#008 March 31, 2009
Did I fall asleep… have I been in a coma? Did I awaken this morning in the twilight zone? Have I moved from the “free” country of the U.S.A. to somewhere (anywhere) else?
President Obama requires GM’s CEO to step aside…
“On Friday I was in Washington for a meeting with administration officials,” Wagoner said in a statement. “In the course of that meeting, they requested that I ’step aside’ as CEO of GM, and so I have.”
President Obama said Wagoner’s dismissal was less about retribution or incompetence than it was about giving the company a fresh start.
“This is not meant as a condemnation of Wagoner, who’s devoted his life to this company and has had a distinguished career; rather, it’s a recognition that it will take a new vision and a new direction to create the GM of the future,” Obama said.
I’m just curious, when did President Obama ever run a business? What does he know about making money, when he never earned money in a business at all? Should President Obama’s title be changed to Premier Obama? Do we now have an oligarchy ruling America? (Oligarchy is a form of government where power effectively rests with a small elite segment of society). Has our government formed an Oligarchy of Obama, Geithner, Bernanke and Pelosi? I am amazed, in less than 12 months we have gone from just not liking our President to having a President actually requiring a CEO of a private institution to resign.
I bet Wagoner wishes he would have taken bankruptcy instead of bail out! As much as I disagree with the USG having the ability to require a CEO to resign, at least it almost seems apropos – he was willing to take government money, now he has to play by their rules. Kind of like, if you go to the Godfather for help, you are now in his debt. GM, Chrysler, AIG, and the major investment banks now must line up and submit to the Godfather (I mean President).
And of course, let’s not forget the administration’s desire to control any private business they deem “too large to fail.” I wonder where all this is going? I have no idea, but I know it cannot be good for freedom loving Americans.
Another thing… have you heard of the new AmeriCorps Bill passed by Congress? This will triple the size of the organization and cost us several billion in the next five years. AmeriCorps is the public service organization President Clinton formed in the early 90’s. I read about this bill passing last week and it got me to wondering, “is this the precursor to a national service organization?” This concerns me. I believe the USG is working towards a mandatory national service organization – not unlike the military draft, only for “civil and public” service. I think this bill/program could ultimately morph into a mandatory 2 year stint for young Americans, all in the name of “public service”. I am going to research more on this topic in the next few weeks. Let me know if you have any insight on this subject.
March ended up for the markets – hopefully (?) that will translate to good news for all us out there in TV land. The major economic reports will be out at the end of this week… let’s see how the oligarchy and their minions can spin the March reports.
I thought you might just want to know!
With regards,
Allen
Information contained herein is deemed reliable but not guaranteed.
http://VoiceCafe.blogspot.com
Tuesday, March 31, 2009
Monday, March 30, 2009
They Get the Money, We Get the Bill
By: Allen Wells
# 018 March 30, 2009
I checked the markets this morning on the way to work, too early for the U.S but the major European and Asian markets were down, way down overnight, Great Britain down over 3%, Germany down over 4.5%, Japan down 4.5% and Hong Kong down more than 4.5%. That does not bode well for the U.S. markets.
Of course, by the time this is published the day will be over and we will know exactly what happened in the U.S. markets. As of 1130 AM the Dow was down over 3.6% and if a rally does not start soon (today) it may end up losing all its wonderful gains for March.
As I have said before, I do not think the U.S. stock market is a true gauge of the U.S. economy. The major traders are driving up the prices on the losers (companies losing money) and driving down the prices on the winners (companies making money, or at least holding their own in this market). The stock market is one big gamble. Traders are not buying for value, they are buying for quick profits, based upon a false economy.
What do I mean by “false economy”? Let me give you an example. Citibank is basically a bankrupt institution, the only reason the company is not in bankruptcy court right now is because the government bailed them out to the tune of billions of dollars. By bailing out Citi (and others) the USG has created a fake or “false” value for these companies. Just a few weeks ago, Citi’s values were dropping like a rock, ending up somewhere in the 80 cent range. Traders were well aware that the USG had committed to not letting Citi fail. When the stock hit this bottom, the traders came in and bought as much as possible – why not, they had a virtual guaranty from the USG that they would not lose their money. Today Citi is down over 9.5% (at 1150 AM), but is still trading at $2.37 per share. This is a spread of $1.50 per share (more or less) from just a few weeks ago.
Now, if you are a big trader and you bought 1 million shares at 80 cents, and sold today at $2.37 you would have made a $1,570,000 profit in just a few weeks. The stock market is no longer about investing in profit making ventures, it is about making as much money as quickly as possible. This is why I say that a rising stock market is not the best place to look for what is happening in the economy. A falling market is a better indicator, because as a company’s stock value goes down, their book value goes down and that affects their borrowing power.
Once a company’s stock value goes too low, they lose the ability to borrow. Falling stock prices are a good indicator that the economy (overall) is headed down. A rising stock market however, is not necessarily an indicator of great things to come. Just because a company’s stock value is rising does not mean good times are coming. If a company’s stock increases in value, but the overall market is slow or slowing, the company will not invest that new capital in more plants, or hiring or other capital expenditures. What a smart company will do is put additional credit in place, pull out cash and put it away for the inevitable slow down in the economy. Just because XYZ Corporation’s stock is going up does not mean that XYZ Corporation will be spreading that wealth, nor does it mean XYZ Corporation is making money (profit). Long term investors may buy the stock because it carries less risk than other companies.
Going back to my original point – false economy… when the government makes the decision to back a company or companies, they are basically stating that win or lose (profit or no profit) we will keep this company in business. The injection of billions, maybe trillions of dollars into these companies opens up tremendous opportunities for two groups of people:
1. Big money traders that can spend literally millions of dollars on one stock trade. An average
person can buy 1,000 shares at 80 cents per share of CITI and spend $800, thus making $1,570 when the price goes to $2.37. Not a bad profit, but not life changing. The average worker may not be able to risk the $800, and if he can, he does not have the inside knowledge the big traders have that the government will never let the CITI stock go to zero. Look again at the numbers (I quoted above) when you are able to spend $800,000! $1,570,000 profit in a few weeks is not so bad, is it? Once a stock (that is guaranteed not to fail by the USG) reaches a tipping point, it has nowhere to go but up. Those versed in this market know this, and knew it when the stock fell in price. Follow the money.
2. Politicians will also reap the benefits of this bail out boondoggle. By bailing out these massive corporations, they virtually assure themselves campaign contributions and special favors from here to eternity from the beholden industries. What do you and I get?
This is what we get: Our politicians have made the decision that major corporations are “to big to fail”. The result of that decision is you and I can go bankrupt; we do not matter. Even if we do go bankrupt, that does not relinquish us from our tax obligations. Citi, Bank of America, auto parts suppliers and the others are all too big to fail. Therefore, the government can bankrupt us (to pay for them) through higher prices (inflation) and through higher taxes to pay off those “to big to fail”.
What happens when there is none of us left to carry the burden of those “to big to fail?”
All I can say is this, “The United States of America, where we subsidize our failures and punish our producers.”
With warmth and regards (as always),
Allen
To reply or comment:
http://voicecafe.blogspot.com
# 018 March 30, 2009
I checked the markets this morning on the way to work, too early for the U.S but the major European and Asian markets were down, way down overnight, Great Britain down over 3%, Germany down over 4.5%, Japan down 4.5% and Hong Kong down more than 4.5%. That does not bode well for the U.S. markets.
Of course, by the time this is published the day will be over and we will know exactly what happened in the U.S. markets. As of 1130 AM the Dow was down over 3.6% and if a rally does not start soon (today) it may end up losing all its wonderful gains for March.
As I have said before, I do not think the U.S. stock market is a true gauge of the U.S. economy. The major traders are driving up the prices on the losers (companies losing money) and driving down the prices on the winners (companies making money, or at least holding their own in this market). The stock market is one big gamble. Traders are not buying for value, they are buying for quick profits, based upon a false economy.
What do I mean by “false economy”? Let me give you an example. Citibank is basically a bankrupt institution, the only reason the company is not in bankruptcy court right now is because the government bailed them out to the tune of billions of dollars. By bailing out Citi (and others) the USG has created a fake or “false” value for these companies. Just a few weeks ago, Citi’s values were dropping like a rock, ending up somewhere in the 80 cent range. Traders were well aware that the USG had committed to not letting Citi fail. When the stock hit this bottom, the traders came in and bought as much as possible – why not, they had a virtual guaranty from the USG that they would not lose their money. Today Citi is down over 9.5% (at 1150 AM), but is still trading at $2.37 per share. This is a spread of $1.50 per share (more or less) from just a few weeks ago.
Now, if you are a big trader and you bought 1 million shares at 80 cents, and sold today at $2.37 you would have made a $1,570,000 profit in just a few weeks. The stock market is no longer about investing in profit making ventures, it is about making as much money as quickly as possible. This is why I say that a rising stock market is not the best place to look for what is happening in the economy. A falling market is a better indicator, because as a company’s stock value goes down, their book value goes down and that affects their borrowing power.
Once a company’s stock value goes too low, they lose the ability to borrow. Falling stock prices are a good indicator that the economy (overall) is headed down. A rising stock market however, is not necessarily an indicator of great things to come. Just because a company’s stock value is rising does not mean good times are coming. If a company’s stock increases in value, but the overall market is slow or slowing, the company will not invest that new capital in more plants, or hiring or other capital expenditures. What a smart company will do is put additional credit in place, pull out cash and put it away for the inevitable slow down in the economy. Just because XYZ Corporation’s stock is going up does not mean that XYZ Corporation will be spreading that wealth, nor does it mean XYZ Corporation is making money (profit). Long term investors may buy the stock because it carries less risk than other companies.
Going back to my original point – false economy… when the government makes the decision to back a company or companies, they are basically stating that win or lose (profit or no profit) we will keep this company in business. The injection of billions, maybe trillions of dollars into these companies opens up tremendous opportunities for two groups of people:
1. Big money traders that can spend literally millions of dollars on one stock trade. An average
person can buy 1,000 shares at 80 cents per share of CITI and spend $800, thus making $1,570 when the price goes to $2.37. Not a bad profit, but not life changing. The average worker may not be able to risk the $800, and if he can, he does not have the inside knowledge the big traders have that the government will never let the CITI stock go to zero. Look again at the numbers (I quoted above) when you are able to spend $800,000! $1,570,000 profit in a few weeks is not so bad, is it? Once a stock (that is guaranteed not to fail by the USG) reaches a tipping point, it has nowhere to go but up. Those versed in this market know this, and knew it when the stock fell in price. Follow the money.
2. Politicians will also reap the benefits of this bail out boondoggle. By bailing out these massive corporations, they virtually assure themselves campaign contributions and special favors from here to eternity from the beholden industries. What do you and I get?
