry about the government paying off the debts reflected in the bonds.  The populist sentiment was that  this would only reward the rich and the speculators and hurt the little people.  Many wanted to default on the bonds.  Hamilton wrote his ideas and Theories down in a 40,000 word booklet.  It was a master piece of scholarship and practical application of our values, the law and sound economic theory.  Hamilton was an excellent lawyer and had prospered as one before he became Secretary of the Treasure.  Trust was critical.  The people and all creditors had to believe in the government and its commitments.  Without that trust all else would not matter.  He knew that the sanctity of the contract was the cornerstone of the rule of law and all the rights of property that emerges from that foundation.  Without that we would have no freedoms. 

Hamilton concluded that the bonds would be paid and honored at full face value.  This would greatly benefit some of the speculators he knew.  Some were his friends but that was beside the point.  It was the rule of law; it was a matter of building trust.  Some had advocated that the bonds should only be paid to the original owners but Hamilton shot that down on practical grounds–how could you find them, determine the price they sold them for, and what about the claims of those who paid hard money for them?   He also realized that the bonds would have real value when folks recognized they would be paid in full with interest.  They could become like money.  They would be a medium of exchange between merchants because they would have real worth. 

After much ballyhoo and political tumult, the Hamilton plan was adopted.  It got the nation off on the right course.  It established firmly the principle of the rule of law in all matters commercial and that public debt was a sacred obligation and that it should be honored and provision made for its retirement.  As a note, he at one point talked about public debt being a “blessing”  those who favor stimulus now often quote that.  They do so out of context.  Read his essay on economics.  He was referring to the overall scheme of building trust with that debt that already existed. He was not promoting the idea that government should borrow and spend willy nilly.  He would be appalled at our current economic mess and debt.  Where is a Hamilton when we need him so badly.  Regrettably our tax cheat in chief Geithner hasn’t studied Hamilton enough if at all and certainly isn’t channelling him in the new age sense.

Article 1, section 9 of the Constitution provides that a “regular Statement and Account of the Receipts and Expenditures of all public money shall be published”.  Well, the government spews out reams of numbers annually.  But one wonders how “regular” it is.  http://www.olcranky.wordpress.com

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Who Picks The Fox That Guards The Henhouse?

The rhetoric is picking up regarding the Financial Regulation reform bill that is currently being promoted in Congress.   I have the feeling that the cow is already out of the barn and that the gang that can’t shoot straight is on another’s fool’s errand or using the financial crisis as an excuse to expand again the powers of Washington.  I have no connection to the big banks or investment bankers and no particular love for them.  But I appreciate logis anytime it can be found and honesty over political hypocrisy.   I must confess that I find it both disheartening  and confusing that the administration would trot out Treasury Sec. Geithner for the talk show the last few days as a cheerleader on the issue. 

He knows too much or knows too little.  Firstly, it is disconcerting to be lectured about prudent business and accounting matters by someone who made a $40,000.00 “mistake” on his personal income tax.   If he can’t understand his own tax return why should we have any confidence that he understands the market operations of CDS’s, CBO’s or any other complicated instrument sold on Wall Street?  That is both a serious question and tongue in cheek–take your pick or choose both.  He was there at the New York Fed when all the problems arose and was up to his neck in the decisions to bailout the major banks.  They did NOT have to be bailed out.  That was a decision made by Government, Inc.  The powers that be decided it was an emergency and they decided that had to be bailed out.  How the heck do we know if they were right? 

It is not as though we don’t have enough regulations and regulators already.  For the banks we have the FDIC, the Comptroller of the Currency, the Fed, the Treasury, OTS.  Plus many of the banks are also subject to supervision by State regulators and all States have supervision of public companies and the securities offered to their residents.  Cuomo has been in the news often as was Spitzer before him in these matters.  In addition to that we have the reporting and disclosure requirements of Sarbanes/Oxley and the SEC supervision.   Lying and not making a required material disclosure regarding actions of public companies and the issuance of securities to the public are fraudulent and have been for decades.  Remedies and punishment for abusers of the financial and market system have been available for many, many years.  Do we really need something new and even more cumbersome?

