This Author, like most Economists and Conservatives, finds Government intervention highly suspect, with high probability of eventual damage. The only trouble with such a mind-set comes in a paucity of legislation which could actually help, because We avoid Government regulation as We would the Plague. The current development of Hedge Funds may call for a change of attitude.
Hedge Funds need high Turnover profits in order to survive, in order to pay down the margin borrowing service they engage in. This means they plunge-invest, dumping huge amounts of funds into one stock issuance or commodity until the Market price has risen to sufficient level, that they can make the necessary Turnover profit upon Sale of shares to bandwagon Investors. Commodities are exactly the same as Stock, with $40/barrel Oil selling for $57.68/barrel. The injury of Hedge Funds is clear, but how to limit the excess?
Every avenue of regulation when studied has very ugly connotations for the Market system. It is one of those scenarios where the shortest distance between two points is not a straight line, because the destruction of the environment along the way drives the desired Point further and further away. What is the desired Point? The Answer is quite simple: Stabilized Equity(read as Value) in Stock and Commodities.
Corporate value today stands as overwritten with Stock and Bonds. Hedge Funds value are far too liquid (too flush with funds) because of Margin-borrowing capacity. Is there a fundamental way to stop either practice? Yes and No. What does that mean? We cannot effectively regulate either activity, but We can effectively regulate the Equity value produced.
A Law could be passed stating total Shares of Corporate stock can only be increased by sale to the open Market. Stock Options and Stock Grants can be made to Employees, but said Stock must be bought back by the Corporation anytime Corporate Stock price lowers to level where the initial Stock Option or Grant was made, with no Dividends paid, or Tax credits received by the Corporate entity, until such Buyback is made (in the form of an exact equal number of Shares). The secret of success here lies in automatic Corporate intervention to support their own Stock price.
Commodities must be approached from a different angle. This will become an impediment to Commodity listings. Commodities will be allowing listing, if and only if they are listed with their Production Cost Estimate, Asking Price, and Selling Price. The initial Producer must supply the Production Cost Estimate which must carry through until the Commodity goes to Retailer or Consumer.
Two such laws would help stabilize Corporate stocks and Commodities, one by effective underwriting of Equity price, the other by increasing Market awareness. lgl
Wednesday, July 20, 2005
Tuesday, July 19, 2005
Foreign View
Owen Harries: Costs of a needless war
http://www.theaustralian.news.com.au/printpage/
0,5942,15959815,00.html
A most important article for All to read! The wars of Iraq and Afghanistan extend far beyond destruction of Terrorist elements and/or al Qaida. The current administration wants to leave a historical legacy, while filling their own coffers with rich Government contracts for their Corporate friends. Many, or Most, of this author's readers disagree with the author's position of the current American military ventures. Foreign attitudes, though, are growing increasingly attuned to this author's views on the Wars. Excerpts:
It is still a fundamental strategic axiom that the availability of means should not determine ends, and there are very powerful reasons why the US, even as the "sole remaining superpower", should be very parsimonious in using its military force actively
Barry McCaffrey, a well-informed and, up to now, dedicated supporter of the war, has recently maintained: "The US Army and the marines are too under-manned and under-resourced to sustain this security policy beyond next [autumn]. They are starting to unravel."
Today we are witnessing in the US not only substantial increases in government expenditure, but a serious diminution of the rule of law in the form of a partial suspension of habeas corpus, a circumventing of the Geneva Convention, a justification of the use of torture, and greater secrecy.
(As I write, it is reported that the Bush administration is classifying documents at the rate of 125 a minute or, if my arithmetic is accurate, 180,000 a day!)
as a general approach to political action a commitment to hold undeviatingly to a line of action, regardless of circumstances or consequences, is foolish and dangerous.
As always in politics, circumstances are crucial. To ignore them and to insist that the mission must proceed regardless is to invite recourse to that old play on Kipling's lines: "If you can keep your head when all about you are losing theirs, you have probably misunderstood the situation."
Indeed, prominent US Republican senator Chuck Hagel virtually said as much last month: "The White House is completely disconnected from reality. It is like they are making it up as they go along. The reality is that we are losing in Iraq."
Owen Harries, a former editor of The National Interest in Washington, DC, is a visiting fellow at the Lowy Institute for International Policy in Sydney.
====================
There are other paramount economic reasons for aborting the present Wars as quickly as possible. The Cost of rebuilding the U.S. military Main Force structure from the deterioration now endured is estimated by this author (and some Others) at $180 billion, with that figure growing by $3 bn per month of continued operations in Iraq and Afghanistan. Future Disability payments can be estimated as increasing (containing Survivor Benefits) by $8 million per year for every additional month spent in Operations in the two countries. Iraq, itself, can be estimated to have lost 2% of its Labor Force to Death or Disability payments since the start of the War.
Can the War in Iraq be won?
Islamic Fundamentalists worldwide will finance Terrorist activity in Iraq, as long as American military forces are on Iraqi soil and conducting military operations. American military presence in Afghanistan only incites support for the Taliban, as they learn to counter American tactics effectively, and are adequately financed from Opium sales. Neocon thinking is not going to cure this headache. lgl
http://www.theaustralian.news.com.au/printpage/
0,5942,15959815,00.html
A most important article for All to read! The wars of Iraq and Afghanistan extend far beyond destruction of Terrorist elements and/or al Qaida. The current administration wants to leave a historical legacy, while filling their own coffers with rich Government contracts for their Corporate friends. Many, or Most, of this author's readers disagree with the author's position of the current American military ventures. Foreign attitudes, though, are growing increasingly attuned to this author's views on the Wars. Excerpts:
It is still a fundamental strategic axiom that the availability of means should not determine ends, and there are very powerful reasons why the US, even as the "sole remaining superpower", should be very parsimonious in using its military force actively
Barry McCaffrey, a well-informed and, up to now, dedicated supporter of the war, has recently maintained: "The US Army and the marines are too under-manned and under-resourced to sustain this security policy beyond next [autumn]. They are starting to unravel."
Today we are witnessing in the US not only substantial increases in government expenditure, but a serious diminution of the rule of law in the form of a partial suspension of habeas corpus, a circumventing of the Geneva Convention, a justification of the use of torture, and greater secrecy.
(As I write, it is reported that the Bush administration is classifying documents at the rate of 125 a minute or, if my arithmetic is accurate, 180,000 a day!)
as a general approach to political action a commitment to hold undeviatingly to a line of action, regardless of circumstances or consequences, is foolish and dangerous.
As always in politics, circumstances are crucial. To ignore them and to insist that the mission must proceed regardless is to invite recourse to that old play on Kipling's lines: "If you can keep your head when all about you are losing theirs, you have probably misunderstood the situation."
Indeed, prominent US Republican senator Chuck Hagel virtually said as much last month: "The White House is completely disconnected from reality. It is like they are making it up as they go along. The reality is that we are losing in Iraq."
Owen Harries, a former editor of The National Interest in Washington, DC, is a visiting fellow at the Lowy Institute for International Policy in Sydney.
====================
There are other paramount economic reasons for aborting the present Wars as quickly as possible. The Cost of rebuilding the U.S. military Main Force structure from the deterioration now endured is estimated by this author (and some Others) at $180 billion, with that figure growing by $3 bn per month of continued operations in Iraq and Afghanistan. Future Disability payments can be estimated as increasing (containing Survivor Benefits) by $8 million per year for every additional month spent in Operations in the two countries. Iraq, itself, can be estimated to have lost 2% of its Labor Force to Death or Disability payments since the start of the War.
Can the War in Iraq be won?
Islamic Fundamentalists worldwide will finance Terrorist activity in Iraq, as long as American military forces are on Iraqi soil and conducting military operations. American military presence in Afghanistan only incites support for the Taliban, as they learn to counter American tactics effectively, and are adequately financed from Opium sales. Neocon thinking is not going to cure this headache. lgl
Monday, July 18, 2005
Tax Foundation Case
No. 04-1704
Supreme Court of the United States
DAIMLERCHRYSLER CORPORATION,
v.
