Wednesday, August 29, 2012

Detroit, Obama and African American Failure

Detroit is an enlightening microcosm to examine both culture and politics in a city dominated for 60+ years by African Americans and their unfailing loyalty to the Democratic Party.   You could also say that Detroit is a city without a Republican.   See my blog about the finances of the State of California:  A State Without Republicans.

Detroit is in ruins.

Yet there are other cities in the US "rust belt" that have undergone a similar decline in population and loss of jobs to Asia who are not devastated.  Instead, with more balanced leadership, other areas have "adjusted" and have either prospered or at least did not slide into a horrifying decay like Detroit.   Pittsburgh is a good example.   They completely lost the Steel industry but is today is voted one of the best places to live.

Detroit's population has shrunk from 1.8 million in 1950 to an estimated 800,000 today (55% reduction).  Pittsburgh population also shrank by 55% from 670,000 in 1950 to 300,000 in 2010.

The big difference is that Pittsburgh is 90% white and Detroit is 82% black.  Race is obviously the key difference.  It's the people.   It's black people who have ruined Detroit---black people and those that prey on them including the Democratic party (although Pittsburgh leans Democratic too).  Unfortunately, they just don't have the traditions and capability of building up themselves and their community like those with Northern European or North Asian ancestry. They have a solid Third World mentality that begets Third World reality even in America.

Obama's Third World Background

Barack Obama has a solid Third World mentality too.   Indonesia, where he was raised,  has a solid Third World mentality too as does Africa---where he also lived. (I've lived in both Indonesia and two countries in Africa, so I'm qualified to comment)   Now, Obama is (naturally) bringing the Third World to America!   And he's leading in the polls!!  By the way, this is the precise point that the new film "Obama 2016"

He's seen only government as the primary enterprises in his early life as there are minimal traditions of free enterprise or capitalism in Africa (Kenya) and Indonesia.  Both places are basket-cases of poverty, corruption and failure where it's extremely difficult for private business to prosper.   In America, Obama has only been on the receiving end of the benefits of a prosperous society and he seems to be determined to NOT understand how and where the country's wealth comes from.  Because of that extreme ignorance, he'll easily bite the hands that feed him.

His "statist" views also explain why Barack Obama has no plan to help lift up Black Americans--the group struggling the most.  He vaguely calls for more "redistribution" and is all for more food stamps and easier SSDI eligibility and enrollment (Social Security Disabiliy).  His "faith" is completely in "The Government" and not in 'people' nor 'god'.   It doesn't seem to matter that government programs have been tried in Detroit and are still being tried with no good result.  It's wasted money.  (See the writing below by Jarrett Skorup)   He isn't able to identify correctly the root cause of problems.  For example public school teacher unions cost too much but, worse, are hurting the kids more than helping plus raising costs to unsustainable levels.

You think Obama really cares about black people?  If he does, what is his proposal for real change for this group?   I guarantee he'll never give a speech rallying African Americans emphasizing the need to "pick yourself up by the bootstraps", or promoting self-reliance, personal responsibility, personal initiative, or a call for more discipline and a stronger work ethic.  He's in a position to positively influence this group but his emphasis is a drab emphasis on bureaucracy.  Does he really think that redistribution for black people ad infinitum is good for this group?   If he does, he's a fool.  Sadly, I think he's a fool because Obama has proven that he is incapable of learning from "facts on the ground" whether it's the 2010 mid-term "shellacking" or even from a cop in Cambridge, MA.

We have created a monster in Obama, our first "affirmative action" president.  His ego is vastly inflated and he is so over-confident having been slathered with praise for essentially nothing.    He hasn't done anything of note except get elected (that was done with the backing of a political machine).   He didn't really work his way through school (despite his claims).   He never wrote an article for the Harvard Law Review. He never had a "real" private sector job.  He never sponsored any key legislation in his brief time as Senator.  He did nothing to earn a Nobel prize.  He has admitted that he was a mediocre student, and since his first deed of his administration to tightly suppress release of any and all college transcripts, one can be confident that he didn't even earn admission to Harvard on merit.   Everything has been handed to him because he's "black."   He's a slacker and he knows it.

Because of our "politically correctness" and our inability to call a "spade a spade",  a collective inability to see (the lack of) substance over "appearance" and "performance art",  the future of the "real" American ideal is in peril especially if Obama is re-elected.

Detroit's Descent

Now for a view on the failures of Detroit from Jarrett Skorup at the Makinac Public Policy Center:
Imagine a city where all the major economic planks of the statist or "progressive" platform have been enacted:
  • A "living wage" ordinance, far above the federal minimum wage, for all public employees and private contractors.
  • A school system that spends significantly more per pupil than the national average.
  • A powerful school employee union that militantly defends the exceptional pay, benefits and job security it has won for its members.
  • Other government employee unions that do the same for their members.
  • A tax system that aggressively redistributes income from businesses and the wealthy to the poor and to government bureaucracies.

Would this be a shining city on a hill, exciting the admiration of all? We don't have to guess, because there is such a city right here in our state: Detroit.
Detroit has been dubbed "the most liberal city in America" and each of these "progressive" policies is alive and well there. How have they worked out?
In 1950, Detroit was the wealthiest city in America on a per capita income basis. Today, the Census Bureau reports that it is the nation's 2nd poorest major city, just "edging out" Cleveland.
Could it be pure coincidence that the decline occurred over the same period in which union power, the city government bureaucracy, taxes and business regulations all multiplied? While correlation is not causation, it is striking that the decline in per capita income is exactly what classical economists predict would occur when wage controls are imposed and taxes are increased.
Specifically, "price theory" predicts that artificially high business costs caused by excessive regulation and above-market labor compensation rates imposed by so-called "living wages" will lead to an increase in unemployment. Detroit's minimum wage is more than $2 above the federal minimum wage; and pressure groups are pushing for more. Additionally, any company contracting with the city must pay its employees $11.03 an hour if they offer benefits or $13.78 an hour if they do not.
Such high wage mandates are especially hard on individuals with a poor education and low skills. If struggling and heavily taxed businesses cannot pay such high wages, then they are more selective about the few workers they do hire or simply go out of business altogether. Those who have promulgated these polices may be well-intentioned, but mainstream economists have warned for decades that such policies were very likely to bring about the abject poverty and unemployment that characterize Detroit today. The city has the highest unemployment rate among all large U.S. cities.
A similar pattern has played out in public education. It is now conventional wisdom among the political class that higher pay for teachers and increased spending per student lead to improvements in teacher quality and student performance -— Detroit Public Schools strongly suggests that this theory must be rejected. It has chronically underperformed state averages, yet reforms are vehemently opposed by the system's powerful school employee union.
At the same time that union, the Detroit Federation of Teachers, has won rich salary and benefits packages for its members. Detroit spends one of the highests amounts of money per student nationwide and the district's spending per pupil is eighth highest out of Michigan's 551 school districts. For all that, by almost any measure Detroit schools have for decades failed their students: test scores, safety, drop out rates, etc. Detroit's public school students perform among the lowest in the state. On a 2009 test for urban districts from the U.S. Department of Education, DPS students performed "barely above what one would expect simply by chance, as if the kids simply guessed at the answers."
In the private sector such failure would result in mass firings for unsatisfactory performance. No doubt such a response would be condemned by the progressives who support the school employee unions that have made similar actions impossible in their institutions, and have opposed major transformation at every turn.
For example, in 2003 philanthropist Bob Thompson offered $200 million to build 15 charter public schools in the city in which he would guarantee a 90 percent graduation rate. In response, the DFT balked because charter schools are not unionized. The outcome was that the union jobs trumped better outcomes for children.
People vote with their feet, and all the above suggests why, over the past decade, DPS has lost about 10,000 students each year to charter, independent and suburban schools.
Of course it would be unfair to place all the blame for the city's decline on public employee unions. Detroit is home to the Big Three, whose contracts with their own powerful unions provided the model for those public employee arrangements. The UAW successfully extracted wages and benefitsestimated at $73 per hour before the recent shake-ups began.
This is about $25 more per hour than the amount foreign-owned U.S. auto manufacturing plants pay their non-unionized American workers. Due to this disparity, Japanese car companies earn some $1,000 to $2,000 more on each car sold than their American counterparts. The outcome has been a relentless loss of market share that, among other things, has devastated the economic engine that once powered Motor City prosperity.
In addition to being a model of progressive economic, labor and education policy, Detroit is also a case study in welfare statism. Tom Bray, former editorial page editor for The Detroit News, has made the following observation:   "Detroit, remember, was going to be the 'Model City' of Lyndon Johnson's Great Society, the shining example of what the 'fairness' of the welfare state can produce.
Billions of dollars later, Detroit instead has become the model of everything that can go wrong when you hook people on the idea of something for nothing - a once-middle class city of nearly 2 million that is now a poverty-stricken city of less than 900,000."
Today, Detroit is down 25 percent over the past 10 years and dropping fast.
Progressives will complain that this portrait oversimplifies the factors involved in a great city's decline. Perhaps it does, but with this question in mind: At what point does the weight of evidence and logic make it impossible to avoid concluding that in the case of Detroit, correlation is causation?