This new proposal will create that special agency to determine when a concern or bank is a systemic risk and will have the power to shut it down, sometimes after court approval but not always.   Is this new bunch of whiz-bang kids fresh out of graduate school and law school going to magically make us all safe from the vagaries of the market?  Will there just be new turf wars that are notorious in bureaucracies between this group and all the others that will still be in place?  Supposedly, the bill provides that a special fund of 50 billion will be created from new taxes placed on the big banks to fund the wind down of any future failure.  Well, there goes another 50 billion out of the private market place that who knows might have been loaned to create a new company and create new jobs.   But I don’t think the current gang in control in Washington really cares about new jobs unless they are government-dependent jobs.  Secondly, you know human nature.  That special fund will be sitting there like a new toy for those bureaucrats just waiting to try it out.  Doctors like to try their new remedies, lawyers like to try new legal theories, scientists like to try the latest technological advance.  That is things work, you have a “tool’ in place for technocrats to use and you can be assured it will be used.  They want to show off how well they can give it a spin around the block.

We are told that the fund will only be used to “wind down” the villain in the piece.  But check the latitude they have in the wind down.   The language also provides that in an “emergency” that additional sums can be taken from the Treasury to avoid a systemic risk to the financial system.  But who is making this determination that there is an emergency?  No one you and me have any control over.  One man’s emergency might be another man’s passing problem and even no problem at all.   Furthermore, there is no time limit on anything.  Once a company goes into this process what if the bureaucrats let it take 20 years to be resolved.  Don’t laugh.  Many complicated Chapter 11’s last for 5 years.  FERC was supposedly a temporary bureaucracy to deal with the emergency of the oil embargoes of the Carter ’70’s and we still live with it today.  How many years will Government Motors and Chrysler be under the thumb of government control? 

All we need for new regulation is a simple statute that says if a company becomes insolvent that no government funds from any source, direct or indirect, will be used to buy equity in the company or make any loans to it.  We can let the existing agencies go through the liquidation process by Chapter 11 or the bank regulators or insurance regulators.  Just say too big to fail is not  the law of the land and that any company that fails will be dealt with under existing laws–period.  It was the actions of government that created that fallacious notion in the first place.  Restrict that notion and all is well. 

Many traveled throughout most of the known world using “dead reckoning” for navigation.  That is merely making an educated guess about speed,direction  and distance from a last known position.  They used various methods for calculating speed.  Often it was simply watching a floating device as it receded behind the ship.  The stars and Sun were the only steady beacon most of the time. They did pretty well with our GPS when you think about it.  www.olcranky.wordpress.com

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2 Cents For These?

The following are worth what you paid for them but the asking price is still 2 cents per each as they say on the loading docks.

When you have spent an hour on the tarmac with no word from the cockpit about take off or pulling up the the gate, you wonder if those pilots were “distracted” with their computers and heated discussions about company policy.  Like the policy for keeping passengers informed.

The current health care proposal to have a public option but with a provision to allow States to opt out of the program has one glaring fault.  The folks in Kansas might not want to have anything to do with a Federally run and mandated health care program and decide not to participate.  But, but, but, the new Federal taxes of all stripes being implemented to pay for the program will still be in place so those good folks in Kansas will still pay the taxes and the people in Michigan will get the benefit of the program with a subsidy from Kansas.  That’s a real Hobson’s choice opt out if I ever saw one.

One wonders sometimes if the US will survive the length of the Roman Empire.  The myth of Remus seeing the 12 buzzards flying over Rome supposedly meant that the empire was to last for 12 centuries and that turned out to be pretty close to the facts.  Will the US enjoy ascendency for 12 score of years?

You watch the news and see our troops and allies training Afghan soldiers with modern weapons and how to use proper infantry techniques.  Then sometimes they are firing larger weapons like machine guns.  It is usually some scruffy looking fellow who looked like he just came in from the fields.  Am I the only one that has a concern that all we may be doing is supplying and training our future adversary on the field of battle?