CHARLOTTE CUNO, ET AL.
On Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Sixth Circuit
http://www.taxfoundation.org/publications/show/955.html
The Tax Foundation filed this BRIEF OF AMICUS CURIAE in a mistaken interpretation of the dormant Commerce Clause of the Constitution. This again is one of those times where Precedent serves only to confuse, using previous decisions to forestall discrimination against Out-of-State taxpayers as attack on In-State taxpayers, the Later attempting only to stop a positional discrimination against themselves and their property. Said Tax incentive in question would have unquestionably penalized them by maintaining the exact Tax burden upon themselves, while allowing new entrants to avoid taxation in total.
The dormant Commerce Clause does not grant apriori right to Tax competition, if such entails adverse, differing Tax applications against segments of the total polity taxed. The intent of the Commerce Clause defines simply that no government entity will by its action artificially diminish the role of interstate commerce. The existence of Tax incentives to lure business into a State discriminates against established Business to compete within and without the State. The Cuno decision should stand without writ of certiorari, as not to falsely restrict lower Court powers of determination. lgl
Supreme Court of the United States
DAIMLERCHRYSLER CORPORATION,
v.
CHARLOTTE CUNO, ET AL.
On Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Sixth Circuit
http://www.taxfoundation.org/publications/show/955.html
The Tax Foundation filed this BRIEF OF AMICUS CURIAE in a mistaken interpretation of the dormant Commerce Clause of the Constitution. This again is one of those times where Precedent serves only to confuse, using previous decisions to forestall discrimination against Out-of-State taxpayers as attack on In-State taxpayers, the Later attempting only to stop a positional discrimination against themselves and their property. Said Tax incentive in question would have unquestionably penalized them by maintaining the exact Tax burden upon themselves, while allowing new entrants to avoid taxation in total.
The dormant Commerce Clause does not grant apriori right to Tax competition, if such entails adverse, differing Tax applications against segments of the total polity taxed. The intent of the Commerce Clause defines simply that no government entity will by its action artificially diminish the role of interstate commerce. The existence of Tax incentives to lure business into a State discriminates against established Business to compete within and without the State. The Cuno decision should stand without writ of certiorari, as not to falsely restrict lower Court powers of determination. lgl
Sunday, July 17, 2005
The Children
Body Burden: The Pollution in Newborns
A benchmark investigation of industrial chemicals, pollutants and pesticides in umbilical cord blood
Environmental Working Group, July 14, 2005
http://www.ewg.org/reports_content/bodyburden2/pdf/bodyburden2_final.pdf
In a study spearheaded by the Environmental Working Group (EWG) in collaboration with Commonweal, researchers at two major laboratories found an average of 200 industrial chemicals and pollutants in umbilical cord blood from 10 babies born in August and September of 2004 in U.S. hospitals. Tests revealed a total of 287 chemicals in the group. The umbilical cord blood of these 10 children, collected by Red Cross after the cord was cut, harbored pesticides, consumer product ingredients, and wastes from burning coal, gasoline, and garbage.
Three Scenarios:
1) Resistance Immunity Need: Newborns kept pristine pure will not possess the Survival factors necessary to function in a healthy manner (Everyone has to learn how to live on this world). Shielding the Newborns could provide exactly the injury which We desire to avoid.
2)Irreparable Injury: We are creating entire Generations of idiots, who will be incapable of replacing Us, bringing the downfall of Civilization as We know it.
3) The Consequences Have Already Been Endured: Now the Author knows why he always meets so many stupid people.
Facts:
1) Sound implementation of Pollution Restraints are showing signs of lower Infant Mortality than the United States, even with less prenatal care. Expectant Mothers: Nix on the Drain Cleaner, just like the Shooters.
2) There is little ability to protect the Newborns from pollutants without protecting the Mothers, impossible without scrubbing the entire society of Pollution.
3) Study Recommendation
Grant the EPA clear and unencumbered authority to demand all studies needed to make finding of safety and to enforce clear deadlines for study completion.
Remove from the market chemicals for which tests demonstrating safety are not conducted.
Eliminate confidential business protection for all health, safety, and environmental information.
The first recommendation will be costly beyond belief--a probable $30 bn per year. The second recommendation would close down American industry, as well as much of the World. The third recommendation would be very handy to implement, if given teeth against Those who would hide genuine health risk.
We are seriously at risk, but cannot actively reduce this risk without major change of lifestyle. Vested Interests would not allow such harsh revision, nor would the general Consumer. Extensive study of the risk will not make people feel better, and will not accomplish any long-run reduction of the risk, at great expense better used for design and construction of safer Products. REAL THREAT LEVEL: No higher than some dozen other threats, and thirty times more expensive to correct than the War on Terrorism. lgl
A benchmark investigation of industrial chemicals, pollutants and pesticides in umbilical cord blood
Environmental Working Group, July 14, 2005
http://www.ewg.org/reports_content/bodyburden2/pdf/bodyburden2_final.pdf
In a study spearheaded by the Environmental Working Group (EWG) in collaboration with Commonweal, researchers at two major laboratories found an average of 200 industrial chemicals and pollutants in umbilical cord blood from 10 babies born in August and September of 2004 in U.S. hospitals. Tests revealed a total of 287 chemicals in the group. The umbilical cord blood of these 10 children, collected by Red Cross after the cord was cut, harbored pesticides, consumer product ingredients, and wastes from burning coal, gasoline, and garbage.
Three Scenarios:
1) Resistance Immunity Need: Newborns kept pristine pure will not possess the Survival factors necessary to function in a healthy manner (Everyone has to learn how to live on this world). Shielding the Newborns could provide exactly the injury which We desire to avoid.
2)Irreparable Injury: We are creating entire Generations of idiots, who will be incapable of replacing Us, bringing the downfall of Civilization as We know it.
3) The Consequences Have Already Been Endured: Now the Author knows why he always meets so many stupid people.
Facts:
1) Sound implementation of Pollution Restraints are showing signs of lower Infant Mortality than the United States, even with less prenatal care. Expectant Mothers: Nix on the Drain Cleaner, just like the Shooters.
2) There is little ability to protect the Newborns from pollutants without protecting the Mothers, impossible without scrubbing the entire society of Pollution.
3) Study Recommendation
Grant the EPA clear and unencumbered authority to demand all studies needed to make finding of safety and to enforce clear deadlines for study completion.
Remove from the market chemicals for which tests demonstrating safety are not conducted.
Eliminate confidential business protection for all health, safety, and environmental information.
The first recommendation will be costly beyond belief--a probable $30 bn per year. The second recommendation would close down American industry, as well as much of the World. The third recommendation would be very handy to implement, if given teeth against Those who would hide genuine health risk.
We are seriously at risk, but cannot actively reduce this risk without major change of lifestyle. Vested Interests would not allow such harsh revision, nor would the general Consumer. Extensive study of the risk will not make people feel better, and will not accomplish any long-run reduction of the risk, at great expense better used for design and construction of safer Products. REAL THREAT LEVEL: No higher than some dozen other threats, and thirty times more expensive to correct than the War on Terrorism. lgl
Saturday, July 16, 2005
BRAC and Per Capita Income
by Jack Spencer
Backgrounder #1867
July 8, 2005
http://www.heritage.org/Research/NationalSecurity/bg1867.cfm
Good research, but One wonders how much significance to place on the information. It only shows that an active Economy will absorb unexploited resources. Please understand this Author is quite in favor of the BRAC mission. He would actually be more extensive in his own recommendations for Base closings. It is simply previous Base closings have been the easiest, with some Business interest in utilization of the Base facilities. Future Base closings will find less Business interest, less accessible and utilizable resources, with the Bases in less-developed economic locales. The focus in these circumstances cannot be enticing basic Retail or Information-provision industry, but must resort to involvement of Manufacturing and Distribution industries (likely foreign to the initial area) to the proposed closed Bases.