US Debt Bomb

With a recent government bond sale, from Zero Hedge,  the US National debt reached $16,000,000,000,000.   It took 200 years to reach the first $1 Trillion in debt.   Now it took only 286 days to go from $15 T to $16 T.

But wait. You aint's seen nothing yet. At this rate of growth, total US debt will surpass:
  • $17 trillion on June 10, 2013;
  • $18 trillion on March 23, 2014;
  • $19 trillion on January 3, 2015; and
  • $20 trillion on October 16, 2015
The US Interest payments on debt amounts to $323 Billion in 2012.   That represents an average of 2% interest rate.   If interest rates return to normal levels of 4%, the interest payments would eventually double to $646 Billion.   That bill in 2015 will be $800 billion, or greater than our already bloated defense budget today.

Monday, August 27, 2012

Medicare Reform Is Timely

I like the way Obama tries to scare old people that the evil duo of Romney-Ryan will "end Medicare as we know it."  What he doesn't say is that Medicare will end "as we know it" WITHOUT reforms!  I think the American people are smart enough to get it.

No one is proposing curtailing current recipient payments or even those within 10 years of retirement.  That's the reason something must be done now.  If adjustments of some kind are not made now, there won't be the luxury of 10 years time to let people plan, save and adjust.  

The problem is that there are just not enough young workers paying into the "system" to support the number of baby boomers that are retiring now and those that will retire.  It's that simple.  These demographics have been apparent for about 30 years now and the Government has failed to save enough money to pay future benefits.  The government has been spending the money on other stuff.  It's a pay-as-you-go system and, going forward, there will not be enough people paying in.   It's all about unfavorable demographics.  The same problem affects Social Security.  Social Security is easy to fix.

What is evil is people that refuse to do anything despite the glaring inevitability of the demographic bust.   So bravo to Mitt and Paul for providing leadership in this important matter.   Yes, we have to discuss, compromise and work-out the details.

But the other side doesn't even want a discussion because it would expose how ill-prepared they are despite 30 years of warning.  Also, they believe that America is not smart enough to understand the issues or that they are too hysterical to even discuss it.  They assume that America is just like them!

A similar explanation from Thomas Sowell from Real Clear Politics:

Neither Social Security nor Medicare has ever had enough assets to cover its liabilities. Very simply, there has never been enough money put aside to do what the government promised to do.
These systems operate on what their advocates like to call a "pay as you go" basis. That is, the younger generation pays in money that is used to cover the cost of benefits for the older generation. This is the kind of financial pyramid scheme that got Charles Ponzi put in prison in the 1920s and got Bernie Madoff put in prison in our times.
A private annuity cannot play these financial games without its executives risking the fate of Ponzi and Madoff. That is why proposed Social Security and Medicare reforms would allow young people to put their money somewhere where the money they pay in would be put aside specifically for them, not used as at present to pay older people's pensions, with anything left over being used for whatever else politicians feel like spending the money on.
It is today's young people who are going to be left holding the bag when they reach retirement age and discover that all the money they paid in is long gone. It is today's young people who are going to be dumped over a cliff when they reach retirement age, if nothing is done to reform entitlements.



Kiss Cheap Oil Goodbye?

Peak oil might be argued, but it's becoming more clear that Peak Cheap Oil is increasingly a reality.    Brent Crude is $112 and WTI is $95 at a time when the entire world is either in a recession or entering one.  This round of economic weakness is arguably due to $110 WTI oil prices starting back in February of this year (the effect lagged by 6 months)    Gasoline prices in the US are nearing $4 per gallon and diesel fuel is over $4 per gallon--when the US economy is barely sputtering.

We are in a time that, when the world economy begins to recover, oil prices spurt higher and kill off said recovery.  Right now, the global economy is sputtering and oil prices are very high.  It's entirely possible that oil prices will bring another economic downturn and trigger the last leg of the financial crisis marking the end of a 40 year old world-wide debt super-cycle.  China is a big part of the final collapse as it's reaching it's limit of bad debt along with the rest of the world.  The implication is that we face an outright economic depression and $30 oil at some point.  This of course is inconceivable to most people at the moment.

From Ambrose Evans-Pritchard at The Telegraph,
Britain, the eurozone, and parts of Eastern Europe are in outright recession. China has “hard-landed”, the result of a monetary shock and real M1 contraction last winter. The HSBC manufacturing index fell deeper into contraction in July.
The CPB World Trade Monitor in the Netherlands show that global trade volumes have been shrinking for the last five months. Container shipping volumes from Asia to Europe fell 9pc in June. Iron prices have fallen by 30pc since April to $103 a tonne.
So we face a world where Brent crude trades at over $100 even in recession. Fears of an Israeli strike on Iran may have spiked the price a bit, though Intrade’s contract for an attack is well below levels earlier this year.
Iranian sanctions may have cut supply by more than the extra 900,000 bpd pumped by Saudi Arabia. Japan’s increased reliance on oil since switching off most of its nuclear reactors has played its part.
Yet the deeper force at work is the relentless fall in output from the North Sea and the Gulf of Mexico, endless disappointment in Russia because of Kremlin pricing policies, and the escalating cost of extraction from deep sea fields.
Nothing has really changed since the IEA warned four years ago that the world must invest $20 trillion in energy projects over the next 25 years to feed the industrial revolutions of Asia and head off an almighty crunch. The urgency has merely been disguised by the Long Slump.
We learned in the 2006-2008 blow-off that China is now the key driver of global oil prices, with consumption rising each year by 0.5m bpd -- now a total 9.2m bpd in a world market of 90m bpd. Demand is broadly flat in Europe and America.
So what will happen when China latest spending blitz gains traction? The regions have unveiled a colossal new spree on airports, roads, aeronautics, and industrial parks: a purported $240bn each for Tianjin and Chongqing, $160bn for Guangdong, $130bn for Changsha, and so forth. Sleepy Guizhou has trumped them all with $470bn. Your mind goes numb.
What will happen too when car sales in China surpass 20m next year, as expected by the China Association of Automobile Manufacturers?

