Monthly Archives: August 2012

Romney and Bain saved by Government Bailout?

Today, news about the government bailout saving Bain. First blush appears like the supporting docs mostly came under FOIA. Rolling Stone broke it yesterday and folks stayed away now seeing some traction Business Insider, Bloomberg Huffington Post this AM. Curious how further info will go. Hmm    Mitt Romney Benefited From Government Bailout: Report The Huffington Post| By Mark Gongloff
Posted: 08/30/2012  1:48 pm Updated: 08/30/2012  5:42 pm

Bailed Out by Government?

“And one person who has gotten quite a lot of government help with his business over the years has been Mitt Romney. The latest example comes from Rolling Stone, which in its Sept. 13 issue tells how the Federal Deposit Insurance Corp. ended up footing a bill of at least $10 million in bailing out Bain & Co., the consulting firm that spawned the private-equity firm Bain Capital. The story is based partly on documents the magazine received under the Freedom of Information Act.”

Once again it looks like corporate welfare is OK, but help for the truly needy is not.

Consumers Confident

Not if big money has a say.

How confident are folks about the economy? Great question, but the true answer eludes us. Let’s face it, there is a long way for this economy to go before becoming truly productive, develops big job numbers to reduce unemployment, and re-establishes the tax base to bring down deficits. But could we be artificially holding it back? Perhaps a self-fulfilling prophecy?

In the boxes here are just a few of yesterday’s headlines. Frankly it is all good news, not good enough but good just the same. Confidence may just be lagging behind because we are all being told how bad it is.

 And yes we are being told how bad it is, even stretching truths to make us fell bad about where we are. Take a look at the poll numbers above. Presidential candidates got sorted out around May, full on campaigning generated up, yes right about the time this curve starts down. Millions of dollars, strike that, Hundreds of Millions of dollars are being spent by folks to convince us our economy sucks and we are far worse off that we should be. All while the market is up, job creation is up, housing starts are up, and GDP growth continues. Is the index an outlier, or perhaps a direct correlation? You make the call.

While we have a long, long way to go, I am convinced the bombardment with hundreds of millions dollars worth of negativity is creating its own confidence expectation.

American Theocracy:

The Peril and Politics of Radical Religion, Oil, and Borrowed Money in the 21st Century, by Kevin Phillips

If my military brothers haven’t read this book, they should. Part 1: Oil and American Supremacy will hit way too close to home for those like me who spent time in Iraq. Today there remains a dearth of evidence indicating any Iraqi weapons of mass destruction but a preponderance of data supporting the war was about oil. Having been there, both on the streets of Tikrit and in the battle-staff update briefings, I agree with his conclusion.

While Kevin Phillips, a former Republican strategist makes a compelling argument on the impacts of the big money influence of our political bodies, this book is not an easy read. He makes a point, sometimes on the outrageous side, and then takes off on a story reaching through all ages often deviating from his main point. When he gets down to the dirty details, he back up his thesis. For history buffs, his side runs are extremely educational. For a guy who wants the uncut facts it was a difficult read.

    In the end, with my own flash-backs to division staff meetings where slides tracked oil production from various geographic areas, indicated up or down trends, and feedback discussed as to what the US military was doing to aid the effort, Phillips conclusion that it was all about oil rings true. While I personally dislike his style and historical sidetracks, Phillips makes his point and supports it with over a thousand references. A short excerpt:

 “In Baghdad’s Iraqi National Museum, left wide open to looters in 2003 by careless military planners, dozens of wall maps explaining Iraq’s achievements as the cradle of world civilization: it’s invention of writing and the wheel, the birth of mathematics, and the establishment of the first code of laws (Hammurabi’s). By most archeologists’ accounts, the museum and the National Library were world-class institutions with unique collections.

Even so, the first major building to be surrounded and occupied by American soldiers was the one housing truly vital maps and artifacts: The Iraqi Oil Ministry. Here were thousands of seismic portrats of the nation’s oil fields, the subterranean keys to the Majnoon, northern Rumaila, West Qurna, and many more. World opinion had little difficulty in mistaking U.S. priorities.”