====================================
Here's a Social Security Plan That's Really Two Plans
By DANIEL ALTMAN
Published: July 17, 2005
http://www.nytimes.com/2005/07/17/business/yourmoney/17view.html
Altman makes a good Case for grouping Social Security beneficiaries by Birth year. He makes another Case for the conflict between Rich and Poor Retirees. He follows with a good argument for a Unit Benefit (one-size fits all). Where he fails is in stipulation of a Make up the Difference Unit Benefit, where the beneficiaries' actual Income is deducted from the paid Benefits (non-paid Benefits in the following payment year). Altman hazards with a statement that only a probable 20% of Retirees would need such Benefits upon retirement, as consistent information suggests the number of Retirees using the Benefits would be over 40%. Such a reality means the appliable Tax rate could not be reduced as much as he indicates. A Make up the Difference Unit Benefit could allow for a cut in Tax rate appliable, and mollify the resistance of the Poor, who would be assured of a constant Income. lgl
by Jack Spencer
Backgrounder #1867
July 8, 2005
http://www.heritage.org/Research/NationalSecurity/bg1867.cfm
Good research, but One wonders how much significance to place on the information. It only shows that an active Economy will absorb unexploited resources. Please understand this Author is quite in favor of the BRAC mission. He would actually be more extensive in his own recommendations for Base closings. It is simply previous Base closings have been the easiest, with some Business interest in utilization of the Base facilities. Future Base closings will find less Business interest, less accessible and utilizable resources, with the Bases in less-developed economic locales. The focus in these circumstances cannot be enticing basic Retail or Information-provision industry, but must resort to involvement of Manufacturing and Distribution industries (likely foreign to the initial area) to the proposed closed Bases.
====================================
Here's a Social Security Plan That's Really Two Plans
By DANIEL ALTMAN
Published: July 17, 2005
http://www.nytimes.com/2005/07/17/business/yourmoney/17view.html
Altman makes a good Case for grouping Social Security beneficiaries by Birth year. He makes another Case for the conflict between Rich and Poor Retirees. He follows with a good argument for a Unit Benefit (one-size fits all). Where he fails is in stipulation of a Make up the Difference Unit Benefit, where the beneficiaries' actual Income is deducted from the paid Benefits (non-paid Benefits in the following payment year). Altman hazards with a statement that only a probable 20% of Retirees would need such Benefits upon retirement, as consistent information suggests the number of Retirees using the Benefits would be over 40%. Such a reality means the appliable Tax rate could not be reduced as much as he indicates. A Make up the Difference Unit Benefit could allow for a cut in Tax rate appliable, and mollify the resistance of the Poor, who would be assured of a constant Income. lgl
Friday, July 15, 2005
Bureaucracy
Wednesday, July 13, 2005
21ST CENTURY
CHALLENGES
Transforming Government
to Meet Current and
Emerging Challenges
Statement of David M. Walker
Comptroller General of the United States
http://www.gao.gov/new.items/d05830t.pdf
A clear statement of the fiscal problem created by Federal spending, a call for reexamination of Federal spending patterns, then a Game plan less than perfect. The basic component of this Plan is to turn the Federal Government into a high performance organization (Good Luck!). The Comptroller General even defined what a high performance should consist of or be able to do:
GAO forum broadly agreed on the key characteristics and capabilities of
high-performing organizations, which can be grouped into four themes:
• a clear, well-articulated, and compelling mission;
• focus on needs of clients and customers;
• strategic management of people; and
• strategic use of partnerships.
Are We talking bureaucracy or what?
This Author has an alternate Plan for high performance which he has seen work. One starts by calling in all management personnel, and go over a specific defined Plan:
1) Each Department will be assigned an X number of Labor elements, based upon needs of fiscal solvency.
2) Each Manager will set up his Schedule and operating procedures based upon this X number of labor elements.
3) If Public, Client, or Customer begins to scream, they will be screaming at each personal Manager, not the Program head.
4) If the Public, Client, or Customer begins to scream at the Program head, the individual Manager's Replacement will arrive within Days, if not hours.
5) In the context of any Cost Overrun in Operations, the individual Manager's Replacement will arrive shortly after the Accounting is accomplished.
The Comptroller plan would assure more Staff labor than Field Workers. The later plan of the Author provides some Worker incentives.
==============================
Thursday, July 14, 2005
Supply-side Economics and Recent Real GDP Growth
By PGL at Angry Bear
http://angrybear.blogspot.com/2005/07/supply-side-economics-and-recent-real.html
PGL has provided a good Post plus table on GDP growth rates under the Bush Tax Cuts.
Remember real GDP (figures in 2000$ on an annualized basis) in 2005Q1 ($11096.2 billion) versus where it was in 2000Q4 ($9695.2 billion), that is, 17 quarters ago.
as you study the table (when Growth rate is 0.80%--Potential GDP of $11,102.1 billion). lgl
21ST CENTURY
CHALLENGES
Transforming Government
to Meet Current and
Emerging Challenges
Statement of David M. Walker
Comptroller General of the United States
http://www.gao.gov/new.items/d05830t.pdf
A clear statement of the fiscal problem created by Federal spending, a call for reexamination of Federal spending patterns, then a Game plan less than perfect. The basic component of this Plan is to turn the Federal Government into a high performance organization (Good Luck!). The Comptroller General even defined what a high performance should consist of or be able to do:
GAO forum broadly agreed on the key characteristics and capabilities of
high-performing organizations, which can be grouped into four themes:
• a clear, well-articulated, and compelling mission;
• focus on needs of clients and customers;
• strategic management of people; and
• strategic use of partnerships.
Are We talking bureaucracy or what?
This Author has an alternate Plan for high performance which he has seen work. One starts by calling in all management personnel, and go over a specific defined Plan:
1) Each Department will be assigned an X number of Labor elements, based upon needs of fiscal solvency.
2) Each Manager will set up his Schedule and operating procedures based upon this X number of labor elements.
3) If Public, Client, or Customer begins to scream, they will be screaming at each personal Manager, not the Program head.
4) If the Public, Client, or Customer begins to scream at the Program head, the individual Manager's Replacement will arrive within Days, if not hours.
5) In the context of any Cost Overrun in Operations, the individual Manager's Replacement will arrive shortly after the Accounting is accomplished.
The Comptroller plan would assure more Staff labor than Field Workers. The later plan of the Author provides some Worker incentives.
==============================
Thursday, July 14, 2005
Supply-side Economics and Recent Real GDP Growth
By PGL at Angry Bear
http://angrybear.blogspot.com/2005/07/supply-side-economics-and-recent-real.html
PGL has provided a good Post plus table on GDP growth rates under the Bush Tax Cuts.
Remember real GDP (figures in 2000$ on an annualized basis) in 2005Q1 ($11096.2 billion) versus where it was in 2000Q4 ($9695.2 billion), that is, 17 quarters ago.
as you study the table (when Growth rate is 0.80%--Potential GDP of $11,102.1 billion). lgl
Thursday, July 14, 2005
Economic Measures
Research Changes Ideas About Children and Work
By VIRGINIA POSTREL
Published: July 14, 2005
http://www.nytimes.com/2005/07/14/business/14scene.html?
Child Labor is not about callous Parents, but poverty. Based on primary evidence not extended beyond Vietnam to any great degree. The concentration of Child labor in agriculture expresses only that tribal societies are based upon the household, not the individual.
--------------------------------
From China, Some Relief on Oil Demand
By KEITH BRADSHER
Published: July 14, 2005
http://www.nytimes.com/2005/07/14/business/worldbusiness/14oil.html
Wonder at the decline of Chinese consumption of Oil. The fact, not the article, is fully in line with the Author's estimate that the rapid Chinese expansion of past years did not possess the Profitability to sustain itself, due to Chinese failure to develop a domestic demand for produced Product.