Thursday, August 23, 2012

Lance Armstrong's Legacy At Risk

  • How can USADA (US Anti-doping Agency) have any jurisdiction over a French non-Olympic event (Tour De France)?  
  • Is this a case of another US Agency, with unlimited resources and funding, attacking a US citizen?  Think EPA vs. The Sacketts.  It could be.  It would become impossible for the Agency to back down after years of investigation.  How much taxpayer money am I paying for this type of prosecution??   This is what I want to know.
  • How come no one else is identified as a doper?  If Lance did something, don't you think that others were doing the same?  

Lance Armstrong's statement on 23 August:

‘‘There comes a point in every man’s life when he has to say, ‘‘Enough is enough.’’ For me, that time is now. I have been dealing with claims that I cheated and had an unfair advantage in winning my seven Tours since 1999. Over the past three years, I have been subjected to a two-year federal criminal investigation followed by Travis Tygart’s unconstitutional witch hunt. The toll this has taken on my family, and my work for our foundation and on me leads me to where I am today - finished with this nonsense.

I had hoped that a federal court would stop USADA’s charade. Although the court was sympathetic to my concerns and recognized the many improprieties and deficiencies in USADA’s motives, its conduct, and its process, the court ultimately decided that it could not intervene.

If I thought for one moment that by participating in USADA’s process, I could confront these allegations in a fair setting and - once and for all - put these charges to rest, I would jump at the chance. But I refuse to participate in a process that is so one-sided and unfair. Regardless of what Travis Tygart says, there is zero physical evidence to support his outlandish and heinous claims. The only physical evidence here is the hundreds of controls I have passed with flying colors. I made myself available around the clock and around the world. In-competition. Out of competition. Blood. Urine. Whatever they asked for I provided. What is the point of all this testing if, in the end, USADA will not stand by it?

From the beginning, however, this investigation has not been about learning the truth or cleaning up cycling, but about punishing me at all costs. I am a retired cyclist, yet USADA has lodged charges over 17 years old despite its own 8-year limitation. As respected organizations such as UCI and USA Cycling have made clear, USADA lacks jurisdiction even to bring these charges. The international bodies governing cycling have ordered USADA to stop, have given notice that no one should participate in USADA’s improper proceedings, and have made it clear the pronouncements by USADA that it has banned people for life or stripped them of their accomplishments are made without authority. And as many others, including USADA’s own arbitrators, have found, there is nothing even remotely fair about its process. USADA has broken the law, turned its back on its own rules, and stiff-armed those who have tried to persuade USADA to honor its obligations. At every turn, USADA has played the role of a bully, threatening everyone in its way and challenging the good faith of anyone who questions its motives or its methods, all at U.S. taxpayers’ expense. For the last two months, USADA has endlessly repeated the mantra that there should be a single set of rules, applicable to all, but they have arrogantly refused to practice what they preach. On top of all that, USADA has allegedly made deals with other riders that circumvent their own rules as long as they said I cheated. Many of those riders continue to race today.

The bottom line is I played by the rules that were put in place by the UCI, WADA and USADA when I raced. The idea that athletes can be convicted today without positive A and B samples, under the same rules and procedures that apply to athletes with positive tests, perverts the system and creates a process where any begrudged ex-teammate can open a USADA case out of spite or for personal gain or a cheating cyclist can cut a sweetheart deal for themselves. It’s an unfair approach, applied selectively, in opposition to all the rules. It’s just not right.

USADA cannot assert control of a professional international sport and attempt to strip my seven Tour de France titles. I know who won those seven Tours, my teammates know who won those seven Tours, and everyone I competed against knows who won those seven Tours. We all raced together. For three weeks over the same roads, the same mountains, and against all the weather and elements that we had to confront. There were no shortcuts, there was no special treatment. The same courses, the same rules. The toughest event in the world where the strongest man wins. Nobody can ever change that. Especially not Travis Tygart.

Today I turn the page. I will no longer address this issue, regardless of the circumstances. I will commit myself to the work I began before ever winning a single Tour de France title: serving people and families affected by cancer, especially those in underserved communities. This October, my Foundation will celebrate 15 years of service to cancer survivors and the milestone of raising nearly $500 million. We have a lot of work to do and I’m looking forward to an end to this pointless distraction. I have a responsibility to all those who have stepped forward to devote their time and energy to the cancer cause. I will not stop fighting for that mission. Going forward, I am going to devote myself to raising my five beautiful (and energetic) kids, fighting cancer, and attempting to be the fittest 40-year old on the planet.’’

The Defense
From LanceArmstrong.com:

AUSTIN, TX -- June 13, 2012 -- I have been notified that USADA, an organization largely funded by taxpayer dollars but governed only by self-written rules, intends to again dredge up discredited allegations dating back more than 16 years to prevent me from competing as a triathlete and try and strip me of the seven Tour de France victories I earned. These are the very same charges and the same witnesses that the Justice Department chose not to pursue after a two-year investigation. These charges are baseless, motivated by spite and advanced through testimony bought and paid for by promises of anonymity and immunity. Although USADA alleges a wide-ranging conspiracy extended over more than 16 years, I am the only athlete it has chosen to charge. USADA’s malice, its methods, its star-chamber practices, and its decision to punish first and adjudicate later all are at odds with our ideals of fairness and fair play.

I have never doped, and, unlike many of my accusers, I have competed as an endurance athlete for 25 years with no spike in performance, passed more than 500 drug tests and never failed one. That USADA ignores this fundamental distinction and charges me instead of the admitted dopers says far more about USADA, its lack of fairness and this vendetta than it does about my guilt or innocence.

Armstrong's Defense On CNN

From CNN

"Though USADA claims it has collected at least 10 witnesses to these events, it refuses to name a single one or even to identify what they will say," argues Armstrong's legal team, in a response to the charges published on the cyclist's website.

"USADA also claims that Mr. Armstrong committed doping violations for years, but cannot produce a single positive test result to corroborate this claim.

"Curiously, in the face of an alleged conspiracy involving four separate teams of cyclists over two decades, USADA has decided to charge only a single rider: Lance Armstrong."

Armstrong has also made his feelings clear about the USADA's offers of immunity to his his former colleagues.

"So let me get this straight... come in and tell them exactly what they wanted to hear and you get complete immunity AND anonymity? I never got that offer. This isn't about Tygart wanting to clean up cycling; rather it's just a plain ol' selective prosecution that reeks of vendetta," Armstrong declared on his Twitter account.