This is what we get: Our politicians have made the decision that major corporations are “to big to fail”. The result of that decision is you and I can go bankrupt; we do not matter. Even if we do go bankrupt, that does not relinquish us from our tax obligations. Citi, Bank of America, auto parts suppliers and the others are all too big to fail. Therefore, the government can bankrupt us (to pay for them) through higher prices (inflation) and through higher taxes to pay off those “to big to fail”.
What happens when there is none of us left to carry the burden of those “to big to fail?”
All I can say is this, “The United States of America, where we subsidize our failures and punish our producers.”
With warmth and regards (as always),
Allen
To reply or comment:
http://voicecafe.blogspot.com
Saturday, March 28, 2009
Formula for More Government Control
By: Allen Wells
# 016 March 28, 2009
Here we go again… Republican Senator Orrin Hatch of Utah has started a search committee to investigate the Bowl Championship Series because the Utah “Utes” didn’t make it last year… word is that he is using the Federal Government catch all concept “racketeering!“ I just want to thank Senator Hatch and the rest of the Republican gang for reminding me that the Republicans are the still party of smaller government and less government intervention. Stories like this tend to restore my faith in the system…
Folks, it’s coming… government is becoming more ubiquitous (ever-present) in our lives every day. Will our elected politicians stop at anything? What we must understand, if we allow the government to intervene into the financial aspect our lives, we must expect them to encroach upon every aspect of our lives. By intervention I mean federal subsidies, payouts, grants, etc. Most people think intervention is just new laws and new rulings by the executive agencies and new taxes.
For you more analytical and mathematically inclined, I’ve created a formula for this concept:
Subsidy x Taxes ÷ Laws = Control
You probably won’t see this formula in an economics text or on the pages of Bloomberg or the Wall Street Journal or even USA today, but that is only because it is too simple and makes too much sense. Let me explain (it’s about the money… and re-election): We do not realize each time we allow the government to take money from someone else and give it to us (or a “cause” we agree in) we are agreeing to more and more government encroachment or control or intervention (you choose the word).
For example, the big battle going on in New Hampshire (“Live Free or Die”) is the mandatory seat belt law. New Hampshire is the only state in the Union that does not have a mandatory seat belt law. By not having this law, New Hampshire does not receive several million dollars in Federal highway funds. On one side you have those that claim seatbelts may save lives, but the government has no right to tell them what to do in their own personal vehicle. I agree with this principle. I think I should be free to live safely or kill myself dangerously. The federal, state or local government should have no jurisdiction over my body.
Here’s the problem with that concept in today’s society. We have Social Security, SSI, Medicare, Medicaid and other various hodge podges of Federal and State welfare programs to pay the cost for illness or injury and to pay the spouses and dependents of those who die or are severely injured. This money is extracted from the producers of this nation at the threat of incarceration, confiscation of property or worse (through a process called taxation), placed in a pool or fund and then returned back to the dependents (with a “small handling charge” retained by the government). Depending upon the age of the dependent, some of these payments continue for many, many years after the person’s death, resulting in a substantial ongoing expense for the government.
You may disagree with these programs in principle, but I’ve never heard of anyone that turned down any of these funds or payouts “on principle”. We accept the money or subsidy because we “deserve” it. After all, we paid our taxes.
If we agree that the government should have a program to compensate the spouses and dependents of those that die, then we must agree with laws that try to “protect” us from early death or injury. The argument ceases to be about government intervention in our lives and becomes a question of protecting the investment. In order for the government to protect this “fund”, they must try to control the risk factors. This is the basic tenet of any type of insurance.
Insurance is nothing more than a bet, the insurance company is betting (based on statistics and actuarial tables) that you will not file a claim that exceeds their ability to create income from your premiums. You are betting that you will have a claim that exceeds your premiums. If you do not believe that you will have a claim that will exceed your premiums, then why buy the insurance?
With the Federal Government’s insurance programs – SSI, Medicare, Medicaid, etc. (and coming soon: national health care) the Federal Government cannot make that bet. They must insure or cover everyone that needs covering. The government cannot increase your premiums as a result of your “at risk” life choices. If you die skydiving and you have dependents – your dependents will still receive the benefit. If you have a privately marketed insurance policy that excludes skydiving and you are killed skydiving, your dependents will not receive a benefit. The amount you paid for the coverage is not relevant because skydiving was excluded. The only choice the government has is to outlaw certain types of behavior. Not wearing a seatbelt is a behavior that is outlawed in 49 states.
This also includes moral decisions or other “at risk” lifestyle choices. An ongoing battle for years has been the legality of same sex marriages. Follow the money. Do you think insurers have a moral issue with same sex marriages? Certainly not. The issue is cost. To insure a male homosexual in an “at risk” lifestyle without being able to mitigate the exposure with higher premiums is unacceptable to a profit seeking organization. Insurance companies are not humanitarian organizations, they are businesses.
The argument can be made that two homosexual males involved in a monogamous relationship are as healthy and insurable as heterosexual couples involved in a monogamous relationship.
The dilemma for insurances companies is that they not allowed (by law) to delve into your personal lives and relationships. They can check your medical records, credit, etc. but insurance companies cannot make a decision on what some would call “moral choices.” Insurance companies make their decisions based upon statistics and actuarial tables. From a risk standpoint a heterosexual couple will have far less medical expenses than homosexual couples. This is not a racist or homophobic statement. I personally don’t care who you live with or who you “marry”. Marriage in the eyes of God and marriage as a civil institution are two different things. Homosexuals are more likely to acquire devastating and debilitating illnesses than heterosexuals. Insurance companies are not allowed (by law) to mitigate this risk with higher premiums for homosexual couples –everyone must be treated equally. By virtue of this, most insurance companies choose not to insure homosexual unions.
If you think insurance premiums are high now, wait until Federal Government legislates and end to “discrimination” between heterosexual unions and homosexual unions. Premiums will go up because the cost of doing business will go up. This is another “hidden” way your life changes, or your expenses increase because of government intervention. This is also welfare by legislation. The insurance companies savings as a result of your “not” at risk life style will serve as a subsidy for others at risk life style.
Now, back to government insurance programs. By necessity the Federal Government must cover all claims equally. It cannot “hedge” its bets with exclusions and riders. The only choice the government has is to exercise more control over our lives in order to keep the cost down. Do you really believe your state legislature or congress really cares if you wear a motorcycle helmet (or a bicycle helmet) or a seatbelt? They don’t – they are trying to reduce risk to reduce cost. Seatbelt laws may have saved lives or reduced serious injury. From a cost stand point (hospitals, surgery, recovery, etc.) severe injuries are often more expensive (to the bill payer) than death.
When we submit to government welfare programs… yes, these programs are welfare programs… we are required to submit to the requisite government control in our lives. When we ask the government to intervene with a law that makes property insurers pay for damage claims to our homes as a result of natural catastrophes (that are specifically excluded from our policy), we are agreeing to allow the government to tell us how to build our homes, how to live in our homes, where to build our homes and so on. We are also agreeing to allow the government (through law or administrative decision) to take funds from the insurance company and redistribute it to us.
I think Supreme Court Justice Louis Brandeis hit the nail on the head:
"Experience should teach us to be most on our guard to protect liberty when the government's purposes are beneficent ... the greatest dangers to liberty lurk in insidious encroachment by men of zeal, well meaning but without understanding." Olmstead vs. United States, United States supreme Court, 1928
With every welfare program and subsidy, new laws must be passed to mitigate the exposure to the overall cost or expense of these same programs or subsidies. In order to maintain control over society new laws must be passed. These laws, no matter how benevolent they seem continue to make each one of us a law breaker in our own right.
This explains my formula:
Subsidy(Government subsidies and welfare programs) x (multiply the need for more income) Taxes (government creates income by taxing producers) ÷ (need to mitigate risk) Laws (how the government mitigates risk) = (results in) Control (more intervention in our lives, actions, relationships, making us all law breakers in some shape, form or fashion)
“There's no way to rule innocent men. The only power any government has is the power to crack down on criminals. Well, when there aren't enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible to live without breaking laws”. Ayn Rand
With warmth and regards (as always),
Allen
To reply or comment:
http://voicecafe.blogspot.com/
# 016 March 28, 2009
Here we go again… Republican Senator Orrin Hatch of Utah has started a search committee to investigate the Bowl Championship Series because the Utah “Utes” didn’t make it last year… word is that he is using the Federal Government catch all concept “racketeering!“ I just want to thank Senator Hatch and the rest of the Republican gang for reminding me that the Republicans are the still party of smaller government and less government intervention. Stories like this tend to restore my faith in the system…
Folks, it’s coming… government is becoming more ubiquitous (ever-present) in our lives every day. Will our elected politicians stop at anything? What we must understand, if we allow the government to intervene into the financial aspect our lives, we must expect them to encroach upon every aspect of our lives. By intervention I mean federal subsidies, payouts, grants, etc. Most people think intervention is just new laws and new rulings by the executive agencies and new taxes.
For you more analytical and mathematically inclined, I’ve created a formula for this concept:
Subsidy x Taxes ÷ Laws = Control
You probably won’t see this formula in an economics text or on the pages of Bloomberg or the Wall Street Journal or even USA today, but that is only because it is too simple and makes too much sense. Let me explain (it’s about the money… and re-election): We do not realize each time we allow the government to take money from someone else and give it to us (or a “cause” we agree in) we are agreeing to more and more government encroachment or control or intervention (you choose the word).
For example, the big battle going on in New Hampshire (“Live Free or Die”) is the mandatory seat belt law. New Hampshire is the only state in the Union that does not have a mandatory seat belt law. By not having this law, New Hampshire does not receive several million dollars in Federal highway funds. On one side you have those that claim seatbelts may save lives, but the government has no right to tell them what to do in their own personal vehicle. I agree with this principle. I think I should be free to live safely or kill myself dangerously. The federal, state or local government should have no jurisdiction over my body.
Here’s the problem with that concept in today’s society. We have Social Security, SSI, Medicare, Medicaid and other various hodge podges of Federal and State welfare programs to pay the cost for illness or injury and to pay the spouses and dependents of those who die or are severely injured. This money is extracted from the producers of this nation at the threat of incarceration, confiscation of property or worse (through a process called taxation), placed in a pool or fund and then returned back to the dependents (with a “small handling charge” retained by the government). Depending upon the age of the dependent, some of these payments continue for many, many years after the person’s death, resulting in a substantial ongoing expense for the government.
You may disagree with these programs in principle, but I’ve never heard of anyone that turned down any of these funds or payouts “on principle”. We accept the money or subsidy because we “deserve” it. After all, we paid our taxes.
If we agree that the government should have a program to compensate the spouses and dependents of those that die, then we must agree with laws that try to “protect” us from early death or injury. The argument ceases to be about government intervention in our lives and becomes a question of protecting the investment. In order for the government to protect this “fund”, they must try to control the risk factors. This is the basic tenet of any type of insurance.
Insurance is nothing more than a bet, the insurance company is betting (based on statistics and actuarial tables) that you will not file a claim that exceeds their ability to create income from your premiums. You are betting that you will have a claim that exceeds your premiums. If you do not believe that you will have a claim that will exceed your premiums, then why buy the insurance?