------------------------------------
http://angrybear.blogspot.com/2005/07/falling-inflation.html
Kash at Angry Bear imagines We could be seeing the US's inflation rate is on a distinct, if gradual, downward trajectory. This Author truly hopes so, but sees little to cheer for in Core Inflation, due to the fact real inflation stays firmly implanted in Food and Energy. The duration of high Oil prices means a shift to the Consumer--sooner or later. Kash and this Author both await the Producer Price Index. lgl
By VIRGINIA POSTREL
Published: July 14, 2005
http://www.nytimes.com/2005/07/14/business/14scene.html?
Child Labor is not about callous Parents, but poverty. Based on primary evidence not extended beyond Vietnam to any great degree. The concentration of Child labor in agriculture expresses only that tribal societies are based upon the household, not the individual.
--------------------------------
From China, Some Relief on Oil Demand
By KEITH BRADSHER
Published: July 14, 2005
http://www.nytimes.com/2005/07/14/business/worldbusiness/14oil.html
Wonder at the decline of Chinese consumption of Oil. The fact, not the article, is fully in line with the Author's estimate that the rapid Chinese expansion of past years did not possess the Profitability to sustain itself, due to Chinese failure to develop a domestic demand for produced Product.
------------------------------------
http://angrybear.blogspot.com/2005/07/falling-inflation.html
Kash at Angry Bear imagines We could be seeing the US's inflation rate is on a distinct, if gradual, downward trajectory. This Author truly hopes so, but sees little to cheer for in Core Inflation, due to the fact real inflation stays firmly implanted in Food and Energy. The duration of high Oil prices means a shift to the Consumer--sooner or later. Kash and this Author both await the Producer Price Index. lgl
Wednesday, July 13, 2005
Hedge Funds and Markets
Bernard Ebbers received a 25-year sentence today for a practice which Hedge Fund managers are duplicating at this time: Continual borrowing on the Book value worth to pay both service on previous debt, and dividends to Investors. Similar circumstance has been used with ill effect since the created mess of the Great Depression, and Hedge Funds will eventually go the way of all the rest; likely inciting a Investor-protection program equally large as the S&L Bailout. The causation of such repetitious malfeasance lies in the payment of performance awards to Fund and Organization managers.
Hedge Funds hold particular danger, as they remain actually separated from Production and Markets. They are simply the pure, fraudulent practice applied wherever they care to invade. An underdrawn portrait states they get Investors to invest, borrow against the investments, and punge buy in the Markets for high expected Returns. They continue to borrow if those Returns do not materialize. Fund managers proclaim performance, and really award themselves huge Pay packages, at all times; even as did Bernard Ebbers.
The danger to Markets consists in they using their huge rolled-over Capitalization to generate unusually high Prices in the Market. The danger of Hedge Funds to Production is in their drain of investment funds from actual Production activities. The danger to Investor and Lender lies in the fact that the Bubble will burst eventually. lgl
Hedge Funds hold particular danger, as they remain actually separated from Production and Markets. They are simply the pure, fraudulent practice applied wherever they care to invade. An underdrawn portrait states they get Investors to invest, borrow against the investments, and punge buy in the Markets for high expected Returns. They continue to borrow if those Returns do not materialize. Fund managers proclaim performance, and really award themselves huge Pay packages, at all times; even as did Bernard Ebbers.
The danger to Markets consists in they using their huge rolled-over Capitalization to generate unusually high Prices in the Market. The danger of Hedge Funds to Production is in their drain of investment funds from actual Production activities. The danger to Investor and Lender lies in the fact that the Bubble will burst eventually. lgl
Tuesday, July 12, 2005
MONTHLY BUDGET REVIEW
Fiscal Year 2005 July 7, 2005
A Congressional Budget Office Analysis
http://www.cbo.gov/ftpdocs/65xx/doc6513/07-2005-MBR.pdf
The Report seems far too complacent to this Author, when reviewing the numbers. Outlays increase year over year at over 7%, almost equally distributed between Defense and nonDefense. The good Budget revenues rely on Corporate income tax payments, made under the Bush exemption, so Corporations could bring their money back into the Country at one-third the Tax rate--tax payments which will not be repeated. The nonWithheld Quarterly payments by Individuals increased by $8 bn, but such tax revenues depend on solid economic performance unaffected by increasing Energy pricing. Actual Withheld tax payments from Labor seem partially unclear, but this Author expects they are actually down with the Tax law alterations.
Agriculture, Education, and Homeland Security each increased outlays by 20% year over year. Net Interest on the Public debt was the greatest percentage outlay increase at 14.5%. Social Security payments grew at a rate of 5.4%, O.9% higher than in Y2004. Medicare payments rise at 10.1% this year, 1.6% higher than Y2004. Medicaid payments are about 8% higher year over year, eliminating temporary payments assumptions made by the Federal Government in Y2004.
CBO estimates that the government recorded a deficit of
$251 billion for the first three-quarters of fiscal year 2005.
Receipts were about $204 billion, or 14.6 percent, higher
than in the same nine months last year, and outlays were
about $128 billion, or 7.4 percent, higher.
======================================
Letting the Bush Tax Cuts lapse seems the only method to maintain current tax revenues throughout the next decade. Federal Spending is increasing at twice the projected rate of Inflation, in excess of the projected economic growth rate, and tax revenues are bound to go down without alteration of the Federal Tax Code. We need Tax revision, not Tax Cuts. lgl
Fiscal Year 2005 July 7, 2005
A Congressional Budget Office Analysis
http://www.cbo.gov/ftpdocs/65xx/doc6513/07-2005-MBR.pdf
The Report seems far too complacent to this Author, when reviewing the numbers. Outlays increase year over year at over 7%, almost equally distributed between Defense and nonDefense. The good Budget revenues rely on Corporate income tax payments, made under the Bush exemption, so Corporations could bring their money back into the Country at one-third the Tax rate--tax payments which will not be repeated. The nonWithheld Quarterly payments by Individuals increased by $8 bn, but such tax revenues depend on solid economic performance unaffected by increasing Energy pricing. Actual Withheld tax payments from Labor seem partially unclear, but this Author expects they are actually down with the Tax law alterations.
Agriculture, Education, and Homeland Security each increased outlays by 20% year over year. Net Interest on the Public debt was the greatest percentage outlay increase at 14.5%. Social Security payments grew at a rate of 5.4%, O.9% higher than in Y2004. Medicare payments rise at 10.1% this year, 1.6% higher than Y2004. Medicaid payments are about 8% higher year over year, eliminating temporary payments assumptions made by the Federal Government in Y2004.
CBO estimates that the government recorded a deficit of
$251 billion for the first three-quarters of fiscal year 2005.
Receipts were about $204 billion, or 14.6 percent, higher
than in the same nine months last year, and outlays were
about $128 billion, or 7.4 percent, higher.
======================================
Letting the Bush Tax Cuts lapse seems the only method to maintain current tax revenues throughout the next decade. Federal Spending is increasing at twice the projected rate of Inflation, in excess of the projected economic growth rate, and tax revenues are bound to go down without alteration of the Federal Tax Code. We need Tax revision, not Tax Cuts. lgl
Monday, July 11, 2005
The Housing Generator
Housing Markets Pricing Out Middle Class
By THE ASSOCIATED PRESS
Published: July 10, 2005
http://www.nytimes.com/aponline/business/AP-Unaffordable-American-Dream.html
Real estate experts warn that housing prices in many markets are too quickly outpacing the incomes of most workers. The widening gap affects families across the country, from Washington D.C. and Rhode Island to Florida in the South and Nevada and California in the west.