The case is still focused on whether the USADA has the right to prosecute Armstrong.

"The legal arguments center upon the jurisdiction of the U.S. Anti Doping Agency. In essence Lance Armstrong is trying to adopt a legal argument that the agency should not be prosecuting the regulatory and disciplinary process. Armstrong is saying the agency is violating his human rights," sports lawyer Richard Cramer told CNN.

"However the Federal Judge has rejected Armstrong's application and at the moment the agency will be allowed to proceed, although there is the added complication on whether it should be the International Cycling Union which should be prosecuting the charges."

What say ye??  Please leave comments.

Politician's Fetish For High Speed Rail

What is it with politicians and their fetish for high speed rail projects?

Around the world, central planning politicians from Obama, the Governor of California Jerry Brown all to the way to the Prime Minister Yinluck here in Thailand seem to have a fetish for high speed rail projects.

The cause of all this fetishism is China.   Communist China is the envy of the socialists, statists and authoritarians of the world----spending huge amounts of Yuan on high speed rail.  Nevermind, these projects don't have to make economic sense because every market in China is manipulated and capital is freely mis-allocated.  In China, there are no real market forces, no "un-manipulated" banking sector, no required rates of return and no investors in any conventional sense---other than The State.  "The State" is doing these and many other unwise projects to create jobs at any cost.  (Gee, sounds like the "stimulus" in the USA in 2009 which created jobs at $400,000 a pop)

Also, the breakneck growth in China invites accidents: both of the financial and actual train wreck kinds.  Two trains collided killing 35 people in the Zhejiang province in July of this year.   [I wonder if the authorities harvested body parts from the dead?]    Most of the loans to the ill-conceived capital projects will go "bad".  But the authoritarian communist Chinese government can sweep the bad loans "under the rug" for awhile----maybe even decades.

High Speed Rail is a loser everywhere

You will never see any actual and/or trustworthy data from China but I'd be willing to bet that none of these projects has any viable economic justification.  These projects are incredibly expensive and are difficult to justify with any reasonable fares and ridership.  Similar projects are proven losers world-wide.  From Calwatchdog.com,
France subsidizes its high-speed rail system by nearly $10 billion annually. Japan subsidizes its rail system with nearly $2 billion annually. And Spain spends nearly $3 billion on high-speed rail subsidies every year.
The US subsidizes the incredible slow and decrepit AMTRAK, which should be called 3rd World Rail or SSSR or Super Slow Speed Rail.  Not only is it slow, but you get a good dose of bad attitude from the employees, usually African-American, as a bonus!  What else would you expect from government employees who are, without a shred of doubt, members of an unnecessary public union?

At least we see a few glimmers of common sense from Republican governors.  From George Will at The Washington Post,
Wisconsin Gov. Scott Walker (R) rejected $810 million in federal money for a 78-mile high-speed rail project paralleling Interstate 94 between Milwaukee and Madison. Ohio Gov. John Kasich (R) rejected $400 million for a high-speed (well, about automobile speed) train paralleling Interstate 71 between Cleveland and Cincinnati. Florida Gov. Rick Scott (R) rejected $2.4 billion for 90 miles of high-speed rail paralleling Interstate 4 between Tampa and Orlando. In faith-based transportation policy, rail worshipers think people will park their cars in Tampa and then rent cars in Orlando.
I'm glad to see some Republican governors exercise some fiscal prudence and common sense.  Now if we can just duplicate the same prudence and sense at the national level!  I'd love to see the Republican party stand for competent administration (and forget the irrelevant social issue litmus tests).

Thailand Folly

So, to hell with facts, even the Yinluck government in Thailand has caught the high speed rail bug.  She has proposed $13 Billion dollars (equivalent) of spending for various high speed rail links in Thailand as part of an infrastructure program in preparation for ASEAN integration in 2015.   Nevermind that Thailand doesn't even have any limited access national highways and existing trains are quite old fashioned and outdated.    Yinluck would be well-advised to spend a relatively small amount of money to bring about 10,000 foreign teachers of English, Science and Math to teach the extremely ill-prepared young minds here.  Right now the young people here are as about as dumb as wood. It's so bad that I think Thailand's progress is about to stop or go backward.  But, back to project ideas,  a few limited-access highways should be the first priority.  You can't ship as much freight on high speed trains!

The Yinluck and the Chinese Government are a bunch of idiots.  Those that admire them and their central planning foolishness are idiots too.  That includes Obama, Diane Feinstein, and half of the US congress.

California Folly

A high speed rail project in California, initially estimated to cost $30 billion has escalated to an estimated $100 billion (then back down to $68 billion as the project becomes less high speed).  The project would make economic sense if gasoline cost $40 per gallon!  That's a stretch!    See the article by George Will in the Washington Post.   With the extreme bureaucracy, regulation, permits, litigation that marks doing business in California, the project from San Francisco to Los Angeles will never get done and they will still spend the money trying.  California doesn't have the money!!  Helloooo!  Wake up people!  (See my blog A State Without A Republican.)

And if it gets done, then the state will be on the hook for subsidies to keep it going.  NO ONE is counting the future cost of subsidies that will inevitably occur since gasoline is never going to be $40 per gallon (unless a cup of coffee costs $10-----which might be the case with the mad men at the US Federal Reserve---but the rail project will have escalated by then as well).

Obama Folly

All of this "California Folly" is being promoted with about $4 billion of Federal subsidies from the Obama Administration ($4 billion out of $100 billion isn't much).   Never mind, the Obama Administration doesn't have the $4 billion and must borrow from the Chinese to subsidize a hare-brained project in California.

How screwed-up do things have to get before the public catches-on in the USA?

Monday, August 20, 2012

Hit The Road, Barack


Now's this is encouraging!  Even liberal media is giving a fair hearing for the opposition (and reason).  Take a  look at a great article by Niall Ferguson at Newsweek.

Sunday, August 19, 2012

Ridiculous Chinese Claims On S. China Sea

Have a look at a map showing Chinese territorial claims versus claims of it's SE Asian neighbors. (UNCLOS, referenced in the map below, is an acronym for UN Convention on Law of the Sea.)


Obviously this is outrageous. It is also totally inconsistent with any modern maritime agreement or tradition. The Spratlys and Paracels islands are basically uninhabited, but the Chinese have made a big "show" by recently putting a military garrison on one of them. From the New York Times

China recently established a larger army garrison and expanded the size of an ostensible legislature to govern a speck of land, known as Yongxing Island, more than 200 miles southeast of Hainan. The goal of that move...is to allow Beijing to “exercise sovereignty over all land features inside the South China Sea,” including more than 40 islands “now occupied illegally” by Vietnam, the Philippines and Malaysia.
In the past several weeks, China has steadily increased its pressure, sending patrols with bigger ships and issuing persistent warnings in government-controlled newspapers for Washington to stop supporting its Asian friends against China.
Not only are their claims ridiculous and unreasonable, now the Chinese are using military force and intimidation to defend the ridiculous. As recently as July 2012, there was a stand-off with China and the Philippines recently regarding a Chinese show of force near the Scarborough Shoals off of the Philippines (see map above). Both sides had military vessels in the area and tensions were running high.

