Archive for August 2010

Wouldn’t It Be Nice

August 31, 2010

Tonight President Obama will speak to the nation marking the official end to combat operations in Iraq. What a thankless task.

Wouldn’t it be nice to hear the President say that the US never needed to spend all the money it has, nor did it have the need to have wasted over 4400 lives or seen over 17,000 wounded American bodies?

Wouldn’t it be nice to hear the President say he could not fault the military in any way and quite to the contrary, he feels great pride at the bravery and professionalism of all who were asked to serve. On behalf of a grateful nation, it would be nice to hear him apologize to all the military members.

Wouldn’t it be nice to hear the President say the Government has learned an important lesson about nation building in the 21st century, and in particular in regions hopeless locked in the 15th century. This is not a place for Americans to venture.

Wouldn’t it be nice to hear the President apologize to the Iraqi people for having interfered with their internal affairs and in essence played god on who would rule the rest of Iraq. There is absolutely no reason to expect the Shiites will be any better rulers than the Sunnis. The Kurds might be the best of the lot but they could care less about the Arabs.

And, wouldn’t it be nice to hear the President say the Government renounced the idea of enhanced interrogation, secret renditions, and NSA domestic spying.

If the world was perfect, it would be nice to hear that George W Bush, Dick Cheney and all other chicken hawks (Wolfowitz, Pearle, Libby, etc) would be brought up on charges such as violating the Geneva Convention, intentional deception of the American people, and extensive use of warrentless surveillance. But it is not perfect and there is no political will to resurrect these skeletons much less make an overdue apology to all those whom the Iraq invasion and occupation hurt.

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The Banks Fault?

August 30, 2010

Banks are not lending. That is what Americans are being told. Credit is tight and therefore the economy is having a difficult time getting any traction. That’s number two for the Banks. First they precipitated the financial crisis and consequent recession. Now they are doing their best to act righteous and are holding back on credit. Their lack of action is killing the economy.  What should we do with banks?

How can you blame Banks when just a few years ago they were giving out money to anyone (and in many cases with no documents). Banks got burned and received a lot of unfavorable press coverage. Why shouldn’t banks be more prudent on who they loan to?

The answer is Banks should be prudent (and should have been long before the housing bubble burst). A better question might be, what should banks do with funds they receive from FDIC insured deposits? Or, what should big banks do with funds they borrow from the Fed?

In one way or another, these are public funds back by tax payers guarantees. Under this light, these funds should be used only in building a common wealth application (read create jobs). For example, banks using funds from these sources should be encouraged (maybe required but probably an onerous tax penalty could also work) to invest in small businesses and home construction. In essence, money from these sources could  only be used for this type of purpose. It could not be used by banks to buy bonds or any other proprietary trading purpose. Banks, of course, could still  get funds from investors who would not receive FDIC protection, and then invest in what ever they chose. The point here is that Federal cheap money and insurance protection should be only for funds that would be used to make investments in the common wealth (jobs).

So, what if banks still felt they could not find sound deals in the common wealth area? The simple answer is that they should not make deals just to make deals. I suspect, however, that small banks that know the local market much better, could fill in the gap nicely. Anyone who has dealt with the large banks recently has experienced an attitude that screams out their disdain for small business and mortgage loans. It is very possible that the large banks we are familiar with are like General Motors and will not be able to reform until bankruptcy sets in.

In the 2000s, Banks were primarily interested in mortgages and business loans only if they could repackage them and sell them as bonds (or CDOs). It was the resale where they cleared their books of the risk while collecting large fees that was the beef in the sandwich, not the mortgage or loan.

Like when a field is overgrown with weeds, a controlled grass fire will bring back fresh and vibrant growth.

Any Ideas?

August 29, 2010

The US economy seems to be moping along showing no signs of recovery from the 2008 recession. A lot of people have lost their jobs and have little prospect in getting new ones. States all seem to be having difficulty balancing their budgets and are engaged in layoffs and cutbacks. How did we get into this spot?

It would be easy to blame President George W Bush. It was on his shift that everything went to hell in a hand basket. And for sure, his Administration must take a lot of the blame but that will not help us understand what has really happened. This recession has been years in the making and will require some significant changes to shake off.

Since the 1950’s Americans have deluded themselves on why this country was so well off.

  • God received a lot of credit (he blessed this land and its people so well).
  • American ingenuity and hard work also received a lot of credit.
  • Democracy and capitalism were attributed a major role as well.