Dangerous turf for the Economy considering Housing composes such a large percentage of Household wealth. A market of any type must have Buyers, or face a huge decline in the value of the Product. The situation could become analogous to Selling Short in the Stock Market except reversed: the Housing pricing will drop if there are no Buyers, and reevaluations will not alter mortgages other than flexible Rates, but will occasion the nonextension of Consumption and Production loans because of the loss of Property value.
What is the potential economic effect of such Property devaluation?
The Author has gathered no hard data on this area, but a probable half of Self-Employed utilize the value of their homes for collateral for Business loans. Many Households will lose premium Credit Card status where further purchases will be disallowed until their balances are reduced. Banks will find themselves with overextended mortgages with too much money lent on insufficient Property value--remember they must maintain Reserves on the total deposits, alongside the devolved inability to regain those funds. A loss of Property values will finally dictate Layoffs in the Construction industry, reductions in the Consumption patterns of affected Consumers entailing Retail Layoffs, and an overall drain of funds from Pension plans to pay off incurred debt. The dangers do not surface drastically, until Property values drop more than 10% overall, but they are existent!
========================
Afghans Say Taliban Behead Six Police, 18 More Die
By REUTERS
Published: July 10, 2005
http://www.nytimes.com/reuters/international/international-afghan.html
At least 32 U.S. troops have been killed in action in Afghanistan so far this year, making it the bloodiest for U.S. forces in the country since they invaded and overthrew the Taliban in late 2001.
Why are We there?
Bomb Kills Baghdad Recruits, Memo Flags Troop Cuts
By REUTERS
Published: July 10, 2005
http://www.nytimes.com/reuters/news/news-iraq.html
Everyone knows Bush and Blair are trying 'to cut and run' because Iraq is turning unpopular. The pattern of Vietnam is being repeated. Insurgent incidents, in both Afghanistan and Iraq are increasing in number, with heightened Casualties for both Americans and native populations. The American-sponsored Governments lack support among the native populations, and American and British military presence simply guarantees guerilla activity. lgl
By THE ASSOCIATED PRESS
Published: July 10, 2005
http://www.nytimes.com/aponline/business/AP-Unaffordable-American-Dream.html
Real estate experts warn that housing prices in many markets are too quickly outpacing the incomes of most workers. The widening gap affects families across the country, from Washington D.C. and Rhode Island to Florida in the South and Nevada and California in the west.
Dangerous turf for the Economy considering Housing composes such a large percentage of Household wealth. A market of any type must have Buyers, or face a huge decline in the value of the Product. The situation could become analogous to Selling Short in the Stock Market except reversed: the Housing pricing will drop if there are no Buyers, and reevaluations will not alter mortgages other than flexible Rates, but will occasion the nonextension of Consumption and Production loans because of the loss of Property value.
What is the potential economic effect of such Property devaluation?
The Author has gathered no hard data on this area, but a probable half of Self-Employed utilize the value of their homes for collateral for Business loans. Many Households will lose premium Credit Card status where further purchases will be disallowed until their balances are reduced. Banks will find themselves with overextended mortgages with too much money lent on insufficient Property value--remember they must maintain Reserves on the total deposits, alongside the devolved inability to regain those funds. A loss of Property values will finally dictate Layoffs in the Construction industry, reductions in the Consumption patterns of affected Consumers entailing Retail Layoffs, and an overall drain of funds from Pension plans to pay off incurred debt. The dangers do not surface drastically, until Property values drop more than 10% overall, but they are existent!
========================
Afghans Say Taliban Behead Six Police, 18 More Die
By REUTERS
Published: July 10, 2005
http://www.nytimes.com/reuters/international/international-afghan.html
At least 32 U.S. troops have been killed in action in Afghanistan so far this year, making it the bloodiest for U.S. forces in the country since they invaded and overthrew the Taliban in late 2001.
Why are We there?
Bomb Kills Baghdad Recruits, Memo Flags Troop Cuts
By REUTERS
Published: July 10, 2005
http://www.nytimes.com/reuters/news/news-iraq.html
Everyone knows Bush and Blair are trying 'to cut and run' because Iraq is turning unpopular. The pattern of Vietnam is being repeated. Insurgent incidents, in both Afghanistan and Iraq are increasing in number, with heightened Casualties for both Americans and native populations. The American-sponsored Governments lack support among the native populations, and American and British military presence simply guarantees guerilla activity. lgl
Sunday, July 10, 2005
Entitlements and States
THE FISCAL SURVEY OF STATES:
JULY 2005
http://www.nga.org/cda/files/FSS0506.pdf
The States are doing far better than they were in 2003, but a lot of it may be illusionary. Spending growth has been close to the traditional average, but a lot of that growth was generated by One-Time Federal assistance which will not be repeated. Based on submitted Budgets by Governors for fiscal 2006, Spending growth will be 3.8%, almost half of the 6.5% average over 27 years. The trouble comes in the fact Spending reductions are needed because of Entitlement overruns, and Spending Cuts are often made in necessary apropriations to serve the cause of Entitlements.
Medicaid remains the worst culprit, with 20-24 States experiencing Medicaid shortfalls in 2004-05. The situation can only get worse, as Medicaid enrollments continue to increase (currently 53 million people--largest Medical program existent), and Federal Budgets are being passed reducing Federal underwriting of the Medicaid program. Total Medicaid shortfall for 2004-05 was estimated at $5.8 billion, with Federal reductions from the Medicaid program in excess of $25 billion over the next several years. Medicaid represents 22% of State Spending currently, and is increasing at 8.8% per year, while State revenues are currently increasing at about 2.1% per year.
Quote:
According to the most recent edition of
NASBOÂ’s State Expenditure Report, estimated fiscal
2004 state spending from all sources is nearly $1.2
trillion, with the general fund representing 43.5 percent
of the total. The components of total state spending
are: elementary and secondary education, 21.5
percent; Medicaid, 21.9 percent; higher education,
10.5 percent; transportation, 7.9 percent; corrections,
3.4 percent; public assistance, 2.1 percent; and
all other expenditures, 32.6 percent. lgl
JULY 2005
http://www.nga.org/cda/files/FSS0506.pdf
The States are doing far better than they were in 2003, but a lot of it may be illusionary. Spending growth has been close to the traditional average, but a lot of that growth was generated by One-Time Federal assistance which will not be repeated. Based on submitted Budgets by Governors for fiscal 2006, Spending growth will be 3.8%, almost half of the 6.5% average over 27 years. The trouble comes in the fact Spending reductions are needed because of Entitlement overruns, and Spending Cuts are often made in necessary apropriations to serve the cause of Entitlements.
Medicaid remains the worst culprit, with 20-24 States experiencing Medicaid shortfalls in 2004-05. The situation can only get worse, as Medicaid enrollments continue to increase (currently 53 million people--largest Medical program existent), and Federal Budgets are being passed reducing Federal underwriting of the Medicaid program. Total Medicaid shortfall for 2004-05 was estimated at $5.8 billion, with Federal reductions from the Medicaid program in excess of $25 billion over the next several years. Medicaid represents 22% of State Spending currently, and is increasing at 8.8% per year, while State revenues are currently increasing at about 2.1% per year.
Quote:
According to the most recent edition of
NASBOÂ’s State Expenditure Report, estimated fiscal
2004 state spending from all sources is nearly $1.2
trillion, with the general fund representing 43.5 percent
of the total. The components of total state spending
are: elementary and secondary education, 21.5
percent; Medicaid, 21.9 percent; higher education,
10.5 percent; transportation, 7.9 percent; corrections,
3.4 percent; public assistance, 2.1 percent; and
all other expenditures, 32.6 percent. lgl
Saturday, July 09, 2005
Definition of Insurance
Who Bears the Risks of Terror?