All of this is about oil and gas resources by the way. Vietnam has ongoing offshore leasing, exploration and production activities that include foreign operating companies, and according to The Economist
On June 21st Vietnam's parliament passed a maritime law that reasserted the country's claims to the Spratly and Paracel Islands (see map below). China called this a “serious violation” of its sovereignty. It responded by declaring that a county-level government which supposedly governs the two archipelagoes and much of the rest of the South China Sea from one of the Paracel Islands, had been upgraded to the administrative level of a prefecture. Chinese media described this notional jurisdiction, Sansha, as by far the biggest prefecture in the country (though its population of a few hundred people is heavily outnumbered by gulls and its ill-defined territory is mostly water). Some Chinese internet users speculated excitedly about who might be appointed mayor, but reports on some websites that a 45-year-old hydrologist had got the job were later dismissed as a spoof.
Tensions rose further with an announcement late last month by CNOOC, a Chinese state-owned oil company, that it was opening nine blocks in what China calls the South Sea to international bids for oil and gas exploration. These reach to within 37 nautical miles (68km) of Vietnam's coast, according to PetroVietnam, a Vietnamese state-owned oil firm.

The association of Southeast Asian Nations, ASEAN, met several weeks ago and the Chinese, with the help of client state Cambodia, squashed all evidence that this conflict was even discussed much less settled. I don't know who the Chinese think they're kidding. Do they think the rest of the world is stupid?

The American statement backs the multilateral approach to the disputes championed by ASEAN. Its members are still smarting over their failure—for the first time in the organisation’s 45-year history—to agree on a joint statement after their annual foreign ministers’ meeting, which they held last month in Phnom Penh. It was blocked because Cambodia, a faithful Chinese client, refused to accept wording on the South China Sea demanded by some of its fellow members.
China are communist imperialistic pigs bent on driving their economy forward at breakneck speed. This is necessary because the communist party's only legitimacy is that they are creating jobs for their citizens. They will do anything to stay in power. This includes running roughshod over the environment, human rights, their own citizens, international law.  They even will threaten their SE Asia neighbors with raw displays of military force.  To feed their perverted drive for legitimacy, they'll distort world's commodity, currency and financial markets and they'll also do anything to hush and silence critics. We see the true colors of the Chinese Regime at work here. 

Friday, August 10, 2012

Houston: We Have A (Spending) Problem

From IowaHawk, to collect enough revenue to fund our projected $3.9 Trillion Federal budget (works out to be about 11 Billion per day) without borrowing money, you would have to do ALL of the following plus more:

  1. Confiscate ALL of the corporate profits for the 500 top corporations in the S&P 500 at 100% tax rate ($357 Billion)
  2. Confiscate 100% of the combined salaries of all players in the NFL, Major League Baseball, the NBA and the NHL, the PGA tour and NASCAR would give you $9.4 Billion or 1 day of government spending!
  3. Confiscate ALL of the income over $250,000 of the people making over $250,000 per year would yield only $1.412 Trillion.  (Taking all of the income of people earning over $250k would yield 1.97 Trillion----for one time only because most of that income would "go away" at 100% tax rate)
  4. End all foreign wars for $264 Billion in savings (but you'd have to do this each year, since the Federal Gov't will want to spend MORE than $3.9 Trillion next year---there's NEVER a real budget cut in Washington in the sense that spending actually declines.)
  5. Evict all of the people in Beverly Hills and sell their homes would buy just 3 days of Federal Spending or $30 Billion
  6. Kill all of the billionaires in the US (400 of them) and tax their estates at 50% would give a one time revenue of $700 Billion.  This includes Warren Buffett and Bill Gates.
  7. Confiscate all of the Revenue of the Star Wars series including merchandise, films, etc.for $25 Billion
  8. Kill all of the near-billionaires (about 100) and tax their estates for another $730 Billion
  9. Another $50 billion savings in budget cuts that Conservatives have been clamoring for.  
The total of the above doesn't cover our Federal budget!  All of the above totals only $3550 Billion.  We're still $450 Billion short.   

Let's see, do we have a taxation problem or a spending problem?  

A number of the items above are one-time events and the revenue required will have to be made-up the following year by confiscation of someone else's property.  

From Michael Synder:

For the past four decades, the United States has been enjoying a 15 trillion dollar party. All of this borrowed money has enabled us to live far, far beyond our means.

If our politicians voted to severely cut spending or to raise taxes dramatically at this point, our economy would suddenly readjust to a more realistic standard of living. But that would be extremely painful and most Americans voters would be absolutely furious. They would demand that someone “fix” the economy immediately. But the truth is that what we have been enjoying all these years has not been real. It has been bought with trillions of dollars stolen from future generations. But most of our politicians just want to keep the party rolling as long as humanly possible so that they can keep getting voted back into office.



Wednesday, August 8, 2012

Guest Post: Obama's Second Term Plans

As a follow-on to my previous post about Obama flouting the Constitution, I received a very good email letter which is circulating the internet and credited to a Steve McCann dated May 2012.   I'll post it here in it's entirety as I think it picks up enough good and accurate points concerning the current Obama administration and what a 2nd term might look like.  Every President presses his limits of authority, but when Bush tried it, there were howls of "foul play" from national media.  Of course, the media is continuing it's slavish obedience to this charismatic president.

If we, the People, can't see beyond the "style" to see "substance" then we, the People, will get what we deserve.
Obama's Second Term Transformation Plans

The 2012 election has often been described as the most pivotal since 1860.This statement is not hyperbole. If Barack Obama is re-elected the United States will never be the same, nor will it be able to re-capture its once lofty status as the most dominant nation in the history of mankind.

The overwhelming majority of Americans do not understand that Obama's first term was dedicated to putting in place executive power to enable him and the administration to fulfill the campaign promise of "transforming America" in his second term regardless of which political party controls Congress.That is why his re-election team is virtually ignoring the plight of incumbent or prospective Democratic Party office holders.

The most significant accomplishment of Obama's first term is to make Congress irrelevant. Under the myopic and blindly loyal leadership of Harry eid and Nancy Pelosi, the Democrats have succeeded in creating an imperial and, in a second term, a potential dictatorial presidency.

During the first two years of the Obama administration when the Democrats overwhelming controlled both Houses of Congress and the media was in an Obama worshipping stupor, a myriad of laws were passed and actions taken which transferred virtually unlimited power to the executive branch.

The birth of multi-thousand page laws was not an aberration. This tactic was adopted so the bureaucracy controlled by Obama appointees would have sole discretion in interpreting vaguely written laws and enforcing thousands of pages of regulations they and not Congress would subsequently write.

Additionally, the Obama administration has, through its unilaterally determined rule making and regulatory powers, created laws out of whole cloth. The Environmental Protection Agency on a near daily basis issues new regulations clearly out of their purview in order to modify and change environmental laws previously passed and to impose a radical green agenda never approved by Congress. The same is true of the Energy and Interior Departments among many others.

None of these extra-constitutional actions have been challenged by Congress. The left in America knows this usurpation of power is nearly impossible to reverse unless stopped in its early stages.

It is clearly the mindset of this administration and its appointees that Congress is merely a nuisance and can be ignored after they were able to take full advantage of the useful idiots in the Democrat controlled House and Senate in 2009-2010 and the Democrat Senate in the current Congress.