With the Federal Government’s insurance programs – SSI, Medicare, Medicaid, etc. (and coming soon: national health care) the Federal Government cannot make that bet. They must insure or cover everyone that needs covering. The government cannot increase your premiums as a result of your “at risk” life choices. If you die skydiving and you have dependents – your dependents will still receive the benefit. If you have a privately marketed insurance policy that excludes skydiving and you are killed skydiving, your dependents will not receive a benefit. The amount you paid for the coverage is not relevant because skydiving was excluded. The only choice the government has is to outlaw certain types of behavior. Not wearing a seatbelt is a behavior that is outlawed in 49 states.
This also includes moral decisions or other “at risk” lifestyle choices. An ongoing battle for years has been the legality of same sex marriages. Follow the money. Do you think insurers have a moral issue with same sex marriages? Certainly not. The issue is cost. To insure a male homosexual in an “at risk” lifestyle without being able to mitigate the exposure with higher premiums is unacceptable to a profit seeking organization. Insurance companies are not humanitarian organizations, they are businesses.
The argument can be made that two homosexual males involved in a monogamous relationship are as healthy and insurable as heterosexual couples involved in a monogamous relationship.
The dilemma for insurances companies is that they not allowed (by law) to delve into your personal lives and relationships. They can check your medical records, credit, etc. but insurance companies cannot make a decision on what some would call “moral choices.” Insurance companies make their decisions based upon statistics and actuarial tables. From a risk standpoint a heterosexual couple will have far less medical expenses than homosexual couples. This is not a racist or homophobic statement. I personally don’t care who you live with or who you “marry”. Marriage in the eyes of God and marriage as a civil institution are two different things. Homosexuals are more likely to acquire devastating and debilitating illnesses than heterosexuals. Insurance companies are not allowed (by law) to mitigate this risk with higher premiums for homosexual couples –everyone must be treated equally. By virtue of this, most insurance companies choose not to insure homosexual unions.
If you think insurance premiums are high now, wait until Federal Government legislates and end to “discrimination” between heterosexual unions and homosexual unions. Premiums will go up because the cost of doing business will go up. This is another “hidden” way your life changes, or your expenses increase because of government intervention. This is also welfare by legislation. The insurance companies savings as a result of your “not” at risk life style will serve as a subsidy for others at risk life style.
Now, back to government insurance programs. By necessity the Federal Government must cover all claims equally. It cannot “hedge” its bets with exclusions and riders. The only choice the government has is to exercise more control over our lives in order to keep the cost down. Do you really believe your state legislature or congress really cares if you wear a motorcycle helmet (or a bicycle helmet) or a seatbelt? They don’t – they are trying to reduce risk to reduce cost. Seatbelt laws may have saved lives or reduced serious injury. From a cost stand point (hospitals, surgery, recovery, etc.) severe injuries are often more expensive (to the bill payer) than death.
When we submit to government welfare programs… yes, these programs are welfare programs… we are required to submit to the requisite government control in our lives. When we ask the government to intervene with a law that makes property insurers pay for damage claims to our homes as a result of natural catastrophes (that are specifically excluded from our policy), we are agreeing to allow the government to tell us how to build our homes, how to live in our homes, where to build our homes and so on. We are also agreeing to allow the government (through law or administrative decision) to take funds from the insurance company and redistribute it to us.
I think Supreme Court Justice Louis Brandeis hit the nail on the head:
"Experience should teach us to be most on our guard to protect liberty when the government's purposes are beneficent ... the greatest dangers to liberty lurk in insidious encroachment by men of zeal, well meaning but without understanding." Olmstead vs. United States, United States supreme Court, 1928
With every welfare program and subsidy, new laws must be passed to mitigate the exposure to the overall cost or expense of these same programs or subsidies. In order to maintain control over society new laws must be passed. These laws, no matter how benevolent they seem continue to make each one of us a law breaker in our own right.
This explains my formula:
Subsidy(Government subsidies and welfare programs) x (multiply the need for more income) Taxes (government creates income by taxing producers) ÷ (need to mitigate risk) Laws (how the government mitigates risk) = (results in) Control (more intervention in our lives, actions, relationships, making us all law breakers in some shape, form or fashion)
“There's no way to rule innocent men. The only power any government has is the power to crack down on criminals. Well, when there aren't enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible to live without breaking laws”. Ayn Rand
With warmth and regards (as always),
Allen
To reply or comment:
http://voicecafe.blogspot.com/
Friday, March 27, 2009
Information Update 7: An Advance Auction on Stolen Goods
By: Allen Wells
# 007 March 27, 2009
Today was a big day in the market… traders appear (so far) to have bought into the digital cash for toxic assets plan… yet another of the massive bailouts for the big boys while the rest of us sit on the side lines waiting for the next shoe to drop… and by shoe I mean inflation.
Do you realize the money being spent on the economic bailouts now total more than the entire New Deal, the Korean War, the 1980’s Savings and Loan crisis, the entire Iraq war, and all the money ever (yes, I said ever) spent on NASA – COMBINED! What’s the saying, “we can put a man on the moon but we can’t …”. Ouch.
I ran across an interesting comment from President Change (I mean Obama). Yesterday’s Wall Street Journal carried an article “Obama Defends Budget Plan”. The article states: “He repeated his call for new authority to seize and dismantle nonbank financial institutions like troubled insurance giant American International Group, Inc.” Whoa… is that what I thought he said? Is our President suggesting the Federal Government should now have the power to seize entire companies? Forget socialism, isn’t this fascism?
Understand, I am not accusing or suggesting that our President is a fascist. I’m just saying, the economic and political paths upon which we have embarked have a faint scent of fascism. Check the Wikipedia explanation of fascism… “Fascists thought that private property should be regulated to ensure that “benefit to the community precedes benefit to the individual. They also introduced price controls and other types of economic planning measures. In terms of economic practice, this meant promoting the interests of successful businesses while banning trade unions and other workers' organizations.” If it walks like a duck…
It could be that President Obama is listening to advisors that have more sinister plans for our way of life… perhaps he is innocent in all this. I have no doubt that our President wants to be liked and respected as much as Lincoln. The point President Obama must understand is that Lincoln wasn’t that well liked when he was President. He had to preside over a horrible war and then be murdered in his prime before he became and icon. Hopefully this isn’t in President Obama’s future.
Moody's has now downgraded Bank of America bonds and Wells Fargo bonds. Interestingly these are the same ratings services that gave AAA ratings to the mortgage loans that led to the recent downgrading of the banks. Of course, this is the same bond rating agency that stands to make millions upon millions rating the new issues that the USG will be offering as a result of the new “toxic” loan disposal program.
S & P downgraded its rating on Warren Buffet’s (the smartest investor in the world) Berkshire Hathaway from stable to negative. Berkshire Hathaway lost a third of its value in 2008 and has lost an additional 12% this year. This is the same Warren Buffet (the smartest investor in the world) that told us at the end of last year that he had “faith” in the economy, so he bought stocks… recently he announced that “… the economy is in shambles.” His Berkshire Hathaway profits are down 96% from last year. Like the song says, “you gotta have faith.”
I have faith that he same major banks, BofA, Citi, Morgan Stanley, Chase etal will all make millions with these new government (read Taxpayer funded) funded bail out programs. I have faith that the same bond rating agencies, Moody’s, S & P, Fitch, etal will make millions (maybe billions) rating the new “toxic assets” for sale to the same investors… I guess this is called the circle of life (or the circle of wealth).
“A policy of subsidizing failures will end in an economy strewn with capital-guzzling industries long past their time of profitability--old companies that cannot create jobs themselves, but can stand in the way of job creation.” George Gilder, Wealth and Poverty
Given the recent bailouts, “public/private partnerships and ongoing congressional rhetoric, it has become clear that Americans cannot trust their elected officials to defend our rights and interests.
What happens to a person when they are elected to public office? Suddenly they feel they have the right to spend everyone else’s money, without reason or logic. I guess I have to agree with H.L. Mencken who said; “an election is an advance auction on stolen goods.”
By the way, has anyone noticed, with all the hoopla this month about the “great economic news” we’ve failed to notice the USG is lowering statistic after statistic for January’s economic growth (or lack thereof)? Virtually all of the major indicators have been adjusted down… I’m not saying there is a USG massaging of the numbers going on but…
So, now we are told is that the USG is going to work with the private sector (using the people who got us into this mess) to get us out of this mess. Investors will be working together with the government bureaucrats, as equals to solve this problem.
I don’t know if there is anymore I can say about that. I guess I will close with the words of the French Statesman and Philosopher, Frederic Bastiat: “Government is the great fiction, through which everybody endeavors to live at the expense of everybody else.”
I thought you might just want to know!
Allen
Thursday, March 26, 2009
Taking the Good from the Bad
By: Allen Wells
# 015 March 26, 2009
It seems as though all we hear each day is more bad news. I have to admit, most of what I’ve written these past few weeks seem to hinge on bad news, not good news. That is why I try to balance my opinions on the world and economy with thoughts and essays on personal growth, relationships and life lessons. No matter what the economic times, relationships are far more important than money or the stock market.
"It's good to have money and the things money can buy, but it's good, too, to check up once in a while and make sure that you haven't lost the things money can't buy." George Horace Lormier
Savings rates are up, for the first time in a couple of decades. Savings are the backbone of capital growth (even with fractional reserve banking) and ours had reached the negative savings point. Forget what Washington is telling us… spending is not the way out of this. Americans must learn to save again.
Americans have (I hope) come to realize you cannot finance long term growth with financial engineering… at some point you must have a product. It is now time to get back to earning money the old fashioned way – earning it. How do we earn it? We earn it by providing a good or service that people want or need.
This is the beauty of the free market system. The free market cannot be run by coercion. In order to succeed in the market you must be aware of the needs of the consumer and provide what they need (and want) at a price they can afford. In the free market competition is not only healthy, it should be welcomed. Without competition suppliers can get lazy… this is the problem with government run entities – they are a monopoly with complete control over the production and distribution systems – with no competition (see theVoiceCafe # 011 Gaining Security and Losing Freedom).
Our biggest threat at this point is twofold: Increased government intervention in our lives and businesses and the very real threat of massive inflation.
We cannot do much about the stopping inflation at this point, the massive money machine of the USG has already guaranteed this for us. At this point we must prepare for it to the extent possible. More people are planting gardens than they have in many, many years. Food prices are going up. It might not be feasible to get a cow or a pig, but just about anyone can plant a small garden.
Increased government intervention is coming. In the areas of health and welfare, business, first and second amendment rights… the changes are coming. It may or may not be too late to stop the rising tide but we can do two things, speak out on the issues and educate others. In order to do this, we must be educated ourselves. Many people I talk to agree with these principles (liberty, freedom, free markets, less government intervention, etc) but cannot effectively vocalize their beliefs.