By EDMUND L. ANDREWS
Published: July 10, 2005
http://www.nytimes.com/2005/07/10/business/yourmoney/10view.html
The Terrorism Risk Insurance Act will expire at the end of the year unless extended. The fundamental question is whether a collected Pool (Insurance) should bear the risk, or Taxpayers. The answer to the Question requires examination of Insurance itself. Insurance serves as the facility to replace unacceptable losses. Premium-Payers band together through Insurance companies to assure they will possess the financial assets to pay for Replacement Costs if insured items are damaged or destroyed.
The entire rationale of Insurance is to bear those Replacement Costs. Legislation should be passed forbidding Sale of Insurance which does not bear the entirety of such Replacement Costs. Insurers like to chip away at the effective provision of the full value of such Costs, in order to raise the profitability of such Insurance supply. Congress should recognize the inherent nature of this practice, and stop it.
Insurers and Commercial Business would enjoy Taxpayers' assumption of the Risk, because Insurers could sell more Insurance with less overall Premium Cost, and Commercial Business could enjoy higher Profits paying lower Premiums to insure against a potential Risk. Taxpayers do not want the burden of such Risk (though Taxpayers compose a much larger Pool) due to the fact they have far less Risk of Terrorist Act. Insurers and Commercial Business, on the other hand, know they will have to pay far less in Replacement Cost taxation than they would in Risk-Coverage Premiums.
The Terrorism Risk Insurance Act should not be renewed. It should not have been enacted in the first place! Congress should insist Insurers simplify Contract Coverage, and demand Replacement Cost provision, or refuse to allow Insurers license to sell Insurance. The greater demanded Premiums will be a heightened Cost to Commercial business, but is indeed a legitimate Cost of doing Business. Let the Market bear the Risk. lgl
By EDMUND L. ANDREWS
Published: July 10, 2005
http://www.nytimes.com/2005/07/10/business/yourmoney/10view.html
The Terrorism Risk Insurance Act will expire at the end of the year unless extended. The fundamental question is whether a collected Pool (Insurance) should bear the risk, or Taxpayers. The answer to the Question requires examination of Insurance itself. Insurance serves as the facility to replace unacceptable losses. Premium-Payers band together through Insurance companies to assure they will possess the financial assets to pay for Replacement Costs if insured items are damaged or destroyed.
The entire rationale of Insurance is to bear those Replacement Costs. Legislation should be passed forbidding Sale of Insurance which does not bear the entirety of such Replacement Costs. Insurers like to chip away at the effective provision of the full value of such Costs, in order to raise the profitability of such Insurance supply. Congress should recognize the inherent nature of this practice, and stop it.
Insurers and Commercial Business would enjoy Taxpayers' assumption of the Risk, because Insurers could sell more Insurance with less overall Premium Cost, and Commercial Business could enjoy higher Profits paying lower Premiums to insure against a potential Risk. Taxpayers do not want the burden of such Risk (though Taxpayers compose a much larger Pool) due to the fact they have far less Risk of Terrorist Act. Insurers and Commercial Business, on the other hand, know they will have to pay far less in Replacement Cost taxation than they would in Risk-Coverage Premiums.
The Terrorism Risk Insurance Act should not be renewed. It should not have been enacted in the first place! Congress should insist Insurers simplify Contract Coverage, and demand Replacement Cost provision, or refuse to allow Insurers license to sell Insurance. The greater demanded Premiums will be a heightened Cost to Commercial business, but is indeed a legitimate Cost of doing Business. Let the Market bear the Risk. lgl
Friday, July 08, 2005
Overkill
Preparing for the Next Pandemic
Michael T. OsterholmFrom Foreign Affairs, July/August 2005
http://www.foreignaffairs.org/20050701faessay84402/michael-t-osterholm/preparing-for-the-next-pandemic.html
Osterholm provides clarity to the dangers of a influenza pandemic. The threat is very real, and the consequences he outlined as equally as real. Here is where he and this Author part company. The only salvation from a influenza pandemic is development of a Control Vaccine, which could provide protection from any strain of influenza. Designer Vaccines to protect against any specific strain of influenza will never provide protection against a pandemic.
Infectious spread of a influenza strain far outstrips current Vaccine production capacity, and would outstrip any projected increase in Vaccine production capacity due to the speed of transmission. Massive stockpiling of antiviral drugs to provide limited protection from the influenza strain already ingested is equally foolhardy. The chemical composition of antiviral drugs degrade rapidly, and development of excess capacity will not provide profitability, even with Government funding (simply too many Chemists and Labs sitting around rusting).
We will endure an influenza pandemic sometime, quite possibly within Our lifetimes. The Outcome will undoubtedly be severe, not a complete Horror Story, but We may be talking about the loss of a half billion human lives. Can We plan for it? Not with Our current resources and technology. We simply take measures to bury the bodies, and continue life, as this World always has had to do; remembering that Death is a companion to which We all have to eventually submit. lgl
Michael T. OsterholmFrom Foreign Affairs, July/August 2005
http://www.foreignaffairs.org/20050701faessay84402/michael-t-osterholm/preparing-for-the-next-pandemic.html
Osterholm provides clarity to the dangers of a influenza pandemic. The threat is very real, and the consequences he outlined as equally as real. Here is where he and this Author part company. The only salvation from a influenza pandemic is development of a Control Vaccine, which could provide protection from any strain of influenza. Designer Vaccines to protect against any specific strain of influenza will never provide protection against a pandemic.
Infectious spread of a influenza strain far outstrips current Vaccine production capacity, and would outstrip any projected increase in Vaccine production capacity due to the speed of transmission. Massive stockpiling of antiviral drugs to provide limited protection from the influenza strain already ingested is equally foolhardy. The chemical composition of antiviral drugs degrade rapidly, and development of excess capacity will not provide profitability, even with Government funding (simply too many Chemists and Labs sitting around rusting).
We will endure an influenza pandemic sometime, quite possibly within Our lifetimes. The Outcome will undoubtedly be severe, not a complete Horror Story, but We may be talking about the loss of a half billion human lives. Can We plan for it? Not with Our current resources and technology. We simply take measures to bury the bodies, and continue life, as this World always has had to do; remembering that Death is a companion to which We all have to eventually submit. lgl
Thursday, July 07, 2005
London Bombs and Credit Cards
The four London blasts again totaled our serenity. There was a blip in the Markets before quick recovery, and the Politicians made the usual statements. Some comments should be made, though, about the context of the attacks. The explosives were placed in the London subway and on Buses. This says that the Working Poor were again the Target, because of their lack of fundamental protection. Airports get twenty times the Security personnel as Train stations, Subway stations, and Bus stops. The Rich only spend Security funds on a secure environment for the Rich. Does the Author sound leftist?
The second element to be discussed is the fact that the attacks were conducted by a small, Cell group of closeted individuals. Such groups are hard to track and trace, and incredibly difficult to interdict before their Terrorist conduct. The same cannot be said for their Support personnel. Laws need be passed making provision of funds, or sale of weaponry or explosives used in Terrorist attacks a Criminal offense punishable by Death or Lifetime imprisonment without parole. We must separate the Head of the Beast from its stomach!
The last comment states that uniformed Security do little on-site to stop Terrorist attack, although they are very helpful in cleanup efforts after an Terrorist attack. The real effort must be focused on Intelligence; most specifically, the arrest of these Cell units prior to their commission of Terrorist acts. The best method is the Reward system where We publicly proclaim all Informers providing information to identify and capture such Cells will receive $10k personally, without themselves being identified in any way to the Public. Some might doubt, but it always works.
=================================
Steering a new course in Iraq
By Jay Garner
Special to The Orlando Sentinel
http://seattletimes.nwsource.com/html/opinion/2002357448_garner05.html
General Garner is a good military mind, but as wrong as they come in this article. More American Troops on the ground in Iraq means more American Casualties. Use of Kurd peshmerga in the South guarantees Civil War. Getting Iraqis used to American Welfare transfers worsens, not betters, the existing situation.