Banks – Stealing From the Weak and the Poor

I met a young man here these past few weeks. He is like many young men in these parts; strong, polite, professional, hardworking, and a manual laborer. He is smart and very skilled in many technical trades including welding of all metals, refrigeration, and an excellent painter of boats and small aircraft. Unfortunately he has little in the form of post high-school education.

We were talking motorcycles since he drives a beautifully maintained 2008 sport bike. He rides it to work every day and the bike itself glows with the care of a proud owner. But he told me he wished he didn’t own it. That made no sense to me so I asked. Turns out that he bought it new in late 2008, made every payment, and trying to pay it off early to avoid the high cost of borrowed money he paid extra every month, sometimes a few dollars, often a hundred, and sometimes after completing a large paint job, several hundred. Smart approach, yet now after four years of ownership he owes as much as the purchase price. How?

Well as a new owner, young, excited, happy to finally have gotten his bike delivered, he signed all the documents and really didn’t pay the level of attention required. In the end, he was charged twice for the delivery and setup, a significant finance charge hidden in the fine print, and of course even deeper in the documents was some specific wording as to if and how one desired to make additional payments to the principal he had to clearly designate in writing his intent with each individual payment. Oh and there is some type of general no-recourse legal ease disallowing any challenge to the double up front charges he paid once the documents were signed, which were of course tacked onto the loan. Where did the extra money go? The finance company posted it to future, yet un-accrued interest, yes their yet unearned profits as is often the “standard” practice with some banking institutions.

I put myself through college several times so could easily argue it is his fault for not being better educated, his fault for not reading, and understanding the fine print. As a person who has done well, retired at the age of 49, lives on his yacht traveling between the US and the Caribbean, it would be easy to support the perspective of what folks now refer to as the 1%, argue they have worked hard, earned, and deserve the pay, perks and bonuses taken by the bankers and financiers of the day. But I can’t.

Being smart, having money, owning the bank, having the power to influence how the rules are written does NOT give you the right to essentially steal from someone who hasn’t for whatever reason gotten the same education or breaks as you. I don’t care if you’re a democrat, republican, independent, conservative religious right or far left liberal; this is wrong. And taking someone’s hard earned money as your own profit just because he doesn’t understand your fine print or technical details is indeed stealing. With undergrad and graduate degrees in business, I know what the law says, but how about intent? Why would you THINK he’s paying more? Because he thinks the bank didn’t get enough out of the loan terms? Hardly.

What to do now is the question. The bank has sold out to a different financial institution this year. The new owners bought all the paper and fairly expect the terms to hold and this situation is certainly not their fault. The old boys have indeed taken their profit and ran. So I’ve offered to give the documents the best “fine print” review I can and see if there is something. I know through my own financial dealings, the new organization to be fairer and more considerate than what he has dealt with. Maybe an appeal for their good will. At the very least, the young man now knows how the rules of the game are tilted, and can play the game to minimize his disadvantage.  Maybe he’ll have to settle for the education he has received from this event and the extra couple years he’ll pay for his error. But it really doesn’t have to be this way. The rules can be written differently so the participants in the deal are equal, and the disclosure done in a way that there are no surprises to the parties in the agreement. Again back to intent; can anyone out there actually believe the young man instead of paying extra on his loan, simply wanted to donate extra money to the banks coffers? Again hardly.

Put the Trash in it’s Place

You will Be Fined for Dumping Rubbish

Today we drove east out of Albuquerque and saw a great billboard “There are 9,600 Pieces of Trash in the Next Mile”. Great message I thought, but now we need one for the Social networking: There are 9,600 Pieces of Trash in the Next Minute.It seems like anyone can print anything and it get’s posted and re-posted on social networking. And it never ever goes away.

Yesterday I saw in my Facebook feed several posts that are just flat lies. So I looked up the facts, posted the facts, gave a reference, but the posts are still there.  People keep “liking” them and apparently the posters, my “friends” at least for now, think it’s OK to keep spreading even after the lie is brought to their attention.