This is understandable. Our society has increasingly focused on daily “topical” issues for an entire generation and forgotten how to study and prepare ourselves. Abraham Lincoln was quoted as saying, “I will study and prepare myself and someday my chance will come.” We tend to look for our chance, but we’ve not studied or prepared ourselves when that chance arrives.
If we are to take back our rapidly eroding freedoms and liberties we must learn to think and speak for ourselves with a well founded philosophical basis in what we believe. The majority of our children and most of my generation were raised in government schools taught the state approved philosophy or even no philosophy at all. I’m not talking about Aristotle and Nietzsche, I mean a clear, coherent philosophy of how to live our lives, how to relate to others (and ourselves) and how to understand property and individual rights.
My goal with this blog (and soon, hopefully webpage with more information and links) is to help educate others. Not to force my viewpoint down your throat, but to cause others to think, ponder and wonder. We have too much “noise” around us, we protect ourselves with radio, TV, iPods, and talking (non stop, on and on and on and on) so we do not have to think. Aldous Houxley said, “They intoxicate themselves with work so they won’t see how they are.” This is us.
When was the last time you read a book (not a paper or a magazine)? I’ve heard is said, “books give you knowledge, magazines give you information.” Sometimes all we want is information – it’s a lot easier than a non-fiction book. Books require you to think, ponder and wonder… get my point?
To take back our lives, we must prepare ourselves. I stated in theVoiceCafe #10 “Truth, Lies and Doublespeak”: “As committed believers in liberty, we must continue to fight this battle every day. This is not a battle of guns and ammunition; this is a battle of words, thoughts, concepts and ideologies. If we don’t win that battle, we may end up in a war of guns and ammunition.”
Good from the bad? Let us wake up to the threats around us. Let us learn to defend ourselves philosophically. The cost is much less and the danger is much less than having to defend ourselves physically.
"The man who does not read good books has no advantage over the man who cannot read them." – Mark Twain
With warmth and regards (as always),
Allen
To reply or comment:
Wednesday, March 25, 2009
Living Life With Joy
By: Allen Wells
# 014 March 25, 2009
Today is my birthday! I am 48 years old today. In reality I never thought I would be 48. Not that I thought I would be dead, it’s just that I’ve never been able to picture myself this old (I’m sure some of you will say “that’s not old” and some of you will say “wow, that’s old”!)
As I grow older and mature I’ve come to realize that I will never get everything I want (materially) and life will never be “easy”. I have found that life can be joyful, regardless of where we are and what we are going through. Joy is the fabric that holds together our emotions.
Everyone should have something in life that gives them joy. Only with joy can you have peace and contentment. Happiness, fun, excitement – none of these things will bring you peace or contentment. I have found that you can have joy in your heart and still be sad, or concerned, or even afraid. Joy makes the other emotions tolerable.
Joy fosters love. Joy embodies faith. Joy allows empathy and caring. If a person has no joy, all other “virtuous” emotions are fleeting. Without joy, the emotions that stay with you are painful, harsh and sorrowful.
A person with no joy in their heart soon grows old, regardless of their age. They ache, their body hurts, and instead of seeing beauty in life and its mysteries they see hurt and create bitterness and paranoia.
To not have joy is to be angry, not necessarily on the surface; a deep, brooding melancholy that saps your strength and crushes your spirit. Without the joy of living, without the joy of life – others happiness becomes a cruel mockery. A joyless person selfishly hates the good fortune of others and pleasures in their misfortune. Inside they ask, “Why should they find pleasure in life when I can find no pleasure?”
This is the sadness and pain of a joyless person. The joyless person must reconcile their pain through the justification of others pain. To allow others unbridled happiness or joy is a slap in the face to the joyless person. In order to live with their own hatred of themselves, they must find fault in others. Gossip, innuendo and backstabbing are the qualities of a joyless person. They rarely give compliments, and if they do the compliments are generally “snide” or matched with a put down. We’ve all had a friend (or loved one) that could never compliment us or be happy for anything that made us happy or joyful.
As a result of their own self hatred they try to steal the happiness from others. Consider the joyless persons actions. You may love your job, but that joyless friend is right there to “help” you with a better understanding commenting, “You won’t continue to like it there, you just wait until …. (and so on)”.
The joyless especially hate love. You fall in love and they are the first to warn you how that person is going to cheat on you, or hurt you, or take from you. From the joyless perspective that is the way it has to be, because that is the way they are, or have been treated. They do not have the capability to share in your joy.
The joyless must steal the joy from you – otherwise your joy exaggerates the pain in their own life to an intolerable level. If you are joyful and they are not, their joylessness and pain increase to an even greater degree. They become more spiteful, more jealous, more deprecating in their conversations. At some point, the joyless is overcome by bitterness, becoming a bitter shell of a person wasting away in a never ending spiral of self pity and self loathing… a joyless person hates themselves, how can they love others?
Living our lives with joy is made all the more difficult by the joyless around us. What can we do about our joyless friends and family? Can we change them? My opinion is that people generally do not change their behavior. At a seminar I attended a long time ago, the speaker gave the three things that cause people to change their behavior (this is profound):
1. A lobotomy
2. Castration
3. A profound religious experience
I think most people would agree choices 1 and 2 are a little extreme. That leaves option 3 – a profound religious experience. Depending upon your religion (or faith) this may come about in many different ways. As I grow older and mature I find that we can help affect a profound religious experience in others by simply loving them, caring for them and guiding them. Harsh sermons rarely work and it is unlikely that you will win a convert by arguing with them. Arguing usually only increases bitterness and anger.
Loving the unlovable is very difficult, even when that person is a family member or spouse. If we are not careful, we can create a love/hate relationship that benefits no one. We must protect ourselves from this danger. We cannot not allow others anger and bitterness to shape our emotions.
"Your own mind is a sacred enclosure into which nothing harmful can enter except by your permission." Ralph Waldo Emerson
Love, followed by acceptance are the keys to the change in behavior. If we refuse to judge the joyless person we take away their ammunition for the fight. At times this can be very difficult, but it is a task that love can conquer.
No one person is perfect, and no one will ever be close becoming perfect. Even so, we are called to attempt to be better. Finding joy in our lives will make us better. I’ve found that I do not have to be happy with everything to have joy. I do have to have contentment. Contentment comes from loving yourself, trusting yourself and refusing to be your own worst judge. From this understanding springs joy and peace.
My wish for my family and friends is that they will find joy and contentment in their lives. As we move forward in these troubled times, the peace, joy and contentment we find within us will carry us forward.
I’ve learned; live life the best you can, be the best you can… if you make a mistake, ask others for forgiveness (if needed) and more importantly, forgive yourself. Once it’s done, let it be done and over with. There is no value in beating yourself up over and over again for the same mistake. Don’t be your own worst judge and jury.
"Finish each day and be done with it. You have done what you could. Some blunders and absurdities no doubt crept in; forget them as soon as you can. Tomorrow is a new day; begin it well and serenely and with too high a spirit to be cumbered with your old nonsense." Ralph Waldo Emerson
With warmth and regards (as always),
Allen
To reply or comment:
http://voicecafe.blogspot.com/
# 014 March 25, 2009
Today is my birthday! I am 48 years old today. In reality I never thought I would be 48. Not that I thought I would be dead, it’s just that I’ve never been able to picture myself this old (I’m sure some of you will say “that’s not old” and some of you will say “wow, that’s old”!)
As I grow older and mature I’ve come to realize that I will never get everything I want (materially) and life will never be “easy”. I have found that life can be joyful, regardless of where we are and what we are going through. Joy is the fabric that holds together our emotions.
Everyone should have something in life that gives them joy. Only with joy can you have peace and contentment. Happiness, fun, excitement – none of these things will bring you peace or contentment. I have found that you can have joy in your heart and still be sad, or concerned, or even afraid. Joy makes the other emotions tolerable.
Joy fosters love. Joy embodies faith. Joy allows empathy and caring. If a person has no joy, all other “virtuous” emotions are fleeting. Without joy, the emotions that stay with you are painful, harsh and sorrowful.
A person with no joy in their heart soon grows old, regardless of their age. They ache, their body hurts, and instead of seeing beauty in life and its mysteries they see hurt and create bitterness and paranoia.
To not have joy is to be angry, not necessarily on the surface; a deep, brooding melancholy that saps your strength and crushes your spirit. Without the joy of living, without the joy of life – others happiness becomes a cruel mockery. A joyless person selfishly hates the good fortune of others and pleasures in their misfortune. Inside they ask, “Why should they find pleasure in life when I can find no pleasure?”
This is the sadness and pain of a joyless person. The joyless person must reconcile their pain through the justification of others pain. To allow others unbridled happiness or joy is a slap in the face to the joyless person. In order to live with their own hatred of themselves, they must find fault in others. Gossip, innuendo and backstabbing are the qualities of a joyless person. They rarely give compliments, and if they do the compliments are generally “snide” or matched with a put down. We’ve all had a friend (or loved one) that could never compliment us or be happy for anything that made us happy or joyful.
As a result of their own self hatred they try to steal the happiness from others. Consider the joyless persons actions. You may love your job, but that joyless friend is right there to “help” you with a better understanding commenting, “You won’t continue to like it there, you just wait until …. (and so on)”.
The joyless especially hate love. You fall in love and they are the first to warn you how that person is going to cheat on you, or hurt you, or take from you. From the joyless perspective that is the way it has to be, because that is the way they are, or have been treated. They do not have the capability to share in your joy.
The joyless must steal the joy from you – otherwise your joy exaggerates the pain in their own life to an intolerable level. If you are joyful and they are not, their joylessness and pain increase to an even greater degree. They become more spiteful, more jealous, more deprecating in their conversations. At some point, the joyless is overcome by bitterness, becoming a bitter shell of a person wasting away in a never ending spiral of self pity and self loathing… a joyless person hates themselves, how can they love others?
Living our lives with joy is made all the more difficult by the joyless around us. What can we do about our joyless friends and family? Can we change them? My opinion is that people generally do not change their behavior. At a seminar I attended a long time ago, the speaker gave the three things that cause people to change their behavior (this is profound):
1. A lobotomy
2. Castration
3. A profound religious experience
I think most people would agree choices 1 and 2 are a little extreme. That leaves option 3 – a profound religious experience. Depending upon your religion (or faith) this may come about in many different ways. As I grow older and mature I find that we can help affect a profound religious experience in others by simply loving them, caring for them and guiding them. Harsh sermons rarely work and it is unlikely that you will win a convert by arguing with them. Arguing usually only increases bitterness and anger.
Loving the unlovable is very difficult, even when that person is a family member or spouse. If we are not careful, we can create a love/hate relationship that benefits no one. We must protect ourselves from this danger. We cannot not allow others anger and bitterness to shape our emotions.
"Your own mind is a sacred enclosure into which nothing harmful can enter except by your permission." Ralph Waldo Emerson
Love, followed by acceptance are the keys to the change in behavior. If we refuse to judge the joyless person we take away their ammunition for the fight. At times this can be very difficult, but it is a task that love can conquer.