Now our good friends at GMAC are back asking for more money.  This time it appears to be about 3 or 4 billion more in addition to the 12 billion it has already received to make loans for Government, Inc.’s autormobile industry.  Hmm, let’s see if GMAC went out of business then folks would have to get their car loans from a local or regional bank or even a credit union.  Wouldn’t that be a good deal for everyone.  I thought we were all worried about those too big to fail banks.   Why don’t we let the local banks have that business and stir the local economies.  Government, Inc. is subsidizing GM and Chrysler and they are subsidizing GMAC and there is no end in sight.  You really think the UAW will ever agree to meaningful changes to their contracts to make our auto industry truly competitive as long as Government, Inc. will be there to pick up their tab with taxpayer money from throughout the nation?

Interesting to see that someone finally is reading our Constitution.  Note the recent letter from some members of Congress to the guy in the White House that he can’t accept the Noble prize without approval of Congress.  They are right.  Hate to rain on anyone’s parade but one would hope that occasionally the current gang in Washington would follow the law and the press would hold them to it.  The provision is not comlicated.  Art. 1, section 9….”No title of nobility shall be granted by the United States: And no person holding any Office or Profit or Trust under them, shall, without the consent of Congress, accept of any present, Emolument, Office, Title, of any kind whatever, from any King, Prince, or Foreign State.”  It is not a big deal if followed but it is our law and either it should be followed or not.  Maybe we will ignore it jsut as we do our own immigration laws and pretend they don’t exist.

Speaking of Art. 1, section 9, it requires that there be a “regular Statement and Account of the Receipt and Expenditures of all public money”….. Do you think the off books accounting used for Medicare, Social Security and soon the other like comports with that Constitutional requirement?  Don’t we have the right to demand under that section as legitimate an accounting as is required by other public companies regulated by the SEC?  Government, Inc. official would be prosecuted for fraud if that were held to the accounting standards of the private market.   They make “material misrepresentations” with every alleged budget and accounting they submit. 

Rather than give money to big banks and GM why not use that money to fund big increases in the NASA programs.  It would create thousands of new and well paying jobs.  It would continue the true nature and purpose of Man to venture out and test the new and explore.  It would have side benefits not yet imagined.  We could send a manned crew to Mars.  The scientific knowledge alone would pay for it down the road.  What are we getting for our money in GM or Citigroup?

When you go to the hospital and they make you put on one of those darn gowns with your rear end exposed wouldn’t you prefer to be dressed as you like and tell them you will be glad to undress for their exams or check ups everytime they need one?  I mean those gowns are not a medically necessity it is for the convenience of the staff which I appreciate but gee whiz.  They are so demeaning.  I would rather dress and undress 8 times a day but be able to look normal between times.  It would sure elevate my mental state, don’t know about you.   Then you probably have a cuter rear end than I do.

How is it that the Holidays seem so far away at Easter and then you get hot and before you can blink they are only 7 weeks away?

“The Democratic Party has a vested interest in depression at home and war abroad.  Its leaders are always troubadours of trouble; crooners of catastrophe.  Public confusion on vital issues is Democratic weather.  A Democratic President is doomed to proceed to his goals like a squid, squirting darkness all about him”….  Hard to believe but that is from the New York Times, February 1959.   It could apply to their headline for tomorrow.    http://www.olcranky.wordpress.com

 

 

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Madoff For Treasury Secretary or SS Trustee

Let’s give the devil his due, Bernie managed to run a giant Ponzi scheme successfully for about 20 years.   Not bad considering the whole thing was built on smoke and mirrors from the git go.   He understood quite correctly that “image” was everything and knew how to manipulate that image so others were envious of his position and he had those yapping puppies all around him begging to let him take their money.   He lived very well and indeed took care of his own people rather well also.   Apparently his pay was higher than what you would find in most of the private market.  It was only that nasty day of reckoning that brought him down.  Other than having to pay back the money he was alleging holding for others he was in great shape.   He had “books” and regular statements that proved he was in the black as were all the accounts he was managing.  The problem was that someone finally decided to pull back the curtain and see what was there and just like in the Wizard of Oz there was  a little fellow pulling on the levers and pretending to be the great Wizard.   He turned out to  be  another fellow that owed more than he could pay.   His books were phony and so were the assets he alleged held for the account of others.  Maybe he could run the US Ponzi scheme better than the Treasury or the Social Security Administration.