===================================
Credit Cards Are Raising Minimum Payments
By THE ASSOCIATED PRESS
Published: July 7, 2005
Filed at 6:37 a.m. ET
http://www.nytimes.com/aponline/business/AP-On-The-Money.html
Something which should have been done in 2001, before the huge Consumer Debt, and Housing bubble. Now it is going to discount about 20% of Consumers out of the Retail market. lgl
The second element to be discussed is the fact that the attacks were conducted by a small, Cell group of closeted individuals. Such groups are hard to track and trace, and incredibly difficult to interdict before their Terrorist conduct. The same cannot be said for their Support personnel. Laws need be passed making provision of funds, or sale of weaponry or explosives used in Terrorist attacks a Criminal offense punishable by Death or Lifetime imprisonment without parole. We must separate the Head of the Beast from its stomach!
The last comment states that uniformed Security do little on-site to stop Terrorist attack, although they are very helpful in cleanup efforts after an Terrorist attack. The real effort must be focused on Intelligence; most specifically, the arrest of these Cell units prior to their commission of Terrorist acts. The best method is the Reward system where We publicly proclaim all Informers providing information to identify and capture such Cells will receive $10k personally, without themselves being identified in any way to the Public. Some might doubt, but it always works.
=================================
Steering a new course in Iraq
By Jay Garner
Special to The Orlando Sentinel
http://seattletimes.nwsource.com/html/opinion/2002357448_garner05.html
General Garner is a good military mind, but as wrong as they come in this article. More American Troops on the ground in Iraq means more American Casualties. Use of Kurd peshmerga in the South guarantees Civil War. Getting Iraqis used to American Welfare transfers worsens, not betters, the existing situation.
===================================
Credit Cards Are Raising Minimum Payments
By THE ASSOCIATED PRESS
Published: July 7, 2005
Filed at 6:37 a.m. ET
http://www.nytimes.com/aponline/business/AP-On-The-Money.html
Something which should have been done in 2001, before the huge Consumer Debt, and Housing bubble. Now it is going to discount about 20% of Consumers out of the Retail market. lgl
Wednesday, July 06, 2005
Are Deficits Immortal?
Can the U.S. Government Live Within Its Means?
Lessons From Abroad
ALLEN SCHICK
http://www.brookings.edu/comm/policybriefs/pb141.pdf
Fine Study of the history of fiscal restraints, why they succeed when they do, and how they all fail eventually.
The rigid balance norm was superseded
after World War II by norms that allowed
budget aggregates to accommodate
cyclical changes in economic conditions.
Contemporary fiscal rules have branched
in two directions. One path assumes that
good budget outcomes depend on
preventing politicians from behaving in a
fiscally irresponsible manner; the other
assumes that favorable budget outcomes
depend on giving politicians incentives to
adopt responsible policies. The first ties
their hands, the second holds them politically
accountable for their actions.
============================
The Later fiscal rules work about as well as One would expect, noting the tsunami nature of Government spending knowing Politicians are actually after more money--not Votes--and has to have the Government spend in order to get the Contributors to spend. Deficits cannot be cured with fiscal rules, and alteration of the political rules is the only way to reduce Government spending.
Things which can be realistically done to curb Government Spending and Deficits:
1) A Unitary Accounting system: Make Everyone play from the same Playbook, brings the ideal comparison network.
2) Forbid Politicians to raise Money (political contributions) during the actual Period of the Campaign. They have to make their Commitments prior to the Campaign to get the needed Funds, know they will be bound by those prior Commitments, and cannot gain any material support for any further Commitments.
3) Make the Politicians come up with a definable Budget. Pass a Constitutional amendment stating that at least half of the State Legislatures must approve any Budget before it goes into effect; otherwise, the existing Budget and budgeted amounts will stay in place through the following Budget Period. This approved Budget does not necessarily have to be passed by Congress, but simply provided by any major Political Party for three basic comparisons.
4) Establish a set size Extraordinary Expense Fund--the only source of Funds for Spendthrifts outside the Budget. When it is empty, so are the Politicians.
5) Tell the Federal Government and all State Governments We are tired of their acting like they are a Bank or Corporation. Treasuries and State bonds are forbotten! They are to get their funding from Commercial Bank paper like Everyone else. lgl
Lessons From Abroad
ALLEN SCHICK
http://www.brookings.edu/comm/policybriefs/pb141.pdf
Fine Study of the history of fiscal restraints, why they succeed when they do, and how they all fail eventually.
The rigid balance norm was superseded
after World War II by norms that allowed
budget aggregates to accommodate
cyclical changes in economic conditions.
Contemporary fiscal rules have branched
in two directions. One path assumes that
good budget outcomes depend on
preventing politicians from behaving in a
fiscally irresponsible manner; the other
assumes that favorable budget outcomes
depend on giving politicians incentives to
adopt responsible policies. The first ties
their hands, the second holds them politically
accountable for their actions.
============================
The Later fiscal rules work about as well as One would expect, noting the tsunami nature of Government spending knowing Politicians are actually after more money--not Votes--and has to have the Government spend in order to get the Contributors to spend. Deficits cannot be cured with fiscal rules, and alteration of the political rules is the only way to reduce Government spending.
Things which can be realistically done to curb Government Spending and Deficits:
1) A Unitary Accounting system: Make Everyone play from the same Playbook, brings the ideal comparison network.
2) Forbid Politicians to raise Money (political contributions) during the actual Period of the Campaign. They have to make their Commitments prior to the Campaign to get the needed Funds, know they will be bound by those prior Commitments, and cannot gain any material support for any further Commitments.
3) Make the Politicians come up with a definable Budget. Pass a Constitutional amendment stating that at least half of the State Legislatures must approve any Budget before it goes into effect; otherwise, the existing Budget and budgeted amounts will stay in place through the following Budget Period. This approved Budget does not necessarily have to be passed by Congress, but simply provided by any major Political Party for three basic comparisons.
4) Establish a set size Extraordinary Expense Fund--the only source of Funds for Spendthrifts outside the Budget. When it is empty, so are the Politicians.
5) Tell the Federal Government and all State Governments We are tired of their acting like they are a Bank or Corporation. Treasuries and State bonds are forbotten! They are to get their funding from Commercial Bank paper like Everyone else. lgl
Tuesday, July 05, 2005
Medicare v. Hospice
High-Cost Medicare Beneficiaries
May 2005
http://www.cbo.gov/ftpdocs/63xx/doc6332/05-03-MediSpending.pdf
Good CBO work showing the Concentration spread of Benefits going to enrolled beneficiaries. Important elements:
About 14 percent of beneficiaries with high Medicare
expenses in a given year die during that year (see
Figure 2). Within four years, that fraction accumulates to
40 percent.
Studies show that about
one-quarter of total Medicare payments are for the typically
expensive and intensive treatment received in a patient’s
last year of life, which often postpones death for
only a short time
The CBO are past Masters at not making a recommendation--lots of Practice! The Study actually says some percentage of Medicare Costs could be eliminated by identifying what are basically 'Lost Cause' Patients, and switching them to Hospice Care. This Author could not agree more, but is tired of People mumbling about it with a hand over their mouth. Such a switch upon Patients reaching a designated Age is medically beneficial to most Patients, as they do not have to undergone barbaric Saving medical practices where wear down both Patient and Staff. It could also probably cut Medicare Costs by 20% in any given Year, and a probable nearer 40% over a projected Retirement Age-to Death usage. lgl
May 2005
http://www.cbo.gov/ftpdocs/63xx/doc6332/05-03-MediSpending.pdf
Good CBO work showing the Concentration spread of Benefits going to enrolled beneficiaries. Important elements:
About 14 percent of beneficiaries with high Medicare
expenses in a given year die during that year (see
Figure 2). Within four years, that fraction accumulates to
40 percent.