No one person is perfect, and no one will ever be close becoming perfect. Even so, we are called to attempt to be better. Finding joy in our lives will make us better. I’ve found that I do not have to be happy with everything to have joy. I do have to have contentment. Contentment comes from loving yourself, trusting yourself and refusing to be your own worst judge. From this understanding springs joy and peace.
My wish for my family and friends is that they will find joy and contentment in their lives. As we move forward in these troubled times, the peace, joy and contentment we find within us will carry us forward.
I’ve learned; live life the best you can, be the best you can… if you make a mistake, ask others for forgiveness (if needed) and more importantly, forgive yourself. Once it’s done, let it be done and over with. There is no value in beating yourself up over and over again for the same mistake. Don’t be your own worst judge and jury.
"Finish each day and be done with it. You have done what you could. Some blunders and absurdities no doubt crept in; forget them as soon as you can. Tomorrow is a new day; begin it well and serenely and with too high a spirit to be cumbered with your old nonsense." Ralph Waldo Emerson
With warmth and regards (as always),
Allen
To reply or comment:
http://voicecafe.blogspot.com/
Tuesday, March 24, 2009
Information Update 6: Just Say No to Buying Toxic Waste
# 006 March 24, 2009
Last year, AIG gave major donations to several of the politicians currently “overseeing” it’s restructure:
President Obama ‘s campaign received over $104,000
Senator Dodd (see Information Update 004) received over $103,000.
Where is the outrage? Where is the Congressional bill committee that is working feverishly to require President Obama, Senator Dodd and the others to return this money or pay confiscatory tax rates ex post facto on the money?
I look at it this way, at least the AIG employees worked for their bonus… campaign contributions are given in anticipation of future benefits… and benefit they have! A Rasmussen poll revealed that two thirds of Americans believe that “politicians who received campaign contributions from AIG should return the money.” Right…
How is it that our politicians in Washington can lie, cheat, steal, commit immoral acts and keep their job? I’m just asking…
How is it that Washington and the Fed can come up with a plan to sell the public “toxic” assets… excuse me, doesn’t toxic mean “deadly, lethal, noxious”? Let’s be realistic. If the banks could sell these assets… wouldn’t they already have done so?
Houses are selling again, up 5% last month. Of course what is not being touted is that these are sales of “existing” homes at a price far below their market value or even the loan amount of two to three years ago. There are still plenty of investors out there with money to spend or with the borrowing power to buy good deals.
If these banks cannot sell these “toxic” assets now, why in the world should we believe that a “public/private” partnership will make them more sellable? Here is how… the banks will be getting off the hook 100% and the investors will be insured against loss!
Here’s how it works: the FDIC will guarantee packages of loans sold by the banks to investors. These investors will be loaned the money to buy the “assets” by, you guessed it, the Federal Government. The investors will be able to borrow up to 50% of their investment money by the U.S. Treasury. If something goes wrong, the financing is guaranteed by the FDIC. Private sector “partners” will manage the assets. Once the assets have been sold in “packages”, private sector “managers” will control and manage the assets until final liquidation.
Can anyone say “management fees”, probably in the billions? Can anyone guess who these “private sector partners” and “private sector managers” might be? My guess, Goldman Sachs, et al… amazing how that works.
Oh yes, and don’t forget the major bond rating companies… you know the ones that failed to catch on to these “toxic” assets before they went toxic? They will also make millions (maybe billions) rating these new products.
In all honesty, I can’t see how these new products differ from the old “Alt A” and Sub Prime” products… other than the fact that they will be guaranteed by the full faith and credit of the USG… Let’s follow the money… who do you think is going to reap the financial windfall in this one?
I thought you might just want to know!
With regards,
Allen
Information contained herein is deemed reliable but not guaranteed.
http://VoiceCafe.blogspot.com
Last year, AIG gave major donations to several of the politicians currently “overseeing” it’s restructure:
President Obama ‘s campaign received over $104,000
Senator Dodd (see Information Update 004) received over $103,000.
Where is the outrage? Where is the Congressional bill committee that is working feverishly to require President Obama, Senator Dodd and the others to return this money or pay confiscatory tax rates ex post facto on the money?
I look at it this way, at least the AIG employees worked for their bonus… campaign contributions are given in anticipation of future benefits… and benefit they have! A Rasmussen poll revealed that two thirds of Americans believe that “politicians who received campaign contributions from AIG should return the money.” Right…
How is it that our politicians in Washington can lie, cheat, steal, commit immoral acts and keep their job? I’m just asking…
How is it that Washington and the Fed can come up with a plan to sell the public “toxic” assets… excuse me, doesn’t toxic mean “deadly, lethal, noxious”? Let’s be realistic. If the banks could sell these assets… wouldn’t they already have done so?
Houses are selling again, up 5% last month. Of course what is not being touted is that these are sales of “existing” homes at a price far below their market value or even the loan amount of two to three years ago. There are still plenty of investors out there with money to spend or with the borrowing power to buy good deals.
If these banks cannot sell these “toxic” assets now, why in the world should we believe that a “public/private” partnership will make them more sellable? Here is how… the banks will be getting off the hook 100% and the investors will be insured against loss!
Here’s how it works: the FDIC will guarantee packages of loans sold by the banks to investors. These investors will be loaned the money to buy the “assets” by, you guessed it, the Federal Government. The investors will be able to borrow up to 50% of their investment money by the U.S. Treasury. If something goes wrong, the financing is guaranteed by the FDIC. Private sector “partners” will manage the assets. Once the assets have been sold in “packages”, private sector “managers” will control and manage the assets until final liquidation.
Can anyone say “management fees”, probably in the billions? Can anyone guess who these “private sector partners” and “private sector managers” might be? My guess, Goldman Sachs, et al… amazing how that works.
Oh yes, and don’t forget the major bond rating companies… you know the ones that failed to catch on to these “toxic” assets before they went toxic? They will also make millions (maybe billions) rating these new products.
In all honesty, I can’t see how these new products differ from the old “Alt A” and Sub Prime” products… other than the fact that they will be guaranteed by the full faith and credit of the USG… Let’s follow the money… who do you think is going to reap the financial windfall in this one?
I thought you might just want to know!
With regards,
Allen
Information contained herein is deemed reliable but not guaranteed.
http://VoiceCafe.blogspot.com
Information Update #5: How Long Will Our Money Last?
# 005 March 24, 2009
What’s going on with our political system? The major media outlets are so excited today… the DOW ended on an up note last week and climbed an additional 497 points Monday. Good news, yes? The stock market is good news for large institutional holders and major trading houses, but what does this mean for the average Joe? I’m not so sure a rising stock market is going to help the average wage earner out of the problems we are having.
Companies are continuing to lay off employees and lose money. Unemployment is hovering around 8.5%, with even the most conservative estimate stating that it may very well reach 10% before mid year. Corporate earnings reports are down. Companies are bleeding cash and many have stated they will be out of cash reserves within the next few months. Spending on travel and tourism declined last year for the first time since 9/11.
The White House has announced a new round of bail outs (excuse me, initiatives) to help the auto parts industry. Who or what industry is next? Where in the world will this end? In light of the huge public outcry and congressional indignation over the AIG bonuses, the House passed the “Bonus Tax Bill” imposing a 90% surtax on any bonus granted to an employee that makes over $250,000 per year and is employed by a bank or institution that received $5 billion or more from the governments financial rescue program. Just remember you heard it here first… see the last two paragraphs of my blog: “Let’s Bail Them All Out”.
Here is what is scary about this proposed surtax: first, it is retroactive to December 31, 2008, and second, for recipients that live in high tax jurisdictions (like New York) having to pay state and local income tax, the effective amount of this tax can be 102% or more. That is bad enough, but this is an even worse precedent: the government (if this surcharge passes the Senate and is signed into law) will have made a tax RETROACTIVE or “ex post facto” (Applied retroactively: applying to events that have already occurred as well as to subsequent events).
The following information is from an archaic and seldom used document called the U.S. Constitution:
http://www.usconstitution.net/const.html#A1Sec10
Now, I am no Constitutional scholar but I can read history and understand the original intent of our founding fathers. With the magic of the internet I can also find other things, like James Madison’s comments in the Federalist 44:
Oops, guess our congressmen missed that one!
http://thomas.loc.gov/home/histdox/fedpapers.html
The U.S. Government is taking one more step towards centralization of power and control over all aspects of business. This move is in direct violation of the very Constitution our President and Congress swore to uphold. WHERE IS THE OUTRAGE? What’s next, an “Equalization of Opportunity Law” or “Anti Dog Eat Dog Rule?”
If you want to read an excellent essay printed today in the Wall Street Journal: “The Bonus Tax Is Just Plain Stupid” click here:
http://online.wsj.com/article/SB123776600113009243.html
All this is very disconcerting but what really concerns me is what the Treasury is doing to our money. I stated in my blog “Gaining Security and Losing Freedom”, the Federal Reserve is debasing our money to the extent that major U.S. debt holders are becoming very wary, especially the Chinese. I wrote earlier that the Chinese were asking for assurances from the USG that the U.S. would not devalue our currency and risk their (China’s) investments. The U.S. is the oldest and most stable government in the world and that we are still the safest haven in times of economic turmoil.
That works until we purposely debase our own currency. At that point we lose the faith and confidence of the entire world. Since the Fed’s announcement last week they were buying $300 Billion of U.S. Treasuries (they called it “quantative easing” ??) the euro is on track for the largest one week gain over the dollar since the Euro was introduced in 1999. Currency investors are continuing to pull out of the dollar. The Fed is still counting on international investors to buy the dollar based upon its safe haven status. How long can this last?
China currently holds over $2,000 Billion (yes thousand billion) of foreign exchange reserves in U.S. dollars and is rightfully concerned, to the extent that they are now putting forth the idea of a new international reserve currency in a global fund managed by the IMF. It’s been said that China would not risk its economic future by going against the dollar.
http://www.ft.com/cms/s/0/7851925a-17a2-11de-8c9d-0000779fd2ac.html?nclick_check=1
Frequent commenter to this blog John Galt (who is John Galt?) sent me a personal email that stated:
“Now Allen, you do realize who owns the majority of our debt? China. Now let me ask you this, what happens in the future if China decides to call in their payment? Logic tells you China wouldn't do that. In fact I've heard this from pretty much everyone. But it seems to me that many people aren't familiar with China's history and the fact that they often make decisions based on pride rather than logic. So what am I getting at? If a country sells off their debts in the form of bonds, then fails to make payment, I believe the country that bought the bonds could legally declare that an act of war.”
I’m not sure about the act of war, but JG’s statement about China’s history is right on target.
In the book “A Splendid Exchange: How Trade Shaped the World” by William Bernstein, the author gives a detailed description of how China ruled the entire Indian Ocean trade with ships as big as our modern aircraft carriers. Within 10 years they were not even a concern for the Portuguese traders. Why? China’s xenophobic rulers decided that the trade was endangering their culture, so they discontinued it.