The Social Security Administration and its assets are often referred to as a Trust Fund.  Implying that there is a separate, segregated account with all this money in it just for those who are paying in for the enforced retirement account.  A Ponzi Scheme means that you take money from folks and promise to give it back but you spend the money on other things and depend on a continuing influx of new “investors” to pay out what you owe to the earlier investors.   Social Security does not segregate all those taxes they collect from us during our lifetime.  Yes, some of the money collected is used to pay those entitled to retirement benefits but many years ago that revenue source was insufficient to meet the payments to the recepients.  So the Government merely gave itself an IOU for the so-called Trust Fund in Social Security and spent the money collected for SS on whatever bills had to be paid by the Government.  Money is a fungible after all and it doesn’t really matter what the money was spent on, whether for interest on  the National Debt, Income Tax refunds or social programs like Medicare or food stamps.   The money collected was spent and the Trust Fund got those IOU’s from the same Government that owed the money to the Social Security recepients.   The system depended upon new people coming into the system constantly and paying in fresh money to pay out to the older folks who were entitled to their money back.  Of course the Social Security system doesn’t even promise you will get back all the money you paid in over your lifetime.  You only get a regular payment and if you die a few years later then the excess money you paid in stays with the Government.  They don’t make a lump sum payment to your heirs.  They just keep it.  Boy, would Bernie have loved such a deal! 

Just like Bernie the Government cooks the books and shows those IOUs as assets for the Social Security Trust.  But that means the Government has to get the money from somewhere if it is going to pay those notes.  Now where does the Government get its money?  They have an advantage that Bernie would have died for.  They can tax and make people give them money on a regular basis.  In a few more years when those Boomers’ bills come due and they want their money the funds will be depleted to nothing.  Even those IOUs won’t be of any use because with all the other expenses of the Government there simply won’t be enough money to pay everyone what they have been promised by SS.   The Ponzi scheme will crash just like Bernie’s.  

The Treasury is doing about the same thing with its pals at the Federal Reserve.  It is supplying money to run the Government with deficit budgeting and spending by selling bills and notes and when there aren’t enough buyers they have the Fed “buy” the bills and notes.  They have already done so to the tune of hundreds of billions already and are primed to buy more before year end.   This is the Mother Lode of Ponzi schemes because the Fed can simply print up all the money it needs.  Bernie would never have crashed and burned if he could have printed up money.  Since he is so experienced with these matters I think it would be the honest thing to let him out and have him head up both the Treasury and the Social Security Administration.   Maybe Geithner could swap places with him for tax evasion.  Bernie is sure familiar with cooked books and phony record keeping so he would be right at home.  He couldn’t do any worse than those in charge now when it comes to an honest accounting of our financial affairs.

Love your family.  They truly are your treasure on earth.  That more than wealth will be in your last thoughts, not your bank account.  http://www.olcranky.wordpress.com

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Government, Inc. Grabs Control and Law Be Damned

more at www.olcranky.com

It was with sadness that I have read and heard the latest news from our new seat of Industry–Washington.  The latest proposals now call for even more intrusion into the private sector by the Treasury and/or other regulatory agencies to mandate pay and pay methods for employees of the banks who did not receive any TARP funds.  Who knows exactly what the restrictions will be but whatever they are they will be intruding on the private perogatives of shareholders and their property and contract rights. 