Additionally, Barack Obama knows after his re-election a Republican controlled House and Senate will not be able to enact any legislation to roll back the power previously granted to the Executive Branch or usurped by them. His veto will not be overridden as there will always be at least 145 Democratic members of the House or 34 in the Senate in agreement with or intimidated by an administration more than willing to use Chicago style political tactics.

The stalemate between the Executive and Legislative Branches will inure to the benefit of Barack Obama and his fellow leftists.

The most significant power Congress has is the control of the purse-strings as all spending must be approved by them. However, once re-elected, Barack Obama, as confirmed by his willingness to do or say anything and his unscrupulous re-election tactics, would not only threaten government shutdowns but would deliberately withhold payments to those dependent on government support as a means of intimidating and forcing a Republican controlled Congress to surrender to his demands, thus neutering their ability to control the administration through spending constraints.

Further, this administration has shown contempt for the courts by ignoring various court orders, e.g. the Gulf of Mexico oil drilling moratorium, as well as stonewalling subpoenas and requests issued by Congress. The Eric Holder Justice Department has become the epitome of corruption as part of the most dishonest and deceitful administration in American history. In a second term the arrogance of Barack Obama and his minions will become more blatant as he will not have to be concerned with re-election.

Who will be there to enforce the rule of law, a Supreme Court ruling or the Constitution? No one. Barack Obama and his fellow-travelers will be unchallenged as they run roughshod over the American people.

Many Republicans and conservatives dissatisfied with the prospect of Mitt Romney as the nominee for president are instead focused on re-taking the House and Senate. That goal, while worthy and necessary, is meaningless unless Barack Obama is defeated. The nation is not dealing with a person of character and integrity but someone of single-minded purpose and overwhelming narcissism. Judging by his actions, words and deeds during his first term, he does not intend to work with Congress either Republican or Democrat in his second term but rather to force his radical agenda on the American people through the power he has usurped or been granted.

The governmental structure of the United States was set up by the founders in the hope that over the years only those people of high moral character and integrity would assume the reins of power. However, knowing that was not always possible, they dispersed power over three distinct and independent branches as a check on each other.

What they could not imagine is the surrender and abdication of its constitutional duty by the preeminent governmental branch, the Congress, to a chief executive devoid of any character or integrity coupled with a judiciary essentially powerless to enforce the law when the chief executive ignores them.

Conservatives, Libertarians, the Republican Party and Mitt Romney must come to grips with this moment in time and their historical role in denying Barack Obama and his minions their ultimate goal. All resources must be directed at that end-game and not merely controlling Congress and the arious committee chairmanships.

Steve McCann
May 2012

Tuesday, August 7, 2012

Obama Ignoring The Constitution

First, a 7th grade Civics lesson:  the Executive Branch of our government is in charge of enforcing the laws that the Legislative Branch passes.  If a statute becomes a law, it's because the Legislative Branch has passed it in both Houses and the President has signed it into law.   This is the way the Government is supposed to function under our Constitution.

Apparently Obama was not present in 7th grade Civics class or somehow missed that basic information in his Harvard Doctoral Constitutional law class (whether he attended or even passed these courses is a carefully guarded secret)!   Either that or he is flouting the Constitution intentionally.

First, it was Obama saying that he won't enforce immigration rules for young illegals (haven taken the oath to protect the Constitution), now Obama unilaterally has decided that there is no need for the provision, enacted by Bill Clinton and bi-partisan Congress, to require able-bodied welfare recipients to find some kind of work.   This was termed welfare-to-work and it pushed down welfare rolls dramatically in the 1990s.  Personally, I thought that the welfare "problem" was solved for good in this country.

From the Detroit News
In a blatant challenge to the legislative branch, Obama by executive order tossed out the Clinton-era welfare reform that required able-bodied aid recipients to work, saying the federal government will no longer enforce the law.

This follows the president's unilateral rewrite of immigration law, using an executive order to implement elements of the DREAM Act, which Congress refused to adopt. He also has thumbed his nose at the No Child Left Behind Act, and has put in place cap-and-trade carbon rules that were specifically rejected by Congress.

He can't do these things, by any reading of the Constitution. And yet he is. Because Congress, whose powers he is usurping, hasn't risen to stop him.

The Constitution separates powers between the legislative, administrative and judicial branches to more effectively limit government authority, and thus protect individual liberty.

Obama apparently does not recognize those constitutional limits on his power.

He is doing these things under the rallying cry of "We Can't Wait," contending that the gridlock in Congress caused by Republican gamesmanship is impeding his agenda.

But this is how the founders intended government to work. The responsibility is on the president to forge a working relationship with Congress. Obama's inability to do that does not give him the power to act unilaterally, even if it were true that the opposition wants to see him fail.
From Mitch McConnell, explaining the original law and what has happened in the Richmond Times-Dispatch
In 1996, President Bill Clinton worked with Republicans in Congress to reform our nation's costly and ineffective welfare programs. Upon signing the bipartisan bill into law, Clinton noted that the measure would "[restore] America's basic bargain of providing opportunity and demanding, in return, responsibility." And he was right. Most would agree that the measure has been a great success.....
Building on successful state programs, like our groundbreaking legislation here in Virginia that I was honored to carry in the legislature as a delegate, Congress strengthened the welfare safety net by adding a requirement that individuals receiving financial support must also look for and find work. It's known as "welfare-to-work" for short. And while some were concerned that the measures in this reform were too tough, their doubts were soon erased.
Welfare caseloads that had remained unchanged for 40 years were quickly cut in half. The poverty rate among welfare recipients, especially children, plummeted. The percentage of single mothers with a job grew from 58 to 75 in less than a decade. Millions of Americans were moving off the welfare roll and moving up life's ladder.
Over the course of 16 years, welfare reform has proven to be a historic achievement. But, ignoring this record, the Department of Health and Human Services last month announced that it would allow states to propose programs that did not comply with federal work requirements. With a stroke of a pen, decades of bipartisan efforts to tie welfare to work were undone, and the heart of welfare reform was gutted.
As a candidate, the president claimed that he supported welfare-to-work policies. He once professed that work should be "a centerpiece of any social policy." He has now apparently changed his mind.
It's time for Congress and the voters to pay attention to this bad behavior and give him a good firm "Civics Lesson" to this "Chavista" president.  Please pass this on to your concerned friends.

Friday, August 3, 2012

Blog Series #4: More Solutions...

This blog entry is a continuation of the 3rd Blog in this Series: "Blog Series #3: More Solutions to Big Problems"

Embrace Shale Energy, Reduce Oil Imports (radically improve trade balance and national security)
  1. Convert cars, buses and trucks to CNG (compressed natural gas). 
  2. Build CNG filling stations which is fairly easy to do. 
  3. Promote Conversion kits that are available for cars now. 
  4. Displace oil imports and improve our balance of trade and national security.
  5. Try CNG mass transit (buses and mini-buses) in cities with minimal mass transit.  People will take a bus if it comes every 3 to 5 minutes.
  6. The US needs to finally allow exploration of the most promising areas of Alaska including ANWR, and extend leasing in both US east and US west coasts.  Offshore California (in Federal waters) and ANWR/North Slope are each likely to similar to the North Sea in oil/gas.  The last fields developed offshore California were over 1 billion barrels of oil!   We can't allow an individual state to block access to the people's resources!  (Federal waters begin at 3 miles and extend to 200 miles offshore.)  Increased exploration means more jobs
  7. Allow the Keystone pipeline construction to go ahead to create jobs and secure reliable energy from Canada.  Stop annoying our best friends! 