Arguably, China had the opportunity to rule half of the known world, and let it go just to prove a point. I have no doubt that China’s concern is not with the opinions of the rest of the world, it is all about their own self interest (it’s always about me).
Keep an eye on this battle, it is far from over…
Hey, one last thing, check this out. In the midst of a worldwide depression (oops, I mean recession) a new automaker is moving into the U.S. market:
http://www.mahindrana.com/
I thought you might just want to know!
With regards,
Allen
Information contained herein is deemed reliable but not guaranteed.
http://voicecafe.blogspot.com/
What’s going on with our political system? The major media outlets are so excited today… the DOW ended on an up note last week and climbed an additional 497 points Monday. Good news, yes? The stock market is good news for large institutional holders and major trading houses, but what does this mean for the average Joe? I’m not so sure a rising stock market is going to help the average wage earner out of the problems we are having.
Companies are continuing to lay off employees and lose money. Unemployment is hovering around 8.5%, with even the most conservative estimate stating that it may very well reach 10% before mid year. Corporate earnings reports are down. Companies are bleeding cash and many have stated they will be out of cash reserves within the next few months. Spending on travel and tourism declined last year for the first time since 9/11.
The White House has announced a new round of bail outs (excuse me, initiatives) to help the auto parts industry. Who or what industry is next? Where in the world will this end? In light of the huge public outcry and congressional indignation over the AIG bonuses, the House passed the “Bonus Tax Bill” imposing a 90% surtax on any bonus granted to an employee that makes over $250,000 per year and is employed by a bank or institution that received $5 billion or more from the governments financial rescue program. Just remember you heard it here first… see the last two paragraphs of my blog: “Let’s Bail Them All Out”.
Here is what is scary about this proposed surtax: first, it is retroactive to December 31, 2008, and second, for recipients that live in high tax jurisdictions (like New York) having to pay state and local income tax, the effective amount of this tax can be 102% or more. That is bad enough, but this is an even worse precedent: the government (if this surcharge passes the Senate and is signed into law) will have made a tax RETROACTIVE or “ex post facto” (Applied retroactively: applying to events that have already occurred as well as to subsequent events).
The following information is from an archaic and seldom used document called the U.S. Constitution:
Section 10 - Powers prohibited of States
No State
shall enter into any Treaty, Alliance, or Confederation; grant Letters of
Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold
and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility. (bold and italics by me)
http://www.usconstitution.net/const.html#A1Sec10
Now, I am no Constitutional scholar but I can read history and understand the original intent of our founding fathers. With the magic of the internet I can also find other things, like James Madison’s comments in the Federalist 44:
“Bills of attainder, ex-post-facto laws, and laws impairing the obligation of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation. The two former are expressly prohibited by the declarations prefixed to some of the State constitutions, and all of them are prohibited by the spirit and scope of these fundamental charters. Our own experience has taught us, nevertheless, that additional fences against these dangers ought not to be omitted.”
Oops, guess our congressmen missed that one!
http://thomas.loc.gov/home/histdox/fedpapers.html
The U.S. Government is taking one more step towards centralization of power and control over all aspects of business. This move is in direct violation of the very Constitution our President and Congress swore to uphold. WHERE IS THE OUTRAGE? What’s next, an “Equalization of Opportunity Law” or “Anti Dog Eat Dog Rule?”
If you want to read an excellent essay printed today in the Wall Street Journal: “The Bonus Tax Is Just Plain Stupid” click here:
http://online.wsj.com/article/SB123776600113009243.html
All this is very disconcerting but what really concerns me is what the Treasury is doing to our money. I stated in my blog “Gaining Security and Losing Freedom”, the Federal Reserve is debasing our money to the extent that major U.S. debt holders are becoming very wary, especially the Chinese. I wrote earlier that the Chinese were asking for assurances from the USG that the U.S. would not devalue our currency and risk their (China’s) investments. The U.S. is the oldest and most stable government in the world and that we are still the safest haven in times of economic turmoil.
That works until we purposely debase our own currency. At that point we lose the faith and confidence of the entire world. Since the Fed’s announcement last week they were buying $300 Billion of U.S. Treasuries (they called it “quantative easing” ??) the euro is on track for the largest one week gain over the dollar since the Euro was introduced in 1999. Currency investors are continuing to pull out of the dollar. The Fed is still counting on international investors to buy the dollar based upon its safe haven status. How long can this last?
China currently holds over $2,000 Billion (yes thousand billion) of foreign exchange reserves in U.S. dollars and is rightfully concerned, to the extent that they are now putting forth the idea of a new international reserve currency in a global fund managed by the IMF. It’s been said that China would not risk its economic future by going against the dollar.
http://www.ft.com/cms/s/0/7851925a-17a2-11de-8c9d-0000779fd2ac.html?nclick_check=1
Frequent commenter to this blog John Galt (who is John Galt?) sent me a personal email that stated:
“Now Allen, you do realize who owns the majority of our debt? China. Now let me ask you this, what happens in the future if China decides to call in their payment? Logic tells you China wouldn't do that. In fact I've heard this from pretty much everyone. But it seems to me that many people aren't familiar with China's history and the fact that they often make decisions based on pride rather than logic. So what am I getting at? If a country sells off their debts in the form of bonds, then fails to make payment, I believe the country that bought the bonds could legally declare that an act of war.”
I’m not sure about the act of war, but JG’s statement about China’s history is right on target.
In the book “A Splendid Exchange: How Trade Shaped the World” by William Bernstein, the author gives a detailed description of how China ruled the entire Indian Ocean trade with ships as big as our modern aircraft carriers. Within 10 years they were not even a concern for the Portuguese traders. Why? China’s xenophobic rulers decided that the trade was endangering their culture, so they discontinued it.
Arguably, China had the opportunity to rule half of the known world, and let it go just to prove a point. I have no doubt that China’s concern is not with the opinions of the rest of the world, it is all about their own self interest (it’s always about me).
Keep an eye on this battle, it is far from over…
Hey, one last thing, check this out. In the midst of a worldwide depression (oops, I mean recession) a new automaker is moving into the U.S. market:
http://www.mahindrana.com/
I thought you might just want to know!
With regards,
Allen
Information contained herein is deemed reliable but not guaranteed.
http://voicecafe.blogspot.com/
What's the Definition of Bailout?
# 013 March 24, 2009
Definition of “bail out”:
1. obtain somebody’s release, help, rescue, save, assist, aid, come to somebody’s aid.
These definitions sound reasonable and certainly what any normal, empathetic person would do to help out another person, right?
Let’s look another set of definitions for “bail out”:
2. Escape, run away, desert, flee, evacuate, abandon, duck out.
Which one describes the givers and takers in our current government bailout fiasco? An ordinary person that reviews the facts and situations would most likely make the same decision the market made, AIG deserved to grow broke. AIG is not one big company. AIG is a holding company that controls multiple corporations. If AIG had been allowed to fail, the smaller companies would still be viable businesses. These business groups would have been put on the market by the Bankruptcy courts and sold. This did not happen. The only group that was sold was the U.S. taxpayer… we were sold a “bill of goods”: [that] government could spend our way out of this crisis.
To quote Henry Hazlitt, in his book “Economics in One Lesson, “There is no more persistent and influential faith in the world today than the faith in government spending.” He wrote this in 1946.
The USG had “to do something”… something, anything, action is required! Forget the fact that something, anything was the wrong thing to do. Based upon this supposition, what else could they do but inflate the money supply? Will it work? It depends upon what you mean by “work”. In some ways it is working. The financial markets are up… so far.
Our federal government has shown it has no problem inflating our money supply. Investors are buying gold and they are selling the dollar. The Fed knows, if it can inflate our money, they can cause the debts they are accumulating to drastically reduce. Our economy cannot grow again until this debt has been dealt with. The USG has decided to use inflation to deal with this debt. If it gets out of hand it could completely destroy our economy, financial systems and political stability.
America is a land of plenty. We are not accustomed to massive inflation or hunger on the scale of a third world company. We are the best armed and most independent (so far) people on this planet. I don’t think we will stand by and accept $10 loaves of bread, $15 gallons of gas… do you? As the saying goes, “somebody’s going to whip somebody’s A**”.
Again from Henry Hazlitt, “Everything we get, outside the free gifts of nature, must be paid for…The world is full of so-called economists who in turn are full of schemes for getting something for nothing. They tell us the government can spend and spend without taxing us at all; that it can continue to pile up debt without ever paying it off because ‘we owe it to ourselves.”
Normal ordinary citizens like you and I can look at the truth today and say, the companies that have been bailed out deserve to grow broke. Give someone a degree in economics, or elect them to political office and they decide to help any and everyone with … someone else’s money. Our money, our children’s money and the future of our country.
Per the definitions above, bailout is giving a helping hand when someone needs it, or it is evacuate, abandon, flee… where are the former heads of AIG, Countrywide and Citibank? I think definition 2 fits more aptly!
Goldman Sachs states that they would not have lost “that much money” if AIG had not been bailed out, yet they were “at the table” to accept a check in the tens of billions from AIG after the bail out. Is it lost on anyone where our past and current Treasury officials worked prior to their Treasury positions? Things that make you say hmmm….
And to top it off, as a result of the worldwide economic slowdown we may get buried beneath our own trash! From The New York Times:
With warmth and regards (as always),
Allen
To reply or comment:
http://voicecafe.blogspot.com
Definition of “bail out”:
1. obtain somebody’s release, help, rescue, save, assist, aid, come to somebody’s aid.
These definitions sound reasonable and certainly what any normal, empathetic person would do to help out another person, right?
Let’s look another set of definitions for “bail out”:
2. Escape, run away, desert, flee, evacuate, abandon, duck out.
Which one describes the givers and takers in our current government bailout fiasco? An ordinary person that reviews the facts and situations would most likely make the same decision the market made, AIG deserved to grow broke. AIG is not one big company. AIG is a holding company that controls multiple corporations. If AIG had been allowed to fail, the smaller companies would still be viable businesses. These business groups would have been put on the market by the Bankruptcy courts and sold. This did not happen. The only group that was sold was the U.S. taxpayer… we were sold a “bill of goods”: [that] government could spend our way out of this crisis.
To quote Henry Hazlitt, in his book “Economics in One Lesson, “There is no more persistent and influential faith in the world today than the faith in government spending.” He wrote this in 1946.
The USG had “to do something”… something, anything, action is required! Forget the fact that something, anything was the wrong thing to do. Based upon this supposition, what else could they do but inflate the money supply? Will it work? It depends upon what you mean by “work”. In some ways it is working. The financial markets are up… so far.
Our federal government has shown it has no problem inflating our money supply. Investors are buying gold and they are selling the dollar. The Fed knows, if it can inflate our money, they can cause the debts they are accumulating to drastically reduce. Our economy cannot grow again until this debt has been dealt with. The USG has decided to use inflation to deal with this debt. If it gets out of hand it could completely destroy our economy, financial systems and political stability.