The expressed rational is that Government, Inc. will use the “safety and soundness” standard under bank regulatory authority to justify whatever these new compensation restrictions will be.  I have no particular sympathy for banks or bankers but I do respect the necessity and fundamental rights of private enterprise and the free markets to manage their own affairs as they see fit and the rule of law.  I understand and do not oppose the concept that banks should be regulated.  But I expect the regulations to be utilized for their intended purposes and not as a bludgeon to brow beat banks into submission to Government, Inc.’s world view.   The Federal Reserve and FDIC and others such as the Office of the Comptroller of the Currency have had the power for decades to shutter a bank that they believe is not practicing its lending with safety and soundness.  We want our banks to be safe and certainly financially sound.  That is why we regulate them.  However what we are witnessing now is the use of this standard to control the internal affairs of the bank that have nothing to do with those principles but rather to make them conform with a political agenda  and populist notions now prevalent in Washington.

It was only about 20 years or so ago that a similar outcry was made about the large salaries paid to top CEO’s in industry, including the banks.  The argument ran that those folks were making huge sums of money without regard to long term and even short term performance.  That is what really kicked off the new method of lower salaries but then awarding stock bonuses based on financial results.  It was the simple idea of rewarding better those who performed better.  You may not recall these events but you can research and see this was the fact.  So under lots of governmental pressure at that time the CEO’s of large companies did get agreements to reward them handsomely for good results in exchange for lower base salaries.    Then we got great growth in our economy for two decades and those stock bonuses turned out to be terrific deals for those CEO’s.  Now some of the banks are staggering and the politicians are again on the hunt for scapegoats and those large bonus payments are in the bull’s eye.

The method of c0ntolling these compensation issues  is twisting, warping and ignoring the law.  As we have seen so often in the last few months the law of the land and the Constituion apparently have no meaning to those currently in power.  The “crisis” seems to justify anything in their minds.  Let’s be clear, the Federal authorities do have the right under the existing law to shut down any bank they find to be conducting itself in a manner that threatens the “safety and soundness” of the bank.  They can shut it down immediately and have done so many times over the last century.  Almost 30 have been shuttered this year alone.  The banks if they so choose could challenge that finding in court.  It never happens but at least the legal right exist to protect the shareholders of the bank.  Bureaucrats have been known to be wrong.  When the Feds went on their last rampage 20 years ago during the S and L crisis they made deals with some banks regarding their closure and then changed the rules during the middle of the game.  (Sound familar these days?)  A few of those banks finally sued and lo and behold they won!  Billions were awarded to them after the fact in the mid to late ’90’s.

The power to shut down the bank does not equate to the power to dictate compensation terms for employees of the bank be they the janitor or the CEO.  That is for the shareholders.  It is the legal right and authority of the shareholders and their elected boards to deal with that issue.  Government, Inc. is arbitrarily usurping that perogative from the shareholders.  That is a violation of law and the taking of property without compensation.  I hope some brave bank will have the gumption to stand up to them and take Government, Inc. to court.  Simply refuse to obey the mandate and dare the government to shut them down.  Then the government would have to justify its conclusion about safety and soundness in a court room with transparency that everyone seems so keen on these days and offer real evidence rather than conclusions from some 30 year old bureaucrat with his green visor, or maybe the evidence would be that the order wasn’t even from a bureaucrat but came much higher up the food chain–like the Treasury or the White House.  Be nice for the public to know exactly who made the decision and what the facts were to support it.

We created the Collossus and we can tame it if only we are brave enough to stand tall. 

I find it amazing about the recent research revealing that the twinned forces in physics when separated and then observed will react at the same time even though separated by distance.  The two forces move and react as one and that communication from one to the other seemingly defies the speed of light.  Paranormal happenings going on here?  I don’t think so but quantum physics is a mystery within an enigmatic universe I don’t comprehend.

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Liberal Changes To Chagrin of Conservatives

Looking at a long historical perspective it occurs to me that there is a consistent pattern in a liberal view of the political and social world.  You can start pretty much any where you like with the analysis on a timeline.  Whether it is 1850, 1900, 1940 or 2000 there is a pattern to the liberal fulminations and calls for action.  The liberals like to change the rules in the middle of the game.  If you start at any time period there will be “rules’ in place that everyone is expected to follow.  Those rules are the formal laws of the land and even the informal laws of society.  At any given point in our history there are those who find a way to flourish and thrive whatever the prevailing rules are at that time.  Naturally there are those who don’t flourish.  They bounce along at the lower levels of society economically and in social esteem.   This has been so since the birth of man.   A far smarter man than me said we would always have the poor with us.  You might recall His name.