Reduce Medical Costs that threaten to overwhelm family budgets

Pass measures known to reduce medical costs:
  1. Tort reform, 
  2. Promote national (interstate) insurance competition, 
  3. Encourage more supply of medical professionals, 
  4. "Bust the trusts" of AMA and Big Pharma: outsource drug supply via worldwide bidding and graduate more doctors
  5. Encourage more medical savings plans which allow for more high-deductible policies (people paying more of their bills; questioning pricing and demanding the lowest price, more "skin in the game"), 
  6. If ObamaCare remains, allow high deductible policies to suffice for medical coverage (instead of imposing high cost policies)
  7. Allow pharmacists to dispense most medicine without a doctor's prescription.  Pharmacists can handle most issues and they know when they don't know enough.
Also see Ideas to Reduce Medical Costs

Overcoming Demographic "Drag"and Excessive Housing Supply
  1. Expand immigration from Developed areas of the world and less from 3rd World Nationalities.
  2. Invite foreign graduate students, master's and doctoral candidates, to immigration interviews.
  3. Target highly skilled immigrants using a point system like Canada.
  4. Offer visas to foreigners who buy used homes in the US (to mop up oversupply).
Moral, Social and Educational Issues
  1.   How about mandatory military service for young people in trouble?  
I'm welcome to ideas and comments on all of these categories...

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Blog Series #3: More Solutions To Big Problems

This page is a continuation of Blog Series #2: Solutions To Big Problems

Improve Education and Reduce the Cost of Government
  1. Outlaw public sector unions at local, state and national levels. Even FDR advised this. Teachers unions are hurting our kids and not helping, all other public unions only extort taxpayer money. Government employee benefits are estimated to be 45% too high compared to private sector.  Pensions are driving cities to bankruptcies already and expect more. Zero interest rates are NOT helping pension plans either.
  2. Cut public employee costs; kill defined benefit plans for public workers and scrap Davis-Bacon and all prevailing wage laws for public workers.  (hat tip to Mike Shedlock at  Globaleconomicanalysis Blogsite)
  3. Pass national "right to work" laws to allow individuals true freedom to join or not join unions.
  4. Freeze Federal employees salaries and reduce benefits which have ballooned 45% higher than similar jobs in the private sector.
Improve Fiscal Administration  

    1. Rollback the various Federal budget categories to 2008 levels or at least freeze Federal spending. Gradually reduce government spending back to 19% of GDP rather than 25%. Yes this will hurt the economy for a few years, but it's better for the long term.  It's entirely possible that, since there has been so little benefit for increased debt, a reduced rate of debt creation might not hurt as much as expected. In other words, vastly increased deficits did so little good, then reducing the deficits may not hurt as expected.
    2. We don't need troops in 140 countries! Cut defense spending.
    3. Medicare and Social Security need to be means-tested now. Reduce future payouts now to to take into account adversely changing demographics and reassure US debt markets.
    4. Get control of Social Security Disability--it's cost's are spiraling out of control. See my blog entry on this.
    5. Reduce or eliminate all/most tax deductions and broaden collection. The bottom 48% is paying no taxes (many or most have "negative" taxes), the middle class (top 25 to 50% from 32K to 66K income is only paying 6% federal income tax. The "rich" (top 1%) are paying 23% of their income in taxes, but the next highest income group between the top 1% and top 5% is paying only 16.4%. See Taxfoundation.org for a Table of Income Tax data.   Obviously revising the tax code is indicated. Contrary to everything you've heard, the very rich are carrying more than their fair share!   Also see my blog:  Income Tax Demagoguery
    6. Corporate and Individual tax reform to broaden collection and reduce deductions. Collect more revenue. Corporations should pay more tax but the top rate should come down.  The "effective" rate now is too low given profit levels.
    7. Eliminating the Dept of Education, Dept of Homeland Security, TSA, Dept of Agriculture, NLRB (National Labor Relations Board), Dept of Energy, HUD and other housing programs. 
    8. Eliminate agricultural subsidies. 
    9. Cancel/reduce most foreign subsidies starting with eliminating subsidies to Pakistan! 
    10. Cancel or scale-back Obamacare since it's going to cost infinitely more than what was promised. If ObamaCare is retained, then allow high deductible policies to suffice for medical coverage (instead of imposing high cost policies)
    11. Privatize, privatize, privatize! Privatize the Federal highways and Post Office? Sell-off Fannie Mae and Freddie Mac. Get out of the student loan business.
    12. The Federal Government must schedule an end (soon) to the unlimited support ($100's of billions) of Fannie Mae and Freddie Mac. Sell off both.  Markets will clear faster.
    Please proceed to the next Blog Series:   Blog Series #4: More-solutions..

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    Blog Series #2: Solutions to Big Problems


    Major Ideas to address the major problems detailed in Blog Series Part 1-America's Problems And How To Solve Them:

    Politics and Corruption
    1. Get money out of politics. Go with all Federal money for national campaigns--no private contributions permitted (with the exception of $200 or less??). This would ban lobbyist money too.  No SuperPacs.
    2. We need the "fresh air" of shareholder democracy at our corporations.  Pass rules that shareholders must approve executive pay packages including stock options, etc. Complete disclosure of pay packages must be made for shareholder vote.  Major investors like public pension funds must be on the Boards of Directors-by law.  
    Overcoming Loss of Demand and Sluggish US Economy 
    1. Defeat Obama in the upcoming election. It's true that the President is a fairly weak effect on the economy but the current president and his administration together are the biggest "wet blanket"  to job creation ever  (as Democrat Mort Zuckerman termed it) .  I predict that there will be an economic rebound due to pent-up demand when he is defeated.  How long it lasts is debatable.
    2. A bipartisan effort to repatriate jobs back to America from Asia:  offer businesses/entrepreneurs incentives or even "tax holidays" to bring jobs back to America.  Improve US trade balance (also see Energy revival section below to improve trade balance).  Make a big patriotic splash to encourage this. Enact incentives to make this happen.
    3. Lower corporate tax marginal rates to more world-competitive levels.   Reform tax codes to raise the currently insufficient "effective" corporate tax rate.  A lower marginal rate should bring capital and jobs back to the US as costs in China and Asia have risen sharply in several years.  (Individual tax reform is covered in another blog)
    4. A presidential announcement of a moratorium on further regulation (or, better yet, a rollback of regulations) by the EPA, NLRB, etc.  
    5. Expand immigration (see Blog Series #3)
    6. Have a Presidential-led,  bipartisan State Governor's summit to discuss possible infrastructure projects that improve future US productivity (the lifeblood of real growth).  There may be some Federally supported infrastructure 'works' that have real economic benefit.  The problem is that it will take years to plan, appropriate and engineer projects before many jobs are created.  This was the problem with small amount of infrastructure spending in the first $700 million "stimulus".
    7. Embrace the shale energy boom and conversion of transportation to compressed natural gas (see following blogs in this series)
    8. A bipartisan deal on closing the impending Federal debt "train wreck" that has business and investors worried (see Improve Fiscal Administration, Improve Education, and Lower the Cost of government and Reduce Medical Costs in  Blog Series #3: More Solutions To Big Problems and  Blog Series #4: More Solutions..  ).
    9. Expand energy exploration in the US (on Federal land).  Approve Keystone pipeline.  Take advantage of every opportunity to create jobs.  (see Blog Series #4: More Solutions...)