America is a land of plenty. We are not accustomed to massive inflation or hunger on the scale of a third world company. We are the best armed and most independent (so far) people on this planet. I don’t think we will stand by and accept $10 loaves of bread, $15 gallons of gas… do you? As the saying goes, “somebody’s going to whip somebody’s A**”.
Again from Henry Hazlitt, “Everything we get, outside the free gifts of nature, must be paid for…The world is full of so-called economists who in turn are full of schemes for getting something for nothing. They tell us the government can spend and spend without taxing us at all; that it can continue to pile up debt without ever paying it off because ‘we owe it to ourselves.”
Normal ordinary citizens like you and I can look at the truth today and say, the companies that have been bailed out deserve to grow broke. Give someone a degree in economics, or elect them to political office and they decide to help any and everyone with … someone else’s money. Our money, our children’s money and the future of our country.
Per the definitions above, bailout is giving a helping hand when someone needs it, or it is evacuate, abandon, flee… where are the former heads of AIG, Countrywide and Citibank? I think definition 2 fits more aptly!
Goldman Sachs states that they would not have lost “that much money” if AIG had not been bailed out, yet they were “at the table” to accept a check in the tens of billions from AIG after the bail out. Is it lost on anyone where our past and current Treasury officials worked prior to their Treasury positions? Things that make you say hmmm….
And to top it off, as a result of the worldwide economic slowdown we may get buried beneath our own trash! From The New York Times:
“U.S. and European waste dealers who sell to China are finding that their shipments are being refused by clients when they arrive in Asia.Oh well! Maybe we can “bail out” the garbage industry… print a few trillion more dollars!
“The ultimate victim may be the environment, already overrun with enough trash in places to threaten people’s health, now further burdened with refuse that until recently would have been recycled. “The effect is being felt acutely in China, the world’s largest garbage importer. The U.S., for example, exported 11.6 million tons of recovered paper and cardboard last year to China, up from 2.1 million tons in 2000, according to the American Forest and Paper Association… “The United States xported $22 billion worth of recycled materials to 152 countries in 2007. Now [the
Institute of Scrap Recycling Industries] estimates the value of American recyclables has decreased by 50-70%. Western dealers say they are grappling with mounting stockpiles whose value in many cases continues to sink.“To make matters worse, Chinese importers have been demanding to renegotiate contracts drastically downward. In some cases, they are refusing to accept shipments they already have a contractual obligation to take.”
With warmth and regards (as always),
Allen
To reply or comment:
http://voicecafe.blogspot.com
Information Update 5: How Long Will Our Money Last?
#5 March 24, 2009
The White House has announced a new round of bail outs (excuse me, initiatives) to help the auto parts industry. Who or what industry is next? Where in the world will this end? In light of the huge public outcry and congressional indignation over the AIG bonuses, the House passed the “Bonus Tax Bill” imposing a 90% surtax on any bonus granted to an employee that makes over $250,000 per year and is employed by a bank or institution that received $5 billion or more from the governments financial rescue program. Just remember you heard it here first… see the last two paragraphs of my blog: “Let’s Bail Them All Out”.
Here is what is scary about this proposed surtax: first, it is retroactive to December 31, 2008, and second, for recipients that live in high tax jurisdictions (like New York) having to pay state and local income tax, the effective amount of this tax can be 102% or more. That is bad enough, but this is an even worse precedent: the government (if this surcharge passes the Senate and is signed into law) will have made a tax RETROACTIVE or “ex post facto” (Applied retroactively: applying to events that have already occurred as well as to subsequent events).
The following information is from an archaic and seldom used document called the U.S. Constitution:
Section 10 - Powers prohibited of States
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility. (bold and italics by me)
http://www.usconstitution.net/const.html#A1Sec10
Now, I am no Constitutional scholar but I can read history and understand the original intent of our founding fathers. With the magic of the internet I can also find other things, like James Madison’s comments in the Federalist 44:
“Bills of attainder, ex-post-facto laws, and laws impairing the obligation of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation. The two former are expressly prohibited by the declarations prefixed to some of the State constitutions, and all of them are prohibited by the spirit and scope of these fundamental charters. Our own experience has taught us, nevertheless, that additional fences against these dangers ought not to be omitted.”
Oops, guess our congressmen missed that one!
http://thomas.loc.gov/home/histdox/fedpapers.html
The U.S. Government is taking one more step towards centralization of power and control over all aspects of business. This move is in direct violation of the very Constitution our President and Congress swore to uphold. WHERE IS THE OUTRAGE? What’s next, an “Equalization of Opportunity Law” or “Anti Dog Eat Dog Rule?”
If you want to read an excellent essay printed today in the Wall Street Journal: “The Bonus Tax Is Just Plain Stupid” click here:
http://online.wsj.com/article/SB123776600113009243.html
All this is very disconcerting but what really concerns me is what the Treasury is doing to our money. I stated in my blog “Gaining Security and Losing Freedom”, the Federal Reserve is debasing our money to the extent that major U.S. debt holders are becoming very wary, especially the Chinese. I wrote earlier that the Chinese were asking for assurances from the USG that the U.S. would not devalue our currency and risk their (China’s) investments. The U.S. is the oldest and most stable government in the world and that we are still the safest haven in times of economic turmoil.
That works until we purposely debase our own currency. At that point we lose the faith and confidence of the entire world. Since the Fed’s announcement last week they were buying $300 Billion of U.S. Treasuries (they called it “quantative easing” ??) the euro is on track for the largest one week gain over the dollar since the Euro was introduced in 1999. Currency investors are continuing to pull out of the dollar. The Fed is still counting on international investors to buy the dollar based upon its safe haven status. How long can this last?
China currently holds over $2,000 Billion (yes thousand billion) of foreign exchange reserves in U.S. dollars and is rightfully concerned, to the extent that they are now putting forth the idea of a new international reserve currency in a global fund managed by the IMF. It’s been said that China would not risk its economic future by going against the dollar.
http://www.ft.com/cms/s/0/7851925a-17a2-11de-8c9d-0000779fd2ac.html?nclick_check=1
Frequent commenter to this blog John Galt (who is John Galt?) sent me a personal email that stated:
“Now Allen, you do realize who owns the majority of our debt? China. Now let me ask you this, what happens in the future if China decides to call in their payment? Logic tells you China wouldn't do that. In fact I've heard this from pretty much everyone. But it seems to me that many people aren't familiar with China's history and the fact that they often make decisions based on pride rather than logic. So what am I getting at? If a country sells off their debts in the form of bonds, then fails to make payment, I believe the country that bought the bonds could legally declare that an act of war.”
I’m not sure about the act of war, but JG’s statement about China’s history is right on target.
In the book “A Splendid Exchange: How Trade Shaped the World” by William Bernstein, the author gives a detailed description of how China ruled the entire Indian Ocean trade with ships as big as our modern aircraft carriers. Within 10 years they were not even a concern for the Portuguese traders. Why? China’s xenophobic rulers decided that the trade was endangering their culture, so they discontinued it.
Arguably, China had the opportunity to rule half of the known world, and let it go just to prove a point. I have no doubt that China’s concern is not with the opinions of the rest of the world, it is all about their own self interest (it’s always about me).
Keep an eye on this battle, it is far from over…
Hey, one last thing, check this out. In the midst of a worldwide depression (oops, I mean recession) a new automaker is moving into the U.S. market:
I thought you might just want to know!
With regards,
Allen
Information contained herein is deemed reliable but not guaranteed.
Monday, March 23, 2009
It's Always About Me (Part (III)
# 012 March 23, 2009
In essence, what you are saying is, “I’m sorry you are too self centered to realize what I said should have been helpful to you. Instead your poor ability to understand sensible conversation caused you to take what I said wrong, and get your feelings hurt. Since you obviously do not have the ability to grasp normal conversation and intelligent principles, then I’m sorry.”
What kind of apology is this?
For whom is an apology meant, the person giving the apology, or the person receiving the apology?
Is it for the person that made the statement, or for the person that has been offended? Logic would tell us that the apology is to show regret for hurting or offending the other person. In principle this is true, but this is generally not what we do.
We generally frame arguments and conflicts as we perceive them, and we tend to take a statement that offends someone else and use it as an excuse to get offended ourselves.
Child that got hit: OW! That hurt!
Child that dropped the toy: I’m sorry.
Child that got hit: But it hurt!
Child that dropped the toy: I said I’m sorry, guahhhh I didn’t meant to do it.
Child that got hit: so, it hurts…
Child that dropped the toy: I’m sorry, if you hadn’t stuck your head in the way I would have hit you. You’re such a crybaby…
In order for an apology to be a true apology, the person apologizing must be sincerely contrite. The Encarta Dictionary defines contrite as: repentant – deeply sorry for having behaved wrongly.
If someone says, “I’m sorry, I didn’t mean to do it”, then that is not an apology. That is a defense. As humans we have an inborn need to defend ourselves. To allow ourselves to be truly contrite means that we must be truly defenseless. We don’t like to be defenseless. To be defenseless means to be vulnerable… who wants to be vulnerable?
To be truly contrite means that we are willing to expose ourselves (and our feelings) to someone else; “to let our guard down.” Letting our guard down means to allow our emotional self to be exposed and this means we might be hurt. To be vulnerable. Not perfect. Not in control.
How can we satisfy our need to be right, if a true apology has to be honestly contrite? We cannot. This is all part of that pain that goes with growth. The admission outwardly that we said or did something hurtful to another comes with the inner admission that there might be something wrong with our inner laws or “agreements” (see It’s Always About Me Part II).
How can we do this? An apology is not an apology if there is any hint of defense in the apology. If you hurt someone (physically or emotionally), the issue is not if you meant to do it. The issue is not that you did not do it on purpose. The issue is that you hurt another person.
A true apology is simply a request for forgiveness. It is an admission of guilt. We don’t like to admit guilt. If our relationships are to be built upon trust and faith without fear, then we must learn to be able to admit guilt and ask forgiveness.
Next time you wrong someone, try a true apology.
If you say something that hurts another’s feelings, simply say, “I am sorry. I was wrong. What I said hurt your feelings and I should not have said it. Please forgive me.” That’s it. Don’t try to explain why you said what you said. Don’t try to defend your actions or statement. The minute you offer any type of defense for your words or deeds, you have made your apology a defense for your actions and placed the blame on the person you hurt. This adds more hurt to the offended person and does nothing to restore the relationship.
When trying to understand the feelings of others, don’t mistake introspection (looking into your own heart and feelings), for your understanding of the other persons feelings.
Stay tuned for Part IV.