Same for Littering

It might be easy to grab onto a headline because it’s your party, your religion, your belief, or maybe something you just wish was true. But after it’s pointed out to be a lie, what are you thinking? A line from my US Air Force Commander days comes back to me “There is nothing at Stake but Your Credibility”. Unfortunately the example set by both liberal and conservative PACs is horrible, but they are anonymous donors, faceless, hiding political and social objectives behind fancy names like Heartland Foundation, Americans for Prosperity, or the ACLJ who posted Oppose Obama’s Lawsuit Against Military Voting Rights.*  Huh? There is no such lawsuit, but a challenge to retain early voting in Ohio for folks who may have difficulty getting to the polls on voting day and nothing about the military votes at all. But the lie is being pushed around the networks by all kinds of folks…and your name’s on it (if it’s you). This one is landing in my box over and over. How about a fine for this kind of trash?

I’m sure it’s your 1st amendment right to retell this crap, but remember, it is my right to keep up the challenge and call it what it is; trash! Hopefully readers will join in this battle. Let’s put the trash in it’s place.

Picth In – We Can Have an Impact

  • http://aclj.org/us-constitution/oppose-obama-lawsuit-against-military-voting-rights

Paul Ryan – Integrity

We know he’s the GOP running mate, heard lots of hype on everything from the tea

Paul Ryan

party, Medicare, music, to how he works out.  I DON”T CARE and here’s why; integrity…lack of integrity.

Ryan is both proclaimed, and self proclaimed as a deficit hawk and this is a lie. In my first blog [1] I wrote about the 19 Senators who voted for the $850 Billion (bank) Bailout bill but who also claim they want a balanced budget.  That activity was not limited to the Senate. Mr. Ryan it would seems voted right with the 19. Remember, all of the $850 Billion was deficit spending. Integrity.

But like the infomercial, that’s not all. Mr. Ryan also voted for the auto industry bailout, and voted to retain federal subsidies for big oil corporations. His “budget” would also retain the oil subsidies while cutting EPA enforcement, alternative energy and conservation funding. For that he is at least consistent, but what it means is he is not a deficit hawk as he proclaims. His budget world would retain subsidies and tax breaks for already wildly successful oil corporations and make it up by cutting things like food stamps, welfare, women’s health, and education. Even the U.S Conference of Catholic Bishops critiqued Ryan’s (himself a Catholic) proposal “for cutting food stamps and other assistance programs for the poor after Ryan said his Catholic faith helped shape the policies in the document” [2] He is far less interested in balancing the budget than he is in furthering his ideologist agenda…Integrity.

I’m with Jim Cramer on this. Ryan’s selection won’t make a bit of difference except getting some attention which the campaign desperately needed after a month of gaffes, but being otherwise ignored. “What rich person who wants his taxes lower thinks Ryan will make that much of a difference? For people voting on their tax rates, haven’t they already settled on the idea of voting for Romney? Other than rich people, are any Americans willing to sacrifice Medicare when the program pays for endless best-in-the-world health care? Is there anyone other than the rich — who can afford it anyway — who would change his mind?” [3] A non-impact on the voters unless we actually start to care about voting records and…integrity.

What we have in the end is just another politician. One who hasn’t made a real living doing anything else but being on your and my payroll in Washington.  And one who’s voting record and proposed budget supports his intent to support already successful corporations at the expense of a legitimate safety net. One who says one thing, and does another. Integrity, where can we find some for these guys?

 [1] http://americanmoneylies.com/?p=23

[2] Romney selects Paul Ryan as VP, By Jonathan Easley and Emily Goodin – 08/11/12 07:10 AM ET

[3] http://www.topix.com/forum/com/bmy/TCKJB0FTPA2SU6A9K

Free The Oil Market

Let capitalism run, supply and demand, the strong will survive, and the economy will roar forward at full speed ahead. I’ve read these lines so often on social networks this year It’s my first line item to balancing the budget, obvious in this capitalist effort, we cut fossil fuel subsidies.

   Tax preferences have been around since 1916, intended to stimulate domestic oil and natural gas production. [1] Today oil and gas production, and the corporations behind that production are as strong, if not stronger than ever, yet the subsidies continue. They even got larger in many cases through several tax rules like the Foreign Tax Credit.