Studies show that about
one-quarter of total Medicare payments are for the typically
expensive and intensive treatment received in a patient’s
last year of life, which often postpones death for
only a short time
The CBO are past Masters at not making a recommendation--lots of Practice! The Study actually says some percentage of Medicare Costs could be eliminated by identifying what are basically 'Lost Cause' Patients, and switching them to Hospice Care. This Author could not agree more, but is tired of People mumbling about it with a hand over their mouth. Such a switch upon Patients reaching a designated Age is medically beneficial to most Patients, as they do not have to undergone barbaric Saving medical practices where wear down both Patient and Staff. It could also probably cut Medicare Costs by 20% in any given Year, and a probable nearer 40% over a projected Retirement Age-to Death usage. lgl
Monday, July 04, 2005
Happy 4th
http://www.nytimes.com/2005/07/04/science/04cnd-comet.html?hp&ex=1120536000&en=e66013400403aba6&ei=5094&partner=homepage
Scientists trying to blow up the place. Having a medium-Grade good effect. Preliminary observations indicate a comet entering an atmosphere would initially create a huge Plume cloud even before impact (Author estimate).
http://www.nytimes.com/2005/07/04/international/asia/04cnd-afghan.html?hp&ex=1120536000&en=79fb372888b2cba5&ei=5094&partner=homepage
Ongoing Military operations are dangerous. Navy Seal unit lost and 16 killed in down helicoptor.
http://www.nytimes.com/2005/07/03/business/yourmoney/03standard.html?
Have We won or lost ground since the 1950s?
============================
Short reading list for Those who must spend Independence Day staring at a Computer (some Independence!). The middle article assures there is no safe military deployment. The first article shows how Scientists can spend money to find information with little economic value. The last article shows the Good Times may not have gone, but are far more expensive. lgl
Scientists trying to blow up the place. Having a medium-Grade good effect. Preliminary observations indicate a comet entering an atmosphere would initially create a huge Plume cloud even before impact (Author estimate).
http://www.nytimes.com/2005/07/04/international/asia/04cnd-afghan.html?hp&ex=1120536000&en=79fb372888b2cba5&ei=5094&partner=homepage
Ongoing Military operations are dangerous. Navy Seal unit lost and 16 killed in down helicoptor.
http://www.nytimes.com/2005/07/03/business/yourmoney/03standard.html?
Have We won or lost ground since the 1950s?
============================
Short reading list for Those who must spend Independence Day staring at a Computer (some Independence!). The middle article assures there is no safe military deployment. The first article shows how Scientists can spend money to find information with little economic value. The last article shows the Good Times may not have gone, but are far more expensive. lgl
Sunday, July 03, 2005
The Lessons of War
http://www.chicagotribune.com/news/opinion/chi-0507010299jul01,0,2430362.story?coll=chi-newsopinioncommentary-hed
When war theories collide
What the Vietnam War should have taught us
Victor Davis Hanson
The Al Qaedas and former Baathists anticipate another impending U.S. retreat, like the 1984 flight from Lebanon or the 1993 exit from Somalia after the horrific dragging of American bodies in the streets of Mogadishu. Both pullouts, now enshrined in Al Qaeda propaganda, contributed to the pre-Sept. 11, 2001, folklore that the United States lacked the stamina to defeat terrorists.
There are lessons here. When the United States has stayed on after fighting dictatorial enemies--admittedly for decades in Italy, Germany, Japan, Korea and the Balkans--progress toward democracy and prosperity ensued. Disengagement from unresolved messy problems--whether from Europe after World War I, Vietnam in 1973, Beirut after the Marine barracks bombings, Afghanistan after the Soviet defeat, or Iraq in 1991--only left murderous chaos or the "peace" of authoritarian dictators.
Those who now evoke Vietnam should think carefully of the entire lesson of that tragedy. We hear daily of how we once foolishly got into that chaos but rarely of the lessons on how we got out.
=========================
Hanson wrote an excellent, well thought-out Piece, well worth a double Read. Islamic Fundamentalism does estimate the United States can be foiled by intransigent, durative resistance to American aims. It is a Cornerstone to their Policy, and they possess the financial assets and physical numbers to sustain Terrorist activities for decades. Here is where Hanson and Bush policy fails: The American people simply will not endure a War of Attrition without perceptible gain. Reality states WE really should not have to!
The Author, in a prior published Book, recounted the folly of sustained American military deployments, Such allowing International Terrorists and Enemies to mount guerilla operations against the deployed elements. This is exactly what Bush policy initiatives has resulted in. It is Time for Change.
This Change does not mean unilateral Withdrawal, but utilization of modern technology combined with compelled Iraqi control. American military presence in Iraq should be reduced--both in Mission Statement and Activity. All American forces, except for Special Intelligence units, will cease patrolling. They will be confined to American military installations supplied by Air, and serve only as Reaction Force elements. All Ground-vehicle traffic will be conducted by native Iraqi elements. Iraq will become an American Air war, with Ground forces only moved by helicopter. Iraqi Patrol elements will be equipped with Radios similar to American Police units--they are Unit identification broadcasters with continuous Computer surveillance for special Sounds or Voice commands.
Insurgents must learn they cannot reach American military personnel easily, that American military Reaction Force is swift and overwhelming, and attack on native Iraqi security forces will generate an immediate American military response. We approach another American Independence Day, so it is time to learn how to Fight Smart and Fight Safe. American military command may state this will not crush the Insurgents, but Vietnam has taught All that dedicated Insurgency cannot be crushed. A military Victory cannot be attained, but an intelligent 'Hearts and Minds' campaign can suck the energy out of an Insurgency. lgl
When war theories collide
What the Vietnam War should have taught us
Victor Davis Hanson
The Al Qaedas and former Baathists anticipate another impending U.S. retreat, like the 1984 flight from Lebanon or the 1993 exit from Somalia after the horrific dragging of American bodies in the streets of Mogadishu. Both pullouts, now enshrined in Al Qaeda propaganda, contributed to the pre-Sept. 11, 2001, folklore that the United States lacked the stamina to defeat terrorists.
There are lessons here. When the United States has stayed on after fighting dictatorial enemies--admittedly for decades in Italy, Germany, Japan, Korea and the Balkans--progress toward democracy and prosperity ensued. Disengagement from unresolved messy problems--whether from Europe after World War I, Vietnam in 1973, Beirut after the Marine barracks bombings, Afghanistan after the Soviet defeat, or Iraq in 1991--only left murderous chaos or the "peace" of authoritarian dictators.
Those who now evoke Vietnam should think carefully of the entire lesson of that tragedy. We hear daily of how we once foolishly got into that chaos but rarely of the lessons on how we got out.
=========================
Hanson wrote an excellent, well thought-out Piece, well worth a double Read. Islamic Fundamentalism does estimate the United States can be foiled by intransigent, durative resistance to American aims. It is a Cornerstone to their Policy, and they possess the financial assets and physical numbers to sustain Terrorist activities for decades. Here is where Hanson and Bush policy fails: The American people simply will not endure a War of Attrition without perceptible gain. Reality states WE really should not have to!
The Author, in a prior published Book, recounted the folly of sustained American military deployments, Such allowing International Terrorists and Enemies to mount guerilla operations against the deployed elements. This is exactly what Bush policy initiatives has resulted in. It is Time for Change.
This Change does not mean unilateral Withdrawal, but utilization of modern technology combined with compelled Iraqi control. American military presence in Iraq should be reduced--both in Mission Statement and Activity. All American forces, except for Special Intelligence units, will cease patrolling. They will be confined to American military installations supplied by Air, and serve only as Reaction Force elements. All Ground-vehicle traffic will be conducted by native Iraqi elements. Iraq will become an American Air war, with Ground forces only moved by helicopter. Iraqi Patrol elements will be equipped with Radios similar to American Police units--they are Unit identification broadcasters with continuous Computer surveillance for special Sounds or Voice commands.
Insurgents must learn they cannot reach American military personnel easily, that American military Reaction Force is