With warmth and regards (as always),
Allen
To reply or comment:
Saturday, March 21, 2009
Gaining Security and Losing Freedom
# 011 March 21, 2009
[On ancient Athens]: In the end, more than freedom, they wanted security. They wanted a comfortable life, and they lost it all -- security, comfort, and freedom. When the Athenians finally wanted not to give to society but for society to give to them, when the freedom they wished for most was freedom from responsibility, then Athens ceased to be free and was never free again. Edward Gibbon
The Federal Reserve shocked the business world this week by announcing the $300 Billion plus purchase of Treasury Securities of the U.S. Government. This is a poorly veiled attempt to get mortgage rates down below 4%. The Fed has attempted to push long term interest rates down by cutting the short term rates to almost zero; this is a drastic last ditch effort to push rates lower indicating how desperate the Fed and the Obama administration have become. They are now willing to risk certain inflation in order to jump start the housing market.
Housing is the backbone of the American economy. In the book “The Mystery of Capital” by Hernando de Soto (yes he is related) the author asks the question, “Why does capitalism seem to work in the West but not in third world or formerly communist countries?
The key to the growth of capital in the West is private property rights and ownership, with a government dedicated to a system of law that not only allows, but promotes private property ownership and the business development that is associated with the accumulation of capital. The author makes the point that many believe the lack of development in third world countries is due to the inability of the citizens to save; the truth is quite the contrary. The poor and dispossessed of these countries have a tremendous amount of savings (comparatively speaking), but little or no capital due to the lack of ability to maintain legal property ownership. This requires resorting to extra-legal ownership, outside the bounds of written “legal” law and within the framework of local laws and customs. While this type of legality is ok for a specific community, it does not afford legal protection against illegal encroachment and does not give the owner the opportunity to turn the equity in such property into capital.
As the US Government takes control over more businesses, the business loses the ability to acquire capital. Capital is not money. Capital is the process achieved by converting the potential assets of a tangible object or property into value by utilization of the asset.
For example, you own a piece of land. That land is worth $20,000. Since the land is vacant, it does not create any income for you, in fact it creates expense because you have to pay property taxes, assessments and possibly even upkeep. You take this land and lease it a company that puts a trailer on it that sells ice. The company makes a profit from the ice it sells and pays you a lease payment of $500 per month. Now an asset that previously only cost you money makes you $6,000 per year. This is what I am describing when I explain the creation of capital.
When the government steps in and takes over a business, the business loses the motivation to create a profit. The reason a business creates a profit is so the owners, managers, shareholders, etc. can make more money (profit).
Take a quick look with what is going on today with AIG, Bank of America and others. Read your local paper, watch CNN, MSNBC, Fox News, check the internet highlights. Everywhere you look there is talk of controlling and capping CEO pay. WHY? Because if the government is in charge, there can be no profit incentive. The question being asked is, if the taxpayers are funding the business, then why should someone get a million dollar bonus? The short answer: THEY SHOULD NOT!
As I wrote before, if you control the questions, the answers do not matter. Let me repeat: As I wrote before, if you control the questions, the answers do not matter.
The question is not; “Should we cap CEO’s pay?”
The question is; “Why in the world are we paying to “save a business?”.
If AIG had been allowed to go bankrupt, we would not be having this discussion. The real producers of AIG would have left and found another job. The problematic employees, the poor workers, those that really were not productive would have been out on the street… and guess what, no need for bonuses! The company is gone!
You cannot make an improper action proper by doing “what’s right or fair”. You cannot make an immoral act moral by having “good intentions”. As my mother used to say, the road to hell is paved with good intentions. If the action is improper, incorrect or immoral, then any effort to justify the action is wasted. The only way to correct the improper action is to undo it. Our government does not know how to undo anything.
By its very nature government cannot run a free market business because government is a bureaucracy. Bureaucracy can be defined as, the administration of a system or industry without regard to profits but with total regard to following codes, laws and decrees. Since bureaucracies are not created to make a profit, the only thing that can be calculated is the cost.
The problem with a government owned or controlled business is that there are no market factors involved and as a result other rules must be put in place to govern the conduct of its affairs. Under such a system the government bureaucrat has a commitment to comply with the rules and regulations (to the letter of the law) of the system without regard to the reasonableness or purpose or intention of the law or decree. This includes profits and the creation of capital.
With a profit-seeking venture you govern the conduct by public perception (i.e. the purchase of goods and services). If the service or product is not useful, no one purchases it and the business bankrupts. Not so with government bureaucracies. The behavior of the public is not a criterion in determining the usefulness of the bureaucratic service. The only criteria can be to improve service or reach by increasing size and expenditures. Government bureaucracies, by their very nature must continue to increase in size, scope and authority – they are a self perpetuating organization, constantly drawing in ever-larger amounts from the treasury.
In truth, citizens must choose between the market economy and socialism. Socialism is an intensely bureaucratic political/governing system. Someone must determine what will be produced and at what price. If the market is not allowed to decide, then the government will.
In a capitalist system (read: free society) the government’s responsibility is to preserve the market economy by protecting life, health and private property against fraud or violent aggression. If the consumers are not able to set prices and supply by means of the free exchange of market supply and demand, then it will be by government compulsion.
This is what we are facing today.
NOTE: Just as an FYI, if the government passes a law that caps CEO pay with companies that have been bailed out, the next step is to cap CEO pay at other “too big to fail” companies. The explanation will be, if we do not require these major corporations to control cost and do business “ethically” we may have to step in and bail them out. Therefore we must cap CEO pay (and expenses) on all major companies that are “too big to fail”. Watch out…. the dominoes are starting to fall.
“Every decent man is ashamed of the government he lives under.” H.L. Mencken
With warmth and regards (as always),
Allen
To reply or comment:
http://voicecafe.blogspot.com
[On ancient Athens]: In the end, more than freedom, they wanted security. They wanted a comfortable life, and they lost it all -- security, comfort, and freedom. When the Athenians finally wanted not to give to society but for society to give to them, when the freedom they wished for most was freedom from responsibility, then Athens ceased to be free and was never free again. Edward Gibbon
The Federal Reserve shocked the business world this week by announcing the $300 Billion plus purchase of Treasury Securities of the U.S. Government. This is a poorly veiled attempt to get mortgage rates down below 4%. The Fed has attempted to push long term interest rates down by cutting the short term rates to almost zero; this is a drastic last ditch effort to push rates lower indicating how desperate the Fed and the Obama administration have become. They are now willing to risk certain inflation in order to jump start the housing market.
Housing is the backbone of the American economy. In the book “The Mystery of Capital” by Hernando de Soto (yes he is related) the author asks the question, “Why does capitalism seem to work in the West but not in third world or formerly communist countries?
The key to the growth of capital in the West is private property rights and ownership, with a government dedicated to a system of law that not only allows, but promotes private property ownership and the business development that is associated with the accumulation of capital. The author makes the point that many believe the lack of development in third world countries is due to the inability of the citizens to save; the truth is quite the contrary. The poor and dispossessed of these countries have a tremendous amount of savings (comparatively speaking), but little or no capital due to the lack of ability to maintain legal property ownership. This requires resorting to extra-legal ownership, outside the bounds of written “legal” law and within the framework of local laws and customs. While this type of legality is ok for a specific community, it does not afford legal protection against illegal encroachment and does not give the owner the opportunity to turn the equity in such property into capital.
As the US Government takes control over more businesses, the business loses the ability to acquire capital. Capital is not money. Capital is the process achieved by converting the potential assets of a tangible object or property into value by utilization of the asset.
For example, you own a piece of land. That land is worth $20,000. Since the land is vacant, it does not create any income for you, in fact it creates expense because you have to pay property taxes, assessments and possibly even upkeep. You take this land and lease it a company that puts a trailer on it that sells ice. The company makes a profit from the ice it sells and pays you a lease payment of $500 per month. Now an asset that previously only cost you money makes you $6,000 per year. This is what I am describing when I explain the creation of capital.
When the government steps in and takes over a business, the business loses the motivation to create a profit. The reason a business creates a profit is so the owners, managers, shareholders, etc. can make more money (profit).
Take a quick look with what is going on today with AIG, Bank of America and others. Read your local paper, watch CNN, MSNBC, Fox News, check the internet highlights. Everywhere you look there is talk of controlling and capping CEO pay. WHY? Because if the government is in charge, there can be no profit incentive. The question being asked is, if the taxpayers are funding the business, then why should someone get a million dollar bonus? The short answer: THEY SHOULD NOT!
As I wrote before, if you control the questions, the answers do not matter. Let me repeat: As I wrote before, if you control the questions, the answers do not matter.
The question is not; “Should we cap CEO’s pay?”
The question is; “Why in the world are we paying to “save a business?”.
If AIG had been allowed to go bankrupt, we would not be having this discussion. The real producers of AIG would have left and found another job. The problematic employees, the poor workers, those that really were not productive would have been out on the street… and guess what, no need for bonuses! The company is gone!
You cannot make an improper action proper by doing “what’s right or fair”. You cannot make an immoral act moral by having “good intentions”. As my mother used to say, the road to hell is paved with good intentions. If the action is improper, incorrect or immoral, then any effort to justify the action is wasted. The only way to correct the improper action is to undo it. Our government does not know how to undo anything.
By its very nature government cannot run a free market business because government is a bureaucracy. Bureaucracy can be defined as, the administration of a system or industry without regard to profits but with total regard to following codes, laws and decrees. Since bureaucracies are not created to make a profit, the only thing that can be calculated is the cost.
The problem with a government owned or controlled business is that there are no market factors involved and as a result other rules must be put in place to govern the conduct of its affairs. Under such a system the government bureaucrat has a commitment to comply with the rules and regulations (to the letter of the law) of the system without regard to the reasonableness or purpose or intention of the law or decree. This includes profits and the creation of capital.
With a profit-seeking venture you govern the conduct by public perception (i.e. the purchase of goods and services). If the service or product is not useful, no one purchases it and the business bankrupts. Not so with government bureaucracies. The behavior of the public is not a criterion in determining the usefulness of the bureaucratic service. The only criteria can be to improve service or reach by increasing size and expenditures. Government bureaucracies, by their very nature must continue to increase in size, scope and authority – they are a self perpetuating organization, constantly drawing in ever-larger amounts from the treasury.
In truth, citizens must choose between the market economy and socialism. Socialism is an intensely bureaucratic political/governing system. Someone must determine what will be produced and at what price. If the market is not allowed to decide, then the government will.
In a capitalist system (read: free society) the government’s responsibility is to preserve the market economy by protecting life, health and private property against fraud or violent aggression. If the consumers are not able to set prices and supply by means of the free exchange of market supply and demand, then it will be by government compulsion.
This is what we are facing today.
NOTE: Just as an FYI, if the government passes a law that caps CEO pay with companies that have been bailed out, the next step is to cap CEO pay at other “too big to fail” companies. The explanation will be, if we do not require these major corporations to control cost and do business “ethically” we may have to step in and bail them out. Therefore we must cap CEO pay (and expenses) on all major companies that are “too big to fail”. Watch out…. the dominoes are starting to fall.
“Every decent man is ashamed of the government he lives under.” H.L. Mencken
With warmth and regards (as always),
Allen
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