Our Prices are Some of the Lowest in the World, click here  

I’m not going to write all the subsidy details; you can read them here. Estimating US Governmant Subsidies to Energy Sources 2002_2008

The cost of subsidies is over $10 Billion per year based on conservative estimates. And that $10 Billion doesn’t even consider the costs of protecting and defending pipelines and shipping lanes in the Persian Gulf, our military’s direct contribution to oil corporations and their profits. If the cost of military contribution is included we can safely/conservatively add another $42 Billion in fuel subsidies.

Congressional Leaks to Oil

Several lawmakers have already introduced legislation to end some of these subsidies and the President requested similar legislation as well.  Unfortunately it has gone nowhere in spite of the conservative position of getting government out of business, perhaps a result of the money spent by industry lobbyists [2] and/or campaign contributions: “political action committees affiliated with oil and gas companies have donated $238.7 million to candidates and parties since the 1990 election cycle, 75 percent of which has gone to Republicans.” [3]

There will be impacts of course, the cost of fuel for our cars, trucks, heating, and electricity will rise over time as the costs are of course passed on to the consumer. But keep in mind: we are already paying this cost through our taxes…passing it on without the government involvement should appeal to conservatives; and we are paying in additional government incentives to conserve…which we can reduce in other budget reduction actions if we allow the market price affect consumption; energy costs in the US are far lower than other developed countries. In actual cost, the US was 44th among developed countries, if we consider cost relative to income the US fall to 50th among 55 countries. [4]

So there is our first $10 Billion plus interest of course since it is all deficit spending. I’ll get cracking on the balance sheet as we move forward.

[1] http://www.cbo.gov/sites/default/files/cbofiles/attachments/03-06-FuelsandEnergy_Brief.pdf

[2] http://www.opensecrets.org/lobby/indusclient.php?id=E01

[3] http://www.opensecrets.org/industries/indus.php?ind=E01

[4] http://mjperry.blogspot.com/2012/05/highest-cheapest-gas-prices-by-country.html

I Can Balance that Budget for you Mr. Congressman

You apparently can’t or won’t get it done. That may sound shocking to some, unimportant to others, a foul to many who’s pet projects and earmarks will be done in, but with all the political battle cries it is worth exploring… simply because it can be done.

Federal Deficit Through the Years

In 2011 deficit spending was $1.3 Trillion. [1] So far in 2012 we are ~11.5 percent under last year’s pace but at this rate will likely top the $1 Trillion mark again in 2012. The difference so far appears to be an increase in tax receipts due to a bit stronger economy coupled with a reduction of spending. [2] To conservatives this would indicate we are on the right track even though I suspect political rhetoric will preclude saying it out loud. Liberals and I in this case, lament the loss of public sector jobs as the cuts have taken effect and in-turn pushed more folks onto the roles of the unemployed. [3]

To balance the budget will take cooperation of both major parties accepting things each object to. We cannot, as Phillips articulates (American Theocracy) give huge tax breaks, and then insist on balancing the budget solely through spending cuts. It will take both. Remember it was balanced not too many years ago.  There are both conservative and liberal readers here and I’m confident the direction I’m heading will provide enough discussion, debate, agreement, and consternation for all. For Modern Monetary Theory supporters keep reading, you may be able to bear some of my solutions. Over the next weeks or perhaps more I’ll put forth inputs and hope readers will jump in with comments to help refine these as we move forward. We will not all agree but let’s not allow ourselves to fall prey to the DC stalemate where our national (alleged) leadership simply cannot support any idea but their own party’s and political contributors.

Without detailstoday, here are topics I’ll cover in future posts. Subsidies on fossil fuels, energy distribution, alternative energy, banks; taxes including long-term gains rules and rates, foreign tax credits, and certain exemptions; and other topics like the military budget, drug war options, coin seignorage, and reducing the interest on existing debt.