Everything American stood as “proof”. Folk lore had it that the US won WWI and WWII. There is little mention of the Korean War or Vietnam War. American Olympic teams won the most gold medals. There is no mention of how much more money the US Olympic committee spent on training compared to other countries. American cars were second to none we were told. Then in the late 70’s Japanese automakers showed Americans that a good car did not need to be so expensive. American industry was supreme until steel and chemicals were replaced by Asian versions of the same products. Air travel with TWA and Pan Am was without peer until the 80’s and 90’s when Singapore Air and Lufthansa set new standards for service and dependability. Health care was probably the greatest achievement of the all the American successes, it was clearly best in the world. Well almost. Today the US ranks 17th in overall health care among other countries but does rank first (by a long measure) in per capita cost.

The point of all this is that America has much to be proud about and is still a wonderful place to live, but there are many other countries that are doing quite well too. For anyone who has traveled, the gap between the US and the rest of the world can easily be seen to be closing.

The question “any ideas” (about how to get the Country growing) is not an idle one. It is clear that Congress has no clue. Both political parties tell either half truths or simply try to distort reality in order to suit their short term political needs.

One of the favorite political mantras is to simply repeat how great the US is. To be sure, in any contest I would like to be dealt the US as my hand. The difference is I would play the hand quite differently.  The king has no clothes.

  • The first observation is that there are many countries that possess brain power and technology every bit the equal of the US.
  • Next, we must understand that capital has no conscience and will go where ever it can earn its best return. We owe Banks and Investment firms no favors.
  • Education and skills remain the key to productivity success and there are no secrets in this arena, just the will to learn.
  • Lastly there are no substitutes for hard work, fair pay, and sustainable life paths.

Those who long for the America of the past simply do not know America, or how it came to be. America has been, and still is, a land of immigrants.  As each wave of foreigners became Americans, the Country grew and change ever so slightly. Those who want to reclaim the past, in truth, really want to retain their personal privileged advantages, and could care less about everyone else.

Anyone that tells you there is a free lunch is a fool or dangerous, and in any case, should not be trusted. Getting America going by cutting taxes or services to the needy fills that free lunch bill.

It is time for the US to look around the world and start making its investment choices again on the basis of increasing our common wealth. The bloated and wasteful ways of the last 60 years must give way to a far more practical and pragmatic approach.

A Peak Under the Covers

August 27, 2010

There are two big scandals enjoying wide press coverage going on in Philadelphia. One involves the Delaware River Port Authority (DRPA) and the other, the Philadelphia Housing Authority (PHA). Both scandals expose the lack of any real oversight one would expect for agencies with budgets the size of these two.

But there is much more than oversight.

In the case of the PHA, the Executive Director was reported as having financial difficulties ( foreclosure on a new expensive home and for having a judgement against him by the IRS). This seems hardly newsworthy but surely not something anyone would want to brag about.

Then came the revelation that the executive director had made several sexual harassment settlement (and was currently in negotiation to settle a fourth). Now we have raised the level of seriousness.

But there is much more than sexual harassment.

The executive director (of an agency that spent millions) encouraged 4 special parties each year in his own honor. Are you getting the idea? Each of the vendors, from lawyers to building materials suppliers, were invited to attend and contribute. And yes, each attendee continued to enjoy contracts with the PHA.

Turning to the DRPA, the soup is just as messy but so far there are no reported sexual harassment cases. The revelations began with reports of astonishingly high pay for the top executives (also true for the PHA executive director). These reports were followed by discovery of excessive perks and abuse of those perks (for example, one executive gave his “EZ Pass” to a friend to use). Think this is starting to smell?

But there is much more than pay and perks.

The DRPA executives are political appointees and they are supervised by a large Board (also politically appointed by the Governors of Pennsylvania and New Jersey along with certain local unions). Now try and guess what happens as a matter of normal business?

The DRPA routinely uses (read 100 of thousands of dollars each) a wide range of Philadelphia law firms, most of which have political ties (read campaign contributions in exchange for work) with current State leaders.

The Governor appoints the DRPA executive director who in turns has the DRPA do business with those firms the Governor (or some other important State official) has ties with.

In both cases there have been, so far, no allegations of wrong doing on the part of the vendors (that is, received pay for no work). In the case of the DRPA, one must wonder whether tolls could not be a lot less if the board’s focus was more business like. But the real issue is, in my opinion, fundamentally a violation of ethics 101.

At the simplest level there is no oversight and the absence of ethical standards.   One could easily conclude that both of these were by design. This leaves the functioning of these important Authorities to chance. The public is left only with certainty that some of their money (tax payer and poll payer) will be going into someone else’s pocket.

Yes, And…?

August 26, 2010

A new out of State funded attack ad has come to Pennsylvania TV screens. The TV spot characterizes Democrat Senatorial candidate, Joe Sestak, by saying (ominously), “he voted for government health care”. How bad is that?

If you equate government with bad, then this add makes sense. Or, does it?