We are born with different talents and aptitudes.  That is a fact of nature beyond any control of man.  For example someone with an 80 IQ is simply not as likely to achieve the same standing and status in society as the fellow who was blessed with an IQ of 120.  That fellow with the low score I believe does have certain rights and is entitled to the dignities of our society.    Some are born with a drive to achieve and indeed might become a “workaholic” and have financial success but abysmal familial success in life.  We are all so diverse in our abilities and motivations that it is not realistic to expect that we all will have the same “success” in life.  That success is normally measured in one’s earning capacity and has been thus for all recorded time.   Those with the higher level of talent will succeed under the rules of their time and generation.  But that disparity in achievement causes envy and resentment in those who don’t   fair as well in society.  In comes the liberal to rectify that situation.

The liberals are in a constant and repeated pattern of wanting to change the rules.  You grow up under one set in any era and along the way the liberals decide that there is not an equality of outcome for everyone.  They refuse to accept my basic premise that all are not created equal in ability even though in rights.  They change the rules to bring down those on top and to lift up those on bottom.  This evening out process is not based on merit or achievement but simply on status.   Look back over our history.  All that legislation over the past 150 years for the alleged advancement of the common  man has been to disrupt the natural striation of society.  Then everyone adopts to the new rules of the game.   Sure enough after a while the disparity still persist even under the changed rules of the game.  Then the process starts over again after a generation or so.   The Great Society of Johnson was to put an end to these descrepancies once and for all if you remember.  Lord knows enough Government goodies were handed out in one fashion or another that persist to this day.  Same with the New Deal. 

The elite liberals inherently think they are smarter than everyone else and certainly more caring about their fellow man.  They brook no disagreement with their tenets.  They believe fervently in a top down approach to the new rules everytime.  The rules are imposed from on high–the Federal Government.  They believe that they know what is best for all of us.  They believe in freedom but only so far as it makes everyone pretty much equal in their life outcome.   If there are disparities then freedom takes a back seat to whatever new rules they impose to work their equalizing strategy.  They are there for the common man.  But the elites are so removed from the common man that it is all theory not reality.  Remember when Sargeant Shriver of Kennedy family connections was going to run for President and he went to the local bar to have a few drinks with the working crowd and he order a Courvoisier brandy?  I can’t think of a better example of that attitude and detachment of the liberal elites.  Unless it is Mr. Geithner giving us that “you don’t understand” attitude about the bailouts and expansion of Treasury power beyond Constitutional limits.  He attended prestigous schools for sure but he can’t do his own taxes and he thinks we don’t understand. 

The other liberals are those that are attached to the “victimhood” outlook like a leech to a juicy leg.  It is not that they can’t achieve like the rest of us; no, they are victims of an unfair and unjust society!   Look, I accept the fact that I am NOT the smartest guy  in the room, that I can’t jump as high as some other men, that I don’t have the business acumen of T. Boone Pickens.   I believe most conservatives accept their shortcomings and will take responsibility for their achievements or the lack of them.  Many conservatives work on the railroad or drive a truck or paint your house.  They are not all country club denizens.  Liberals will not accept the differences in our innate abilities and the willingness of some to work harder than others.  So they will want the rules changed yet again.  I fear the process will go on ad infinitum.  No doubt there will be a liberal push two hundred years from now to rectify the disparities in society. 

Both camps of liberals fed on each other and need each other–the elites and the victims.  They do have a symbiotic relationship.  One can’t exist without the other.  I wish that we could someday get a set of rules that will last but the struggle will continue I fear.  The problem is that every time there are new rules there is a corresponding restriction on our choices in life and our freedoms, including the freedom to fail.

It is time to remind you again about the date for Easter.  We get so many requests for this information.   Easter Sunday is always the first Sunday after the first full moon after the spring equinox.   It is geared to the Jewish Passover which is based on the lunar calendar.  That is why Easter varies by as much as a month from year to year.

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