Thursday, June 27, 2013

Principled Conservatives Should Applaud Supreme Court Gay Rulings

I am a Principled Conservative with Libertarian tendencies. I recommend that you be too.  See my blog Principled Conservatism Will Save This Country

I support the actions of the Supreme Court because it increases individual freedom of those seeking higher levels of commitment and responsibility.  Also it helps to free the States to pass the laws that they want.

The DOMA ruling also correctly chides the Federal government for infringing on the rights of both the individual and The States.  I argue in that blog that power generally needs to be devolved back to The States and away from the Federal Government. The Federal government is too powerful and is running riot over our Constituational guarantees.  And I also argue that The States should be incubators of public policy---not the Federal Government.  If Massachusetts has universal health coverage, fine.  If Vermont allows gay marriages, fine by me. Colorado decriminalizes marijuana, great!  I think the Federal government needs to follow the lead of the States.  Conservatives should applaud fellow citizens who want to take more responsibility and want to make deeper commitments in their lives even if it appears unconventional.

I applaud the Supreme Court rulings on striking down DOMA and returning the Proposition 8 case back to a lower court.  My reasoning, laid out in that blog, is that the decision affirms the primacy of The States to pass laws that they want--and those laws that do not infringe on the Constitution.  The Supreme Court affirmed that The States have a right to decide if gay marriages are legal and there is no room for a Federal Law to infringe in this matter.  The Federal Government was found, in fact, to be acting unconstitutionally.  Now if we can get them to rule on the warrant-less surveillance by the NSA or the actions of the IRS!! (don't count on it by the way)

Judge Kennedy said:
"No legitimate purpose overcomes the purpose and effect to disparage and to injure those whom the State, by its marriage laws, sought to protect in personhood and dignity. By seeking to displace this protection and treating those persons as living in marriages less respected than others, the federal statute is in violation of the Fifth Amendment,"

Connservatives and Republicans had better adopt "live and let live" and a tolerance to different points of view in matters between two consenting adults (gay marriage) and/or individual preferences that have no affect on anyone else (personal decision to smoke or grow marijuana).  If not, then they may go to the ash bin of history.  That would be a shame because Liberalism will take us to complete disaster as I pointed out in that blog entry. Conservatism must save this country from Liberalism.

Conservatives, and every citizen, need to be aware of the very human tendency to adopt a "I don't understand it, I hate it and therefore I must kill it" attitude.  Live and let live---if it doesn't hurt anybody.

My religious friends should admit that a few specific Biblical passages or injunctions regarding matters of sex, sexual behavior or even women's issues are usually not very relevant, helpful or useful some 2000 years later.    Be careful to not cling too strongly to a few passages and ignore the broader context and call to a profoundly loving, ethical and just life.  Remember Conservatism is rooted deeply in our religious and ethical traditions.

The Non-reform of Student Loans

The Federal Government needs to get out of the Student loan and student loan guarantee business because it's going to be very costly to taxpayers.  Also, these programs are enslaving an entire generation of young people in unsustainable debt.

See my blog The Student-loan Bubble and Bailout.  From CBS News:
The number of people who are at least 90 days late on student loan payments has jumped 3.2 percent in only two years, rising from 8.5 percent in 2011 to 11.7 percent today, according to a recent study by the New York Federal Reserve.
We have a bursting student loan bubble.  That's what a default rate of 11% means. With $1.2 TRILLION in student loans outstanding, a 10% default rate is already $120 billion in losses and rising (guaranteed by the Federal Government who will cover these loses).  Meanwhile, the American sheeple snooze as the government never fixes it's debt problem.

On July 1, student loan rates are supposedly set to double to 6.8% from 3.4%.  The House Republicans passed a bill to link the student loan rate to the 10 year government bond yield; which is 2.5% at the moment. Another variant proposal is to use the 10 year bond rate plus 2%, or 4.5% currently.  Democrats, being even more idiotic than Republicans, want the rate lower than 3.4%.  Wrong, wrong, wrong!

Both political parties have it all wrong.  Because of default rates now north of 10%, the student loan rate SHOULD be 12.5% or more now.  This is because, if priced in a private loan market, the market interest rate would include the cost to cover their losses plus the cost of their money:  10% plus 2.5% equals 12.5%.  (Like credit card rates are priced)  Yes, it would be a shock now to jump to a market rate but the rate would have ramped up slowly in recent years as as default rates have risen over the past several years.

A market interest rate is the only thing that will slow the building amount of loans outstanding and halt the rise in delinquencies!!   Almost everything the US Government does ends in disaster. Even when things are way off and broken, your stupid politicians can't fix anything!   While nothing is being managed well, nothing is being properly fixed but the Democrats want even more programs!  Wonderful.

So,  we will continue to under-price student loans with too low interest rates,  therefore the taxpayers will continue to subsidize student loans, feed this debt bubble to even larger levels, feed the astronomically rising college tuition inflation,  enslave millions of young students forever, and guarantee larger and larger losses to the US taxpayer.  

Tuesday, June 25, 2013

Hostess Union Workers Put Themselves Out of Work

Everyone has heard about Hostess Bakeries going out of business last year.  After a history of losing money, the company told employees last year that it was cutting wages 8 percent and cutting benefits some 27 to 32 percent. This triggered a strike. Their unions (Teamsters and Baker's Union) had been on strike starting in November of 2012.  From ABC News:
 Hostess CEO Grey Rayburn said the faltering company cannot handle the industrial action.
"We've been very straight forward that the business can't withstand the significant work stoppage," he said. "If this strike continues, there is certainly a risk that Hostess will go out of business."
Well, he wasn't kidding.  I suggest that, next time, Union leadership take management a little more seriously. Oh wait, there won't be a next time.  Now 18,000 union members are without a job.  I read where the Teamsters had looked at Hostess' finances and concluded that pay cuts were necessary but the Baker's Union would have none of it.   I'm surprised the company didn't relocate to Mexico.

Now we hear that the company is being resurrected by venture capitalists without union labor.  From ABC News:

The company had imposed a contract that would cut its 19,000 workers' wages — 15,000 of whom belonged to the workers from the Bakery, Confectionery, Tobacco Workers & Grain Millers International Union (BCTGM) — by 8 percent. (The Teamsters was Hostess' largest union, followed by BCTGM.)

The contract would have also cut benefits by 27 to 32 percent.    Hostess filed for Chapter 11 in January 2012. In November 2012, the company announced it would be shutting its doors for good. By that time, it had lost about $1.1 billion, largely due to bankruptcy filings.
 The newly reorganized company will not use Union labor.  So, the BCTGM union put themselves out of work.

Monday, June 24, 2013

Principled Conservatism Will Save This Country--Not Liberalism

Principled conservatism can still save this country from the Left. It must do because nothing else will! Obviously there will always be compromise from both sides. But in this blog entry, I'm not trying to be 'fair' or 'balanced' for the sake of clarity.

Here's a number of conservative thoughts that attempt to portray the illusive and inter-related concepts that define "conservatism."  It's more difficult to capture than you might think.

Incidentally, Conservatism is not necessarily "Republican." I tend to support a more libertarian conservatism championed by Ron Paul, who is widely respected but basically ignored. I will also say that the current administration and it's band of misfits best represents the contradictions and fallacies of Leftism.

OK, here goes:
  • Decentralize and devolve political power back to the State and Local level . We need a multi-year or multi-decade movement to decentralize and devolve political power back to the State and Local level and away from the Federal level. This Federalism was the true and central intent of ALL of the Founding Fathers, all of their writings and embodied in The Constitution where only a few enumerated powers are reserved to the Federal government.  Concentration of power at the Federal level leads to abuse of power, corruption, abuse of personal liberties, undue influence of 'money' in the political system, excessive debt, cartels and crony capitalism.
  • States should be the "incubators" of policy within the bounds of the Constitution. It's happening now in matters of gay marriage or unions (until the Supreme Court decided to override The States on gay marriage), decriminalization of marijuana, and even health care reform.  I think each state should come up with it's own solutions to problems and policy.  Let the 50 states experiment with policy first then the national policy should or could follow.  Massachusetts has it's universal healthcare system. Great! Colorado decriminalized marijuana. Great!  Vermont legalized gay marriage.  Fine with me!  
  • The concept of limiting Federal power is at the very heart of America's history, our country's philosophical foundation and THE most fundamental feature of Conservatism. By allowing Federal Government to expand we have the NSA scandal, IRS persecutions of citizens, bankers writing Dodd-Frank to protect their privileged 'cartel' status, the drug and health insurance companies writing the rules and getting 'in bed with the government' in the ObamaCare disaster. Big government has bought you the ineffective and hugely expensive TSA, countless "intelligence" spy organizations all focused on spying on the American people in the name of "terrorism". Obviously I could go on and on.  Just read today's headlines for more examples of government overreach.
  • Reduce the Breadth and Scope of the Federal Government The size, breadth and scope of the Federal government needs serious reduction--not just from a Conservative standpoint---but from a budget standpoint! We can't afford it, the waste and their handouts! Trillion dollar deficits don't cut it -- and they will be back! The Patriot Act should probably be repealed.  Many departments of the Government should be either completely eliminated or severely downsized including the Homeland Security, Education, Agriculture, and Energy Departments. Also cut most of the Commerce Dept., get rid of the Housing and Urban Development Department.  See my comments below on restraining Entitlements which threaten to swallow the entire Fed. budget.
  • Low taxes.  Low taxes is a result of restraint of government growth.  Remember, there wasn't an income tax until 1913. (Then 5 years later, in 1918, top tax rates were 90%!) Low taxes allow people to prosper, invest and fund their retirement. Conversely, high taxes feed big government that wastes money, ruins the society, ruins populations (blacks, native Americans) squanders wealth on programs and entire departments that don't work, individuals become dependent on government and their retirement programs, and stifles the economy. Low taxes allow people to get rich enough to take risk, start businesses, invest and fund their own retirement (as opposed to being a ward of the "State"for your retirement security. One day, the government may not have enough money to pay your retirement benefits since it's a pay-as-you-go system).  High income taxes is antithetical to a vibrant, active economy.  Look at Europe!  Try to get a job in high tax France or Britain. Good luck!
  • Our Nation's Social Foundations used to be Family, Marriage, Community, Charities and Faith Communities.  But growing government and subsequent intrusion in the "charity business" (housing programs, income replacement programs, loan programs, employment and training programs, 'welfare' programs, etc) have hurt our traditional social foundations of family, marriage, community, charities and faith communities.  No faceless, anonymous bureaucratic entity can replace these pillars.  Now 72% of black children are born to a family without a father.  It didn't use to be that bad.  How about that as a sign of social decay?  Guess which group is the focus on numerous welfare and social programs designed to "help?" With "help" like that, who needs enemies?!  The Left refuses to see that they, in part, caused this. They, in fact, they love to be needed in a sick co-dependency. But it's really all about power, control, and it's all supported by the extortion of other people's money. That extortion gets nice sounding names like "fairness."
  • America's success is primarily based in our Religious Faith, and the cultural understanding and legal codification of Judeo-Christian faith and ethical traditions.  Faith in people or "government" is no substitute to faith in God as best defined by long-standing world faiths and religious traditions. The Left makes fun of people of faith, but they are the idiots. The Left doesn't believe in anything! They are lost! Without grounding in a religious faith or tradition, liberals are only left with a faith in man or, worse, government institutions.
    Without a faith and grounding in religious faith, the result is cynicism and despair when "man" and his institutions always fail to fulfill and inspire, then fail entirely. An even deeper and more profound failure of liberalism then is the lack of courage. Without faith, there can be no courage. If you don't have a view of what ultimately matters, informed from the great traditions, then you will find yourself adrift in moral relativity, with no convictions and buffeted by the trends and fads of the day.
    Leftists attack and try to discredit the religious faithful. Think about the communists who place themselves at the apex of authority: not God or a "higher power." All communist regimes outlaw religion. It's happening today in China where Christians are actively persecuted. Communists are the extreme end of socialism and liberalism.
  • Self reliance, Personal responsibility are the foundations of any society.  What else?? Personal responsibility and self reliance are the cornerstones of any society, so government should not undermine that even if unintentional.
  • Social safety nets ('welfare'and unemployment programs) should have a finite period and therefore end.  This would mean that various aid programs like Food stamps, unemployment, and maybe even Medicaid should have a finite period--something like a year. Then, it must end.  Otherwise you promote a crippling dependency.   Obviously disability programs are different. 
  • Both Social Security and Medicare were conceived as MUCH more modest and MUCH more limited programs than they've become--both are examples of gov't "mission creep," and politician "vote buying."  And they were started in a time of very favorable demographics--plenty of young workers and few beneficiaries.  Now entitlements threaten to consume the entire Federal budget in future decades, leaving nothing left for the few "constitutional" functions of government. Just witness the "gnashing of teeth" in response to modest sequester cuts of 'discretional' portions of the budgets--and where entitlements are left untouched and growing.  
  • Therefore, Medicare/Medicaid programs future benefits must be modified now as the ratio of workers to beneficiaries is dropping fast.   Otherwise, these programs consume the entire Federal budget.  This train wreck was predictable 30 years ago but the government has failed to manage the inevitable. The Obama administration hasn't done anything and everything is worse under him.
  • Leftism represents the "easy way out" in nearly all matters--not because it's the right thing to do but because it buys votes.  So what if you're killing fetuses: abortion relieves you of responsibility, accountability.  Can't pay your debts? Then liberals want to ease debt burdens (at the expense of others including future generations).  Huge corruption in liberal programs are to be tolerated rather than eliminate the program. 
  • The reality of life is that there are no easy ways out.  Everything in life requires hard work. Life is much harder than anyone imagines growing up.  Hard work and struggle is the very thing that makes one self-reliant, responsible and principled. There are no short cuts. People are lulled into thinking by politicians that there are shortcuts, until government runs out of money. Government, trying to tame the business cycle has created 2 financial crises from which we are still trying to recover. There will  be more and worse crises thanks to relentless "government."
  • "Tough love" is real love and is essential for individuals, groups and even nations.  People have to learn about life by making mistakes and know the 'sting' of life's lessons. Life is much more difficult than mom ever told you!  Government cannot make everything easy for everyone for vote buying purposes!  It's NOT their job!  Eventually it won't work. 
  • Leftist  elites are jealous of the very people who have prospered based on their own hard work:  businessmen and entrepreneurs. Churchill said "Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy."

    Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery
    Read more at http://www.brainyquote.com/quotes/quotes/w/winstonchu164131.html#rzvKR5XyLybc3Z1w.99
    Liberals don't mind taking your money -- especially the money of the wealthy and they'll do it by confiscation if required.  Liberals love taxes, especially on the wealthy.  (But in 2015, the top 5% now pay 58% of the income taxes but they are branded as 'not paying their fair share.") They don't understand, or care about, the sacrifice and risk most businessmen undertake. Worse, they think that the wealth from success is somehow unworthy or ill-gotten.  Like Churchill said, they are envious of the successful.  Do you think Obama has any idea about how to run a business or make a payroll?  Not a chance!  Ironically, most liberal politicians are quite wealthy-- often from inherited wealth.
  • Free-markets and appropriately regulated free market capitalism is the best path to prosperity.  
  • Let's recap the greatest political lesson of the last century: Communism and Socialism bring nothing but failure or stagnation:  Communism is/was a disaster in every way: totalitarian, human rights, environment, economic.  Socialism in a large economy is not much better. Both have led to drab mediocrity, stagnation and even collapse.  Why do people want to move toward such political positions when history has spoken so loudly and that the success of the American "experiment" has been so successful?  Capitalism has it's crises but these crises historically were allowed to result in enterprise failures that clean out the ineffective and the excessive. Capitalism without failure is not capitalism. The bailouts of 2008 and 2009 didn't allow enough failure; prolonging our current agony of so-called "recovery."
  • Socialist European countries have economies the size of US States--some with the population of US cities!--so even socialist governments at that size tends not to be as stifling and inefficient,  Socialism can work in a small economy--sort of---if you don't mind stagnation and limited opportunities!  I didn't say that it worked well!
  • The star economies of Europe are Eastern and Central European countries who have adopted the purest forms of capitalism: low and flat taxes, low regulation, small government. They have embraced a high degree of economic freedom. They are now more Capitalist than America. They are more similar to Singapore and are prospering similarly.
  • Balanced budgets States must balance their budgets, why not the Federal budget? A simple Federal law would do it. No Constitutional amendment needed.
  • Limit the Federal Reserve to a single mandate of controlling inflation.  Get rid of the mandate to maximize employment. The Fed has caused a 98% fall in the value of the dollar and a 28 fold price index inflation since it's inception in 1913.  It's failed miserably at controlling inflation. Limit money printing and credit creation using a simple rule of, say, 2% credit growth per year or whatever the non-inflationary growth potential of the economy is. Any emergency liquidity must be "mopped-up" quickly---not easy or free money for 5 years!!
  • Sound money: no money printing or monetizing huge government debts!! Wholesale money printing should be banned.  Money printing is about weakening your currency often in another "easy way out" and therefore "un-conservative."  Sometimes currency wars are necessary when your trading partner is the evil China who have manipulated their currency for decades.  Nixon's breaking the Bretton Woods gold standard is a seminal event in world monetary history--and not in a good way!
  • Least amount of regulation as possible   Remember that only the prosperity of free market capitalism created the wealth that allowed for the cost of environment remediation in the 1960s and 1970s. We found out that Communism was an environmental disaster because there was no real prosperity. We'll see that when China collapses too. The current surge of additional regulation from EPA does not make sense. The upcoming cap and trade crap will be a huge job-killer and won't work.  There is no public demand for it and the economy is not good enough--we don't have the money or prosperity to afford it even if it were necessary!  It's all based in ideology not from any clamoring from the public.   Don't kill the golden goose!  
  • Re-instate Glass Steagall   Get back to a separation of Investment banking from retail banking and low leverage requirements: 
  • Work rule reform-limit the coercive power of big Unions. Obama's card-check would have promoted coercive unionism.  But unionism is killing itself quite well all on it's own. End unionism in all levels of government.
  • Free trade as long the other side is playing fair.  China has never played fair.  The US should have cracked down on Chinese currency manipulation in the 1990s or 2000s and threatened to impose tariffs on unfair imports. It would have resulted in some kind of negotiated settlement that would have likely helped.
  • Abortions should NOT be easy to get
  • Get money out of politics.  Finance national campaigns with Federal money. Ban lobbying money and any contributions to politicians.  Ban any contributions more than about $100.
  • Military strength and preparedness causes peace. Reagan was so right about "peace through strength."  The movie "Argo" focused on a group of 5 hostages in Iran being rescued in 1979.  But the real 'award winning' story, that the Left will never tell, is how ALL of the remaining hostages were released on the day of Reagan's inauguration. No world leader doubted Reagan's resolve and convictions. Reagan later essentially ended the Cold War. On the other hand, weakness engenders wars. (This does not mean that the defense budget is not currently bloated and could be cut substantially by the way.)  The Left never understands this or ignores it to spend money on their socialistic programs. You want proof, just look at the pitiful defense budgets gutted by the Socialists in Europe.
With no courage because of no real faith, liberals never have the conviction that sometimes things are worth fighting for. They become master appeasers that brings war! They rarely understand the doctrine of "peace though strength."  Liberals both here and abroad, over time, de-fund military strength to fund the welfare state or their central planning agenda. European countries today have very small militaries and would be unable to fight a war. But that's ok because liberals never believe in anything strong enough to fight for it!  And they denigrate those people who have principles and values.
  • Obama is the Ultimate Example of the failure of affirmative action. Obama coasted along his entire life on a wave of affirmative action money; promoted without real achievements, without real merit, without having had to "work" at a real job. Being a somewhat bright black man has been his "ticket." Praise, from liberal elites and institutions, has come without any exceptional effort (apparently, since all of his academic records are sealed, his record must be quite mediocre). Then, suddenly, a 1/2 term Senator with no distinguished legislative record, no career or work history and a sealed academic record, surfs a liberal affirmative action "wave" into the White House. It's the culmination of a liberal dream: a black man in the White House, promoted by and indoctrinated in leftist "values" and the "compromised" standards of affirmative action, all to "prove" that black men are equal (but don't look too close at standardized test results and academic performance).
What kind of result would you expect? The answer is: the same results from other affirmative action programs: Mediocrity. You can call me racist, but Obama is incompetent and is hurting millions of people who need jobs in this country-- hurting blacks the worst.
  • Leftists are more often ruled with their heart (or right brain?) and not their head. The expression "bleeding heart Liberal" has a factual basis! Witness the nearly hysterical debate about gun control in the wake of several massacres. They are willing to violate the Constitution to take away ALL guns (as they did in the UK to no notable effect), despite the fact that mentally unbalanced or insane people got this weapons outside of the law --any law. The rush to be seen to be doing something seems to be the most important thing regardless that the prescriptions will do nothing to stop gun violence. But the Constitution just keeps getting in the way of the liberal agenda.
Conservatives believe in limited government because it has worked for the majority of American history and it's clearly the intent of the founding fathers. The recent 7 year long surge in government spending (really since WWII), debt accumulation, government and federal reserve intervention into the economy in an effort to "help" after the crash of 2008 has inhibited economic growth. Similar "activist" government stymied the economy in the 1970s thanks to idiots like Jimmy Carter. (We now have Jimmy Carter II in Obama).  Businesses have pulled back, due the government 'activism' and resulting uncertainty. Obamacare has been a huge shadow over business costs since it's inception.  Also, decades of excessive money creation loaded up the economy and public to the hilt with debt that they could and can not sustain.  But rather than back off, the current administration wants even more intervention into the economy!  Obama and fellow Leftists NEVER learn.   Meanwhile millions look for jobs or give up.

Next Will Be Federal Takeover of YOUR Medical Information

The NSA scandal shows that government surveillance is likely exceeding anything that most American voters would agree to. The truth is that we still know nothing of what's going on.  NSA shenanigans are probably just the tip of the iceberg.  I also am confident that the Federal government is trying to monitor and parse all of world's interbank financial transactions--in the name of terrorism of course.  There is no end to the mischief from a government with no management or real oversight and no budgetary restraints.

I say repeal the Patriot Act and kill the NSA warrantless surveillance program.

Oh, and repeal ObamaCare with it's imminent seizure of all of your medical information.

The scandal for 2014 will be the Federal government accessing medical records that ARE REQUIRED to be in electronic format (for ease of extraction into government bureaucrat's computers).

Just today, from Fox News comes a story of how the Republicans are challenging wholesale seizing of medical records in California
The House Energy and Commerce Committee sent a letter Tuesday to acting  IRS Administrator Daniel Werfel requesting information about a 2011 agency search and seizure of as many as 60 million medical records from a California health care provider.
The letter follows a recent lawsuit regarding the legality of the seizure of more than 10 million American patients’ medical information while executing a warrant related to a former employee’s financial records, leaders of the Republican-led committee said.
The letter, which gives Werfel until June 25 to respond, cites a news report this year that states the unnamed health-care provider is now suing the IRS and 15 unnamed agents in California Superior Court and that the suit alleges the agents stole more than 60 million medical records from more than 10 million American patients during a search conducted March 11, 2011.

Death Panels Are Already Here


We got a glimpse of the "death panels" that Sarah Palin and others have warned about recently.  It was widely reported that the HHS department's head Kathleen Sibelius denied a new lung to a 10 year old girl on the verge of dying, reportedly saying, in essence, "some live, some die." The HHS runs that organ donor program.  Welcome to bureaucrat care.  Yeah, I understand that lungs are in short supply, but I'm just saying...

How comfortable are you, in light of the shenanigans from the IRS targeting people who disagree with the administration (about 1/2 the nation), that a conservative activist might be denied care?  How do you feel when government bureaucrats, with mal-intent, can review ALL of the medical information of someone like Rush Limbaugh?   It will so easy when the government has all of your medical information in databases.

Sunday, June 23, 2013

Meet the First NSA Whistleblower: Thomas Drake

Thomas Drake was the first NSA whistleblower; bringing the full weight of the entire USA government on his head.  I happened to see Mr. Drake on Geraldo at Large on Fox News last night.

In the end, all charges were dropped and he just pleaded guilty of "misusing NSA computers" with a 1 year probation, but only after being bankrupted fighting an opponent with unlimited resources.

Wikipedia has a great summary of his case. Him and four others participated in a study in the early 2000s, which was eventually adopted,  that pointed out extreme waste and ineptitude (corruption?) at the agency.

In the mid-2000s, Drake became convinced that NSA was violating The Constitution and the Law,
...he felt the NSA was committing serious crimes against the American people, on a level worse than what president Nixon had done in the 1970s. Drake reviewed the laws regarding disclosure of information, and decided that if he revealed unclassified information to a reporter, then the worst thing that would happen to him was probably that he would be fired.

In November, 2005, Drake contacted Siobhan Gorman, of The Baltimore Sun newspaper. Drake began communicating with Gorman, sending her emails through Hushmail and discussing various topics. He claims that he was very careful not to give her sensitive or classified information; it was one of the basic ground rules he set out at the beginning of their communication. This communication occurred circa 2006. Gorman wrote several articles about waste, fraud, and abuse at the NSA, including articles on Trailblazer [the expensive failure that he exposed earlier]
Naturally the government (the Obama Administration) came down on him, along with the other employees that had participated in the expose of waste earlier.  Their homes were raided, computers, books  and documents were seized.  Eventually trumped-up charges were bought (but not breaching of secrecy laws).

Just after a 60 Minutes television appearance, the government suddenly dropped all charges against Drake and the others.  The judge in the case was not happy saying:
The presiding judge, Richard D. Bennett of the Federal District Court, issued harsh words for the government, saying that it was "unconscionable" to charge a defendant with a list of serious crimes that could have resulted in 35 years in prison only to drop all of the major charges on the eve of trial.[62] The judge also rejected the government's request for a large fine noting that Drake had been financially devastated, losing his $154,600 job at the NSA and his pension.
The moral of the story is never challenge the ineptitude and illegality of the Federal Government.  You will be brought down--and brought down hard!  You will be subject to raids and untrue accusations, highly paid thugs will point guns at you, and you will be financially ruined.  Drake later said
"it's extremely dangerous in America right now to be right as a whistleblower when the government is so wrong." He adds: "speaking truth to power is now a criminal act."
I say repeal the Patriot Act and end all of the warrant-less surveillance programs and end the NSA itself.  You cannot trust the strong arm of the Federal Government. No agency or any program out of Washington is being managed well.  Literally the entire government is so big, so unaccountable, unmanageable and essentially out of control.  There is no budget pressures at all.  It MUST be cut down to size.

White Minority Seals Fate of Slow US Decline

There are reports from a Reuter's article "Whites to become Minority by 2050"  that minority births are now in the majority, meaning that by 2050, the US population will be mostly black, Latino (and Asian) for the first time.  The projected breakdown is 47% White, 9% Asian, 29% Latino and 14% Black.

Currently Blacks and Latinos make up about 13% and 14% of the population.

America Has a Minority Drop-Out Problem 


But what is worse, the overall 4 year high school drop-out rate for Blacks and Hispanics is about 40% and 32% respectively down from up to 50% a decade ago.  Recent studies by Becky Pettit have shown that the black drop out rate is 40% too low, since no one is counting all of the young blacks in jail/prison! The drop out rate is much higher!  And you know that there are absolutely no jobs available for high school drop-outs.  With competition from Asia to continue and no action by US government to encourage businesses to return here, there will continue to be minimal jobs for these people.

Minorities Score Lower On IQ and Other Academic Tests


Minority dropouts are high in part because Black and Hispanics score significantly lower in IQ tests--which measures academic intelligence.  Blacks and Latinos have reported median IQs of about 85 and 89, respectively (refer to my blog "Blacks Score Lower on All Academic Tests").  Once we have 53% minorities and 47% whites in 2043, the nation's IQ will have dropped to 94 from about 96 now.   That doesn't sound like much, but it means significantly larger number of intellectually deficient and severely deficient people in the population and also significantly less gifted and nearly-gifted individuals. More intellectually deficient individuals and significantly less exceptional intellects may be enough to tip our typically 50/50 politics into the "populist zone" and send our nation into a typical Latin or African trajectory.

America Needs Smart Immigrants, Not Dumb Ones


Much of the increased Latino population is projected to be from immigration.  But lack of real and intelligent immigration reform will bring mostly low qualified immigrants.   America needs smart immigrants not low-IQ, low skill, low competence immigrants from Mexico, Honduras and El Salvador.  We need an immigration point system that ALL potential emigres are ranked according to skills, academic skills/degrees and any and all other desireable characteristics.  See my blog Bring On an Immigration Point System--Send Home the 11 Million Illegals to see a recommendation for an objective immigration point system that ranks ALL potential immigrants in an objective point system.

The Pull of Populism Is Our Nation's Biggest Threat


Black and Hispanic cultures both have strong cultural histories of voting for populist politicians with the worst possible agendas. Just look at any Latin or African country. Sadly, even when things look promising in any country on the African and South American continents, eventually failure or mediocrity, at best, prevails. This is clearly due to maladministration. Argentina is a great example with a strong (and intelligent) European immigrant history.  It once had the 7th highest GDP in the world in 1900, now ranks at 40th.  Refer to the graph below comparing Argentina to Australia and New Zealand.  Even now, Argentina is ruled by a disastrous "Chavista" and "populist" government bringing the country to the verge of national bankruptcy and an inflationary collapse (again!)   Obama is another populist charlatan, a Chavista-lite, and may very well be just the beginning of this trend toward populist leaders in the US.  How did he get in and stay in?  It was because minorities "bought into" his populist message.

Yes, it's possible that there may be some good Presidents and Congresses, but slowly the trend for the country is almost certainly down--due to the bad choices and bad governance typical of what you see in African and Latin countries.  When 1/2 the country is Latin or Black, you can expect the country to look more 3rd world.   It sounds racist but it's just common sense and it's just the way it is.  South Texas looks like Mexico. That's a fact.  Don't you think Detroit looks like Africa already?  Sadly, Detroit looks much worse than African cities---it looks post-apocalyptic!

from http://www.krusekronicle.com/kruse_kronicle/2008/03/charting-histor.html#.UcZJyjuR82I
d
100 Year History of Argentina Economy Compared to Australia and NZ


From Reuter's "Whites to become Minority by 2050"
The U.S. population will grow to 438 million in 2050 from 296 million in 2005 if current population trends continue, the Pew Research Center study found.  Non-Hispanic whites would account for 47 percent of the total in 2050, it concluded.
By that time, one in every five Americans will be a foreign-born immigrant, compared to one in eight in 2005.
"Of the 117 million people added to the population in this period due to the effect of new immigration, 67 million will be the immigrants themselves and 50 million will be their U.S.-born children or grandchildren," the study said.
While the white population, with its lower fertility rate, ages, the Latino population, the nation's largest minority, will triple in size. Latinos will be responsible for 60 percent of the population growth until 2050.  They will account for 29 percent of the population, or 128 million in 2050, up from 14 percent now, the study said.
"The number of whites will increase, but only by 4 percent," said D'Vera Cohn, one of the report's authors.
The Asian population will almost double in percentage terms, from 5 to 9 percent, while blacks will remain around 13 percent of the total, the report said.

Bring On an Immigration Point System

America needs highly qualified and highly skilled people in addition to agricultural and other low-skilled workers.  America needs an objective point system for ALL potential immigrants for various categories of applicants -- not a blanket amnesty for low skill, low IQ illegal immigrants who bring few skills and have limited employment options both in this country and their native country.  English language and academic credentials should be highly regarded. 

The illegals and would-be Mexican and Central American immigrants are bringing very few skills and capability to help America in the 21st century.  They should apply for immigration, along with everyone else, using an immigration point system for targeted categories.  Obviously college and post-graduate degree count for more. Additionally, English language skills should figure prominently as well.   Canada has a point system to rank potential immigrants and have many categories for applicants. The USA should have the same.

As nice and as hard-working the illegal Latinos are, our country should still send them all home or give them temporary visas while they wait for processing under a new immigration point system.

In this way, we get the best of the best and satisfy our nation's requirements.  Of course, they would have already been home if there were ANY enforcement of immigration law over the past 20 years.  The Federal Government has been completely derelict in it's duty of enforcing immigration law even to the point of attacking US States (Arizona) that try to fill the gap.  So, add failure to secure borders and enforce the law to the myriad of failures of the US Federal Government.

Local law enforcement checks of legal status should have been happening all along.  The fact that this is not 'allowed' and any attempts to check legality or illegality are vigorously attacked by the very entity (US gov't) that is SUPPOSED to be checking and controlling immigration is ridiculous.  Are we a bunch of idiots?  Sadly, the answer is yes.

I've lived in Thailand, which has a significant illegal immigrant problem as neighboring states remain economic basket cases.  In Thailand, police will calmly go through markets and businesses and check for proper ID cards.  If you don't have a card, they come back the next day to follow up.  This, of course, sends a clear message to the community that laws are laws and illegals will be sent home.  More importantly it sends a clear message to would-be illegals!  Word gets out.  Of course, due to our ridiculous US Gov't, we don't have law and order. Now we have a 11 million person problem.  Conventional wisdom is that you can't send them home.  Maybe it's true now that it's an 11 million person problem!!  Duh!

 All immigrants, from any area of the world, should be measured by the same objective point system.  But objectivity and clarity is also an anathema to our Federal Gov't which is so full of "political correctness" bullshit that it can't even see straight!

The sad facts are that the undocumented or illegals are mostly low skilled, low-IQ people who are overwhelmingly suited for menial jobs.  There are plenty, though, that have some useful skills in trades and that should count for something in the point system.  But mostly they aren't bringing the skills that we need in this country. Also, the initial group of Latino immigrants do well, but the next generation is a problem as 50% of Latino kids drop out of high school. If you don't have a high school diploma in this country, you are nowhere.

We already have legions of dumb-asses and incompetents to fill menial job openings, but that's another blog.

Friday, June 21, 2013

Prison America: US Has 50% of World's Lawyers

The US legal system manages to incarcerate more citizens than any other country in the world including the nearly totalitarian state of Russia. Slowly the US government is working to make everyone in America a criminal by steady expansion of rules, laws and statutes that never expire or are reviewed. Laws at the Federal level are the basis for an unconstitutional expansion of Federal power and oppression. The system is literally out of control.

An indictment of why almost everything is wrong with the US legal system from Conrad Black:
The United States has five per cent of the world's population, 25 per cent of the world's incarcerated people, and 50 per cent of the world's lawyers (who account for nearly 10 per cent of the country's GDP, an onerous taxation of American society). [Wow!]
Almost everything about the American system is wrong. Grand juries are a rubber stamp for the prosecutors; assets are routinely frozen or seized in ex parte actions on the basis of false government affidavits, so targets don't have the resources to pay avaricious American counsel and are thrust into the hands of public defenders, who are usually just Judas goats for the prosecutors. The prosecutors poison the jury pool with a media lynching at the start; bail is often outrageously high, and prosecutions and ancillary proceedings from the SEC, IRS, etc., drag on for a whole decade, all contrary to the Fifth, Sixth, and Eighth Amendments. The plea bargain system, for which prosecutors would be disbarred in most other serious countries, enables prosecutors to threaten everyone around the target with indictment if they don't miraculously recall, under careful government coaching, inculpatory evidence. Prosecutors win 95 per cent of their cases, 90 per cent of those without a trial, and people who exercise their constitutionally guaranteed right to go to trial receive more than three times the sentence they receive if they cop a plea, as a penalty for exercising their rights.
Federal sentences are about twice as long as state ones, on average, for the same offence, and probably about a third of prisoners are in illegally crowded and inhumanely spartan or even unsanitary conditions.
Evidentiary and procedural rules are a stacked deck: the prosecutors speak last to the jury; most trial judges are ex-prosecutors who stitch up appeals in the courthouse lunch rooms; and the Supreme Court only takes 70 cases a year, is ostentatiously unconcerned with the facts and equity of cases, and only interprets and applies the law to ensure it is constitutional and uniform across the country. The sole defence the average American has against this evil, repulsive, and terroristic system is that America does not have the means or personnel to imprison more than one per cent of its adult population at any one time, though a stupefying 48 million Americans have a record.
The civil courts are the bread and butter of the vast medieval legal guild. Over 70 per cent of American cases would be inadmissible in Canada or Britain as frivolous or vexatious litigation, and the routine American practice of marketing contingent fees is just a tawdry racket.

 Comparison to the World


Prison Population Information

Correctional Populations in the United States 1980 to 2008 (Includes Probation Population)

Estimated Number of Inmates by Sex and Race For the Year 2009 

Rates of Incarceration

From Wikipedia

According to the US Bureau of Justice Statistics non-Hispanic blacks accounted for 39.4% of the total prison and jail population in 2009.   According to the 2010 census of the US Census Bureau blacks (including Hispanic blacks) comprised 13.6% of the US population.

Hispanics (of all races) were 20.6% of the total jail and prison population in 2009.   Hispanics comprised 16.3% of the US population according to the 2010 US census.



Percentage of Male Civilian Population Age 20 to 34 That are Incarcerated.
11.4 percent of African American Males Age 20 to 34 Are Incarcerated.  Note the problem with High School Drop-outs of all races.

Crime by Type, Sex and Race

Property Crime by Type (rate per 100,000 persons)


Property and Violent Crime in the US since 1960 (rate per 100,000 persons)



Thursday, June 20, 2013

Worldwide Financial Bubbles Beginning to Burst?

The US Federal Reserve has finally explained that it intends (maybe, if conditions allow) to slow it's massive $1 Trillion per year bond buying/money creation program.

I think everyone in the world can plainly see that the Federal Reserve is way over it's head in moral hazards with it's overly-long-lasting zero interest rate policy, outright "monetization" (or financing) of a majority of the US Federal government's deficit spending using "printed money," thereby allowing for a continuation of chronic trade deficits, and inflating financial bubbles as far away as Asia.

It's likely that bursting bubbles in Asia will be the trigger for a larger world-wide financial bust:  So, get ready for huge financial turmoil.  Asian bubbles include:  China's credit market bubbles (official and shadow markets), China and Hong Kong's property/debt bubbles, Thailand's property/debt bubble, Australia's property and debt bubbles, and inflated emerging market equity markets all threaten a similar repeat of the Asia Crisis of 1997.  When bubbles burst, banking system crises and currency crises are sure to follow.  Capital flight from emerging markets have already started and will aggravate the problems.

Last night, word from Bloomberg was that Chinese officials are trying to "prick" the financial bubble in China as interbank lending rates went up to 25%.  This means that banks are unwilling to loan to each other---not unlike what happened in the US in 2008.  The Chinese authorities are sending the markets a message but they are playing a dangerous game as we saw in the US in 2008. We know that interbank lending stress will weaken their economy further.  Business in China is already not good as export markets in Europe collapse.  A credit crisis will worsen their economy and the other economies in the region.

Then, news that the PBoC rescued a bank last night and is rumored to be in discussions with other troubled banks. There are tons of bad loans on all of their bank's books and "off-book." Expect more trouble to come as the government has spent, using government captive bank's credit, and year after year, in amounts equivalent to about 50% of their GDP on unnecessary and un-economic infrastructure projects. These loans  will go sour.  Bad loans are hidden but it is a sure bet that bad loans are a huge number. Expect more financial distress in China--maybe calamity.

No one in the entire world has uttered the word "recession" with regard to China.  That alone is scary.  Fitch reported back in May 2011 that there was a 60% chance of Chinese Banking crisis by 2013. That prediction may prove prescient.

Then a few days ago, Fitch issued an even worse report on China claiming that China has the "worst financial credit bubble in modern world history."  Those words from financial rating agencies are never spoken.   From Telegraph,
The agency said the scale of credit was so extreme that the country would find it very hard to grow its way out of the excesses as in past episodes, implying tougher times ahead.
"The credit-driven growth model is clearly falling apart. This could feed into a massive over-capacity problem, and potentially into a Japanese-style deflation," said Charlene Chu, the agency's senior director in Beijing.
"There is no transparency in the shadow banking system, and systemic risk is rising. We have no idea who the borrowers are, who the lenders are, and what the quality of assets is, and this undermines signalling," she told The Daily Telegraph.
While the non-performing loan rate of the banks may look benign at just 1pc, this has become irrelevant as trusts, wealth-management funds, offshore vehicles and other forms of irregular lending make up over half of all new credit. "It means nothing if you can off-load any bad asset you want. A lot of the banking exposure to property is not booked as property," she said.
Concerns are rising after a string of upsets in Quingdao, Ordos, Jilin and elsewhere, in so-called trust products, a $1.4 trillion (£0.9 trillion) segment of the shadow banking system.
Bank Everbright defaulted on an interbank loan 10 days ago amid wild spikes in short-term "Shibor" borrowing rates, a sign that liquidity has suddenly dried up. "Typically stress starts in the periphery and moves to the core, and that is what we are already seeing with defaults in trust products," she said.

Overall credit has jumped from $9 trillion to $23 trillion since the Lehman crisis. "They have replicated the entire US commercial banking system in five years," she said.
The ratio of credit to GDP has jumped by 75 percentage points to 200pc of GDP, compared to roughly 40 points in the US over five years leading up to the subprime bubble, or in Japan before the Nikkei bubble burst in 1990. "This is beyond anything we have ever seen before in a large economy. We don't know how this will play out. The next six months will be crucial," she said.

Friday, June 14, 2013

Guest Post: US Ruled By Criminals and Idiots

To all of the young generation who need to learn to be skeptical of politicians and government "solutions," here's a good blog from Sovereign Man blog:

"For some, it's hard to even fathom... as if the headlines were ripped from the Onion instead of Atlas Shrugged or Orwell's 1984:
  1. NSA Is Wired Into Top Internet Companies’ Servers, Including Google and Facebook
  2. NSA reportedly collecting phone records of millions
  3. Former NSA head defends agency reportedly spying on millions of Americans
  4. US gov't defends NSA surveillance, slams 'reprehensible' journalists
Even more, just within the last few weeks we've seen the Justice Department confiscating news reporter phone records... the IRS caught bullying political opposition groups... and now this.It should be as plain as day at this point.

Yet some people still have a hard time understanding that they're living under an oppressive, destructive, unaccountable government.  Most other cultures get it. If you go to Argentina, Vietnam, Italy, or China, people there have absolutely no trust or confidence in their governments. It's something that's -almost- uniquely American-- a lifetime of steady, bombastic propaganda that inculcates a deep belief that our system is the 'best'.  And, even in the face of such overwhelming evidence, it's still hard for people to break from this programming and acknowledge that their government is just as corrupt as Mexico's... albeit slightly more sophisticated.  [It used to be that there was a healthy skepticism of the government and politicians-where did THAT go??]

The politicians running the nation are socio-pathic criminals, plain and simple. If you or I were to tap people's phones or hack their Facebook accounts, or use our authority to bully opposition groups, we would be tossed in the slammer in no time... and branded by the media as moral delinquents.Yet politicians get away with it.  They even have prominent members of the press championing their criminality, like this quote from Forbes today: "this is in fact what governments are supposed to do so I'm at something of a loss in understanding why people seem to be getting so outraged about it." The simple reason is because the system is a total failure.

In the 'free world', society is based on a principle that a tiny elite should have the power to kill. To steal. To wage war. To debase the currency. To deprive certain people of freedom. All in their sole discretion. And for the good of everyone else. We're just supposed to trust them to be good guys and be proficient at their jobs.  And in case they happen to completely screw it up and wreck the nation, they get a pass. It's completely absurd. We're ruled by criminals, plain and simple.

This is a hard lesson for an entire society to learn, but perhaps the most important. Unfortunately, the second lesson is even harder: that there's absolutely nothing we can do about it. We've also been led to believe that direct democracy and grassroots movements can be a force for change. Yet it rarely, if ever, happens. Short of outright revolution, the system isn't going to change. It has to completely crash... and hit rock bottom... before it can be rebuilt. And we're still a loooong way off from that.  Like ancient Rome before, the Land of the Free can look forward to being governed by a long series of criminals in the foreseeable future, notwithstanding the occasional sage."

Wednesday, June 5, 2013

Forget Dodd-Frank, Reinstate Glass-Steagall

I keep asking if this administration and Congress can do anything right?

Dodd-Frank Law is a Flop


It's been years, 3 years to be exact, since something called "Dodd Frank" bill was passed into law. We had better hope that a financial crisis doesn't erupt this month, because only 20% of the rules have even been written. I call that a FLOP.

It's still a moving  target too. So far, it totals over 2,000 pages and counting. You know when a law becomes 1000s of pages, that banksters will soon figure out a way to wiggle around these rules. Heck, the banksters are writing the rules!  Laws need to resemble the succinct wording of Amendments to the Constitution.  For example, in this case, the law needs to read something like this: "If taxpayer money is lost due to banking losses, then the entire executive management of the bank will go to jail for 'financial malfeasance'  and all of their earnings, including stock options, for the past 7 years will be clawed back."

In commentary about the status of Dodd-Frank from CNBC:
It had some good ideas when it first passed but it's pretty much a failure," said Kurt Schacht, managing director of standards and finance market integrity at CFA Institute, an association of investment professionals. "It's confusing, to say the least, and the rules keep changing," Schacht said. "The financial industry keeps pushing back on the rules and trying to get them changed. It's a mess."  

Forget Dodd-Frank, Reinstate Glass Steagall


Meanwhile a more serious debate about re-instating the Glass Steagall act has emerged.  Glass Steagall, enacted in the 1930s to separate conventional banking activities from investment banking, was repealed in 1999 and there has been nothing but financial instability and shenanigans every since.  Glass Steagall worked for a long time.

See a very well-written article excerpt from Liam Halligan at the Telegraph:
For many years, I have banged the drum for the US in particular, but also the UK and Western Europe, to reimpose a decisive split between commercial banks (that take deposits and lend to ordinary firms and households) and investment banks (which take big risks). Why? Because since this divide was incrementally removed in the UK and US during the late 1980s and 1990s, financial markets have lurched from crisis to crisis. No other single act did more to cause “sub-prime” and transform it from a banking crisis into a broader fiscal and economic crisis.
Once the depression-era Glass-Steagall legislation was repealed in America in 1999, Wall Street investment banks systematically used taxpayer-backed deposits to take ultra-risky bets, knowing they’d be rescued if their bets backfired. In so doing, they were competing with their City brethren, the UK having ended its “informal” banking split during the 1986 “Big Bang”.
Separation would prevent investment banks from gambling with ordinary deposits, exposing them to the full force of the market. At a stroke, our banking system would be far safer and the “too big to fail” issue resolved. That’s anathema, of course, to the banking giants who rely on government cash for survival and from whom politicians receive campaign donations and cushy jobs once their political careers expire. Yet our lack of genuine banking reform is sowing the seeds of the next collapse – with all the economic dislocation, human pain and further bail-outs that would bring.
Those of us who called for a new Glass-Steagall back in the immediate aftermath of the sub-prime crisis were often derided. Yet numerous very serious people have emerged as strong supporters of this view. Outgoing Bank of England Governor, Sir Mervyn King, backs reimposing a genuine divide. So does former Federal Reserve boss Paul Volcker and former UK chancellor Lord Lawson. Even John Reed and Sandy Weill, the two Wall Street plutocrats who made vast fortunes off the back of the Clinton-era repeal, now admit that dismantling Glass-Steagall was wrong.
Draft legislation to restore Glass-Steagall has just been introduced in the US Senate. This is a companion bill to a measure in the House of Representatives that now has 63 sponsors. Sick of market instability, America’s mighty farming lobby last week called for a new Glass-Steagall. “Congress must learn from the past in order to prevent future financial crises,” said Roger Johnson, president of the US National Farmers’ Union.
We’ve also lately had a courageous set of statements from an economist called Jeff Sachs. A professor at Columbia University, Sachs is a hugely authoritative figure. In truly astonishing public testimony to the Federal Reserve, Sachs recently lacerated Wall Street and its links to America’s political class, pointing repeatedly to “massive fraud” in the US financial services industry. Referring to “pathologically criminal behavior”, Sachs accused the big investment banks of “gaming the system to a remarkable extent… they have a docile president, a docile White House and a docile regulatory system that absolutely can’t find its voice. It’s terrified of these companies”.
Sachs then called for the “recreation of a mechanism where liquidity is separated from large-scale financial gambling”.

That was the role of Glass Steagall, to separate FDIC insured bank deposits from financial gambling.   Bring it on!   Bring back Glass-Steagall!

Tuesday, June 4, 2013

Federal Reserve Policies Hurting Not Helping

Now it's time for Bill Gross to catch up to  Zero Hedge with regard to the role of the Federal Reserve chairman and conclude this in his latest monthly letter:
"It’s been five years Mr. Chairman and the real economy has not once over a 12-month period of time grown faster than 2.5%. Perhaps, in addition to a fiscally confused Washington, it’s your policies that may be now part of the problem rather than the solution. Perhaps the beating heart is pumping anemic, even destructively leukemic blood through the system. Perhaps zero-bound interest rates and quantitative easing programs are becoming as much of the problem as the solution."   Which is why there simply is no way out as long as Bernanke stays in. From Bill Gross of PIMCO
For a more advanced discussion of the problems with zero Fed funds interest rates, which push all market interest rates lower (financial repression), have a look at the list below (also  from the same Zero Hedge article referenced above):

  1. Zero-bound yields deprive savers of their ability to generate income which in turn limits consumption and economic growth.
  2. Reduced carry via duration extension or spread actually destroys business models and real economic growth. If banks, insurance and investment management companies can no longer generate sufficient “carry” (Return on investment or ROI) to support employment infrastructures, then personnel layoffs quickly follow.
  3. With banks, net interest margins (NIM) are lowered because of “carry” compression, and then nationwide retail branches previously serving as depository magnets are closed one by one. In the U.K. for instance, Britain’s four biggest banks will have eliminated 189,000 jobs by the end of this year compared to peak staffing levels, reports Bloomberg News.
  4. Investment banking, insurance, indeed the entire financial industry is now similarly threatened, which is leading to layoffs and the obsolescence of real estate office structures as well which housed a surfeit of employees.
  5. Zombie corporations are allowed to survive. Reminiscent of the zero-bound carry-less Japanese economy over the past few decades, low interest rates, compressed risk spreads, historically low volatility and ultra-liquidity allow marginal corporations to keep on living.  Real growth is stunted in the process.
  6. When ROIs or carry in the real economy are too low, corporations resort to financial engineering as opposed to R&D and productive investment. This idea is far too complicated for an Investment Outlook footnote – it deserves expansion in future editions – but in the meantime, look at it this way: Apple has hundreds of billions of cash that is not being invested in future production, but returnedvia dividends and stock buybacks. 
  7. Western corporations seem focused more on returning capital as opposed to investing it. Low ROIs fostered by central bank policies in financial markets seem to have increasingly negative influences on investment and real growth.  Credit expansion in the private economy is restricted by an expanding Fed balance sheet and the limits on Treasury “repo.” The ability of private credit markets to deliver oxygen to the real economy is being hampered because most new Treasuries wind up in the dungeon of the Fed’s balance sheet where they cannot be expanded, lent out and rehypothecated to foster private credit growth. 

Monday, June 3, 2013

Our Expensive Jumble Of Intelligence Agencies

The Homeland Security Act was passed in 2002, calling for the establishment of a Department of Homeland Security with a primary mission to:

“prevent terrorist attacks within the United States”;
“reduce the vulnerability of the United States to terrorism”; and
“minimize the damage, and assist in the recovery, from terrorist attacks that do occur within the United States.”

How are they doing?  After 10 years and a Homeland security budget of $59 billion dollars for 2013, how much are you getting for your money??

Yes, there have been some 40 terror attacks foiled since 9/11, so that's pretty good--but at what cost?  (let's see, there have about 4 plots per year, so that works out to $15 billion per foiled attack!)  There are plenty of other intelligence agencies that already existed, so it's difficult to claim that these attacks were foiled strictly due to the Homeland Security department.

How many terrorists has the $7 billion TSA found in screening lines since 9/11?  None!

Add to that another $52.6 billion in 2013 budget request for the CIA and 15 other intelligence agencies, how do you feel now?   Has the CIA EVER done anything right?  They didn't get it right about Iraq.  They don't seem to know ANYTHING about Iran.

Add another $8.2 billion for the FBI, yet ANOTHER intelligence and law enforcement agency who appears to be constantly butting into state and local jurisdictions.  But at least the FBI DOES something!

Here's a summmary list of our extensive and expensive intelligence agencies from  Wikipedia:

The IC consists of 16 members (also called elements), most of which are offices or bureaus within federal executive departments. The IC is led by theDirector of National Intelligence, whose office, the Office of the Director of National Intelligence (ODNI), is not listed as a member of the IC.
Central Intelligence Agency (CIA)
United States Department of Defense
Defense Intelligence Agency (DIA)
National Security Agency (NSA)
National Geospatial-Intelligence Agency (NGA)
National Reconnaissance Office (NRO)
Air Force Intelligence, Surveillance and Reconnaissance Agency (AFISRA)
Army Intelligence and Security Command (INSCOM)
Marine Corps Intelligence Activity (MCIA)
Office of Naval Intelligence (ONI)
United States Department of Energy
Office of Intelligence and Counterintelligence (OICI)
United States Department of Homeland Security
Office of Intelligence and Analysis (I&A)
Coast Guard Intelligence (CGI)
United States Department of Justice
Federal Bureau of Investigation (FBI)
Drug Enforcement Administration (DEA)
Office of National Security Intelligence (ONSI)
United States Department of State
Bureau of Intelligence and Research (INR)
United States Department of the Treasury
Office of Terrorism and Financial Intelligence (TFI)
Gee, do you think we have enough intelligence????

You can imagine the overlapping of responsibilities between all this bureaucracies?  How many highly paid people descended on Boston to chase two criminal terrorists?  I bet it was over 1000 people at a cost that is unimaginably high.   At the end of the day, it was local citizens who saved the day.

In summary, we spend about $120 billion per annum on a huge jumble of intellegence bureaucracies.  I'm sure that there is room for a lot of consolidation and cost savings.

Flat Tax Could Neuter IRS

The IRS scandal shows how big government becomes corrupt government.  The entire bloated agency is run by mostly unionized, and therefore Democratic, employees.  This has been the case for some time and is true for most of the Federal Government bureaucracy.  So, there will always be considerable reluctance to ever "tame the beast" by Democrats.   But the beast needs taming when the bureaucracy begins to attack perceived adversaries that represent about half of the country's population! 

Peggy Noonan said it best when she summarizes the essence of the IRS scandal in the Wall Street Journal:
What does it mean when half the country—literally half the country—understands that the revenue-gathering arm of its federal government is politically corrupt, sees them as targets, and will shoot at them if they try to raise their heads?
That is the kind of thing that can kill a country, letting half its citizens believe that they no longer have full political rights. Those who think this is just business as usual are ahistorical, and those who think nothing can be done, or nothing serious should be done, are suffering from Cynicism Poisoning.
I've accused Obama of being Chavez-lite with Democratic vote-buying, 'control' of the media, and bulllying of the opposition---tactics used by Chavez to cement his multiple terms of office. The IRS persecution of the political opposition is not bullying?  And why else are the Democrats trying so hard to provide "cost-free" amnesty to 11 million undocumented Mexicans and so eager to offer them government benefits within months?  They see an opportunity to "capture" millions of new voters!!  It's a cynical power play!  They want another group "hooked" on the government for "free benefits." (In this way, we can "ruin" another minority group after we've ruined the Native Americans and African Americans.)

The end result of out-of-control government could be the same as in Venezuela:  inflation, stagnation and administrative politcal coercion.  We already have the stagnation and administrative coercion.  There are signs that inflation is welling-up too.  

When you hear that the head of the IRS has visited the White House 100s of times (which is extremely unusual), you can correctly fear that there is collusion and strong-armed tactics being perpetrated or planned.    We know Obama is obsessed with increasing taxes so he can spend all of that money and more.

Flat Tax Is Fairest and Makes the IRS obsolete 


The best way to neuter the IRS would be to downsize it.  The best way to downsize it is to vastly simplify our 10,000 page tax code.  Replace what we have with a flat tax on income for both individuals and corporations.  From my blog entry from September 2012 called A Flat Rate Income Tax is Truly Fair,

Because we live in time that nearly 50% of tax filers pay no income tax at all,  a flat tax of 16 or 18% on all income above the poverty level would be the fairest and simple tax rule (and no deductions).   Oh, and apply it to corporate entities too.   In that way, everyone pays their fair shar 
 (in this entire discussion, we are talking about income taxes.  It is assumed that payroll taxes would continue as is at 7.2% for individuals and the same amount paid by employers)
If you're single and make $40,000, then you pay 18% of the difference between $40,000 and the poverty level of $11,170.  This equates to 18% of $28,830 or $5,189 in Income Taxes.   If you make $1,040,000, then you $187,200 in Income Taxes.  No deductions.  
That's really fair right??   Right!  I'm glad that you agree.    This way, everyone has "skin in the game" and all can squawk with truly equal vigor about how well their tax dollars are spent.
You want to know why this is so difficult?   It's because the bottom 47% aren't paying income taxes now (they are paying 7% payroll taxes however).  If you have a truly flat rate, then much of the bottom 50% will have to pay a small amount of income taxes too!  
Also, since the top 1% are already paying 24% EFFECTIVE rate on average, then the 18% flat rate actually lowers their marginal rate (but with no deductions, the top 1% payer revenue would go up because of no deductions). 
What? The wealthiest pay lower tax rate???   (but revenues from this group would go up due to no deductions)   Sorry, but you already agreed that the flat rate is fair!   What we have now is unfair and amounts to "representation without taxation" for about half of the people in the USA.  
Oh, an average tax collection rate of say 18% is four percentage points above the post-war average tax take of 14% and would substantially solve the budget deficit problem!  The other thing is to limit the number and amount of tax credits or tax deductions per taxpayer as these "tax expenditures" now total $1 Trillion per year.   Add some real budget cuts to match and you've made some real budgeting reform progress!
With income taxes simplified, the IRS can be scaled back to something realistic and less aggressive.  Now, if we can get a Republican Senate majority in 2014!   Then we might really be on the right track once Obama is gone.