    Banking and Financial Reforms
    1. Re-institute a monetary gold standard to guide monetary policy, remove the "full employment" mandate from the Federal Reserve. The Fed Reserve should renounce further Quantitative easing now. 
    2. Consider downsizing the Federal Reserve's size and purpose--since it's failed miserably over the long term. 
    3. Reinstate normal interest rates now to 2 or 3% (set short-term interest rates at 0.5% higher than inflation rate) to stop punishing retirees and savers.  See my blog US Gov't (Federal Reserve) Policies Are Not Working
    4. Repeal Dodd-Frank (it's already 5200 pages and not finished nor implemented) and break up the big banks into investment companies and conventional banks as in the days of 'Glass Steagall.' Limit leverage in both entities to 12 to 14 times capital (conservative). 
    5. No off-balance sheet items---make everything clearly stated on the balance sheet. 
    6. Put derivatives on exchanges and have banks/investment houses mark-to-market all hedging positions at the end of each day. 
    7. Return to conventional banking and loan-making for newly split-off banks with low leverage requirements 
    8. Make bankers responsible for bank failures. Pass laws to require jail time and salary claw-backs for serious "financial malfeasance."
    Please proceed to the next Blog in this Mega-Series: Blog Series #3: More Solutions To Big Problems

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    Thursday, August 2, 2012

    Blog Series Part 1: America's Problems And How To Solve Them

    This is the first in a series of Blogs that attempts to more correctly define longer term causes of economic, political and social problems in the USA and propose some possible solutions that, taken together, might very well be a prescription for a return to prosperity and a renewal for our country.  Obviously this is a Herculean task and demands more time and space than just a few pages!  I've tried to be concise and list ideas.

    This Blog Series is intended to assist in informing and assisting other conservative-minded thinkers, opinion leaders and politicians.  As with any such communications, it is intended to start a conversation with other like-minded persons.

    Thanks for having a look here and please share this information with interested friends!

    The Blog series consists of four blogs:
    Blog Series #1 (This Page):  A Concise Listing of Root Causes of Short- and Long-Term Problems in the Country
    Blog Series #2:  Measures to Reform Politics, Reduce Corruption, Improve the Economy, Banking and Financial Reforms
    Blog Series #3:  Measures to Improve Education, Reducing Government Spending and the Cost of Government
    Blog Series #4:  Reduce Medical Cost Spiral, More Domestic Energy and Jobs and Improve Demand in the Currently Sluggish Economy

    The first step in solving America's problems are to identify what the problems are.   The following list is my attempt to list America's most important short and long term problems (roughly in order of importance):
    • Sluggish economy and loss of demand in the economy is due to a) persistent long-term trade deficits and the resulting transfer (stealing) of jobs to Asia especially China but also to Japan, S. Korea, and others.  Also, persistent trade deficits represent a huge transfer of wealth to Asia and the oil exporting countries, b) the Fed-and Gov't-caused bubbles incl. the housing bubble overhang (bad bank loans) and a "balance sheet recession" for consumers, c) slower spending due to our aging population (demographic drag). Also, d) poor government leadership and tax policies (high marginal corporate tax rates) now hurt the possibility of job repatriation from Asia. e) Poor current presidential leadership has frightened businessmen into 'sitting on their hands'. f) expanding regulation during near-recessionary conditions is a drag on business. (See my blog: EPA's Carbon Regulation Power Grab) g) poor and/or corrupt leadership at corporations, excessive cronyism in board rooms leading to excessive compensation at executive levels.  Excessive compensation=corruption. The resulting income and wealth inequality hurts the economy and invites "populist" governments.  Think Argentina.
    • Poor national administration and lawmaking, lack of or wrong type of national leadership, persistent government and trade deficits for 30 years, corruption in politics at all levels, excessive influence peddling by special interests, eg, inappropriate deregulation of banking due to influence of banking lobby, the decline of 'rule of law', excessive government "changing of the rules" and too much interference in economy. Inappropriate Federal Reserve policy creating "bubbles."  See my blog: US Economic Policies Are Not Working and Washington Is Corrupt All The Way To The Top
    • Abandonment of gold standard in 1971 (Breakdown of Bretton Woods International Gold Exchange Agreements) allowed excessive monetary stimulus/credit creation from the Federal Reserve creating stock market, credit and housing bubbles. These bubbles also benefited wealthy Americans and exacerbated wealth inequality. Abandonment of the gold standard also has allowed persistent trade and budget deficits which, in turn, allowed a historic transfer of US wealth to Asia and Middle East. The effects of this loss of wealth is becoming increasingly apparent in the USA. Further crises and loss of wealth are inevitable with no change. 
    • Medical cost upward spiral threatens family budgets. Policy and lawmaking efforts by politicians have failed to address measures that would limit costs. Instead policy makers are determined to increase demand on a system without addressing an increase in "supply." 
    • Non-white America cultural and educational collapse--Afro- and Latino-Americans continue to perform poorly in school with extremely high dropout rates--especially African-Americans. Also, African American family units are in "tatters" in what amounts to a cultural collapse. This leads to limited job skills, limited social skills, criminality, poor work ethics, high unemployment, government dependence, medical problems, obesity, institutionalized individuals and despair. Ultimately violence will be the result of these factors. These two ethnic groups make up 25% of the US population and a failure to improve the "culture" of these two groups could drag down the entire nation. America is sinking into a "ghetto" culture of failure and government dependence. This group will fall prey to "populist" political messages bringing the wrong political leadership into power--leadership that will "pander"to this group.  Solutions must come from "within" those communities--not from federal programs. In fact, federal programs delay indefinitely the necessary cultural change.  It's possible that local and state governments have roles to play here.
    • Generally declining social and moral values, increasing ignorance--including ignorance of American traditions, economic illiteracy, ignorance of traditional values, declining education standards, poor parenting, declining work ethics in general, declining moral values in business (the housing bubble and mortgage mess was a widespread failure of ethics and morality from Main Street to Wall Street). 
    • Generational decline. From the "greatest generation," who knew hardship of depression and war, each subsequent generation is "spoiled" by success and ease. Work ethics and attitudes decline and a sense of "entitlement" come to fore. This will eventually be reversed by severe hardship once again. 
    • Government spending and increasingly insurmountable national debt due to a) rising entitlement and other government spending especially after 2004 due to a) sluggish economy and declining tax revenue, b) unfavorable demographics and entitlement programs, c) fraud in government programs and d) expensive administration costs due to public unions and poor administration/management, e) expensive military and wars.
    Please proceed to the next Blog in this Mega-Series:  Blog Series #2: Solutions to Big Problems
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