None of these will solve the issue by itself, but one of my pet peeves is the old saying of “this (or that) change really won’t make much difference to the overall debt”. Let’s face it, no one who’s run up a big credit debt did it with a single purchase, but over many small things it grew and grew and grew. Same here, we and congress can nickel and dime this elephant down to nothing…just like your own budget. As I go, we can add up some numbers and see where it stands. In the end, we’re looking for a rough Trillion dollars annually. Piece of cake, but it’ll be a big piece to swallow.

[1] http://www.reuters.com/article/2011/10/07/us-usa-debt-cbo-idUSTRE7965IA20111007

[2] http://www.washingtonpost.com/business/news-summary-us-budget-deficit-totals-974-billion-through-july-trails-last-years-pace/2012/08/10/0212f216-e326-11e1-89f7-76e23a982d06_story.html

[3] http://americanmoneylies.com/?p=90

Welfare Reform Facts – Help From the press

Last month I wrote (and to the St Paul Pioneer Press where I read the original article) about the Heritage Foundation’s mistake on welfare reform. They lied, misled, misrepresented, and even combined both federal and state means tested welfare expenditures in their closing emotional plea. [1] Now one of the campaigns has jumped on the data as if it were factual without digging, or perhaps without caring if it’s actually true.

Today a major network (NBC) has finally gotten on board pointing out the dubious claims in a recent Romney TV add based on the Heritage Foundation fiction. “In 1996, President Clinton and a bipartisan Congress helped end welfare as we know it by requiring work for welfare,” the narrator says. “But on July 12th, President Obama quietly announced a plan to gut welfare reform by dropping work requirements.” The effort is to portray Clinton as the “good” kind of Democrat and Obama as the “bad” kind.  I stated in my earlier article the change was simply a policy adjustment. In fact, a bipartisan adjustment with the waiver policy requested by the Republican governors of Utah and Nevada to achieve more flexibility in designing programs more likely to work in this challenging environment. [2]

Best support is a look at the Health and Human Services Memo which states it “will only consider approving waivers relating to the work participation requirements that make changes intended to lead to more effective means of meeting the work goals of TANF.” So the work requirement is still there. The Heritage Foundation is lying and conveniently, their favored party is buying. Just last night Romney told FOX that Obama believes “they shouldn’t have to have the work requirement” Check the facts friends, I called it here already last week; the claim is just not true. [3]

[1] http://americanmoneylies.com/?p=37

[2] Greg Sargent

[3] First Read

More on Jobs

My last post talked about job growth and how downsizing in the public sector is hurting unemployment and the overall job picture in the US. So I took a look at some comparative data between recent administrations and it is compelling.

Looking at growth in the private sector we see a slow but continuous growth, 29 straight months of private sector job growth, the economy has created 4.5 million jobs that didn’t exist in January of 2009, including 172,000 new private sector jobs in July and 1.1 million generated in 2012 alone. [1] Unfortunately it has come after the substantial losses in 08-09 and the early months of 2010. Since then there has been only gains.

Monthly Change in Total Private Employment, February 2008 – July 2012. Source: Bureau of Labor Statistics, Current Employment Statistics Program.

Best news has been the reaction; everyone loves it including the market with three consecutive days of gains. Well almost everyone that is. “Conservatives” not in office but trying to get there are unhappy…looking for the lump of coal instead of the value for our country. (update…let’s make that 4 days of gains)

    But again lets take a look at the public sector. Here is a comparison chart of the Bush/Obama years with both public and private sector jobs. Growth of the public sector during the Bush administration was astounding for a “conservative”. Again the Laffer/Moore comment “Sadly for fiscal conservatives, the biggest surge in government spending came during the last two years of President George W. Bush’s eight years in office (2007-2008).” [2} which I blogged on 4 Aug becomes even more apparent.

Remember; don’t believe all the cute sound-bites on TV, check some facts. Yes they can disagree, but the discussion can be so much more than a shouting match between parties, PACS, and expensive anonymously funded ads.

[1] http://www.natlawreview.com/article/july-job-growth-exceeds-forecasts

[2] Arthur Laffer and Stephen Moore wrote an op-ed in the WSJ titled Obama’s Real Spending Record