The US health care system is presently based upon private doctors, hospitals, and insurance providers. US residents enjoy the highest cost per capita and the highest yearly increase in premiums of anyone in the world. The US ranks about 17th in the world for its overall health care and among third world countries in terms of infant mortality. On top of all this, the current system is on a collision course with bankruptcy. So, tell me again what is wrong with more Government involvement? And by the way, seniors love Medicare.

These facts are clear. Where are the Democratic counter ads? It is time for Democrats to get serious about explaining what is really the case and not trying to hide hoping Republicans won’t exploit voter ignorance.

The Mountain Ahead

August 25, 2010

Opinion polls in the Pennsylvania Senate race are favoring Republican Pat Toomey over Democrat Joe Sestak. TV ads supporting Toomey have thundered all summer that Joe Sestak is too liberal. They cite his support of the stimulus package and a straightline vote with the House Democratic majority. While these claims are factually true, what is absent is “so what”.

Health care reform, the stimulus package, and several extensions of unemployment benefits have all been legislation aimed at helping middle class citizens, many of whom consider themselves independent voters. Republican and conservative interests have framed all issues as either an Obama/Pelosi/Reid liberal thing or what? That’s the point, Republicans and conservatives have stopped offering any alternative, and instead are just saying the Democratic way is the wrong way.

Republicans got to this point when they realized that their previous positions were too similar to those that resulted in the financial sector melt down and our current recession (near depression). Imagine trying to fix social security through private sector investment on the heals of most people’s 401K’s having nose dived to as much as 50% of their original value.

It is all about framing the issues. Ads in support of Sestak have pictured Toomey as a friend of Wall Street. While true, this leaves most people wondering what’s so bad about that. Sestak and all other Democrats are going to need to explain how (1) they propose to get the economy moving, and (2) how much they have accomplished in two short years (in terms that mean something to the average person) and specifically how that has helped the voter.

Getting the economy going is not an easy question to answer. Economic growth recently has occurred where credit have been made widely available and easy to obtain. This does result in a lot of new growth and demand, but has always been followed with a lot of wasteful spending and resulting bad debt (for example, the US, Ireland, England, Greece, Italy, Portugal and Spain). Asian economies (especially China) have grown by putting to work cheap labor. In the US, many people are set on pushing out Mexicans who are willing to work for low wages. Those who are left will not and can not work as hard or as cheaply, This is catch 22.

I suspect the current economic hole we find the country in will take a substantial time to get out of.  Our free enterprise system will need to find new industries to excel at.    Many States have, in the last 100 years, retooled their local economies, and the same is probably going to be true of the US as a whole. Education and training coupled with tax code stimulus will be key. Probably the most important key is hope and confidence in the future.

Hope and confidence are easiest to project if the candidate speaks reasonably and honestly. In the end, voters place their hope on candidates based upon a mix of impressions. The mountain between Democrats and maintaining a Congressional majority can be made much smaller if Democrats would stop running from their accomplishments and start explaining them in terms middle class people can understand.

Food Fight

August 24, 2010

It could just as easily be the extreme disagreements over health care reform. One side vociferously in favor and the other equally opposed. Both sides augmented (if not outrightly pushed aside) with money and voices from outside the area.   In short the food fight is not about food but about some greater issue in the minds of the protagonists.

The food fight which is the subject of this posit is about whether an Islamic group can build a Mosque and associated buildings on land two blocks from the site of the World Trade Center. While there is nothing unusual about local zoning issues and for sure interested local parties have every right to weigh in with yea or nae. The issue currently being vented is what standing does a group from California or Arizona or Missouri (etc) have to express their opinion and back it up with rhetoric and money?

The first thing a wise person should consider is that this type of opposition is not genuine. Rather it is a placeholder for some other objective. But what could that objective be?

I would submit that these opposition groups are fighting for the hearts and minds of Americans with carefully selected divisive rhetoric.  Their objective aims to steer voters in future elections towards the hard right. With these votes, the hard right reasons they can once again get the keys to the treasury and other political spoils. It is pretty simple when you look at it this way.  It is all about getting a cut of the Federal $3 trillion plus budget.

The Constitution could not be clearer (there is no way to block building permits). Historic precedent also supports the construction of the Mosque. And local officials possess all sorts of means to encourage the Mosque leaders to find an alternative site if they choose to.

Advocates cry out about religious freedom and how great the country is because of its plural religious tradition. I fully agree with that but only to the extent that the US has wasted much less blood fighting about religion than many other countries.  religion itself has done little or nothing for America.  The proposed Mosque is a business just like all other religious enterprises. Existing rules that permit building should apply. In the future, should the operation of the Mosque raise concerns about its political nature, the Mosque should be subject to “nuisance” regulations and shut down if appropriate. There is no need for out of State-ers to put in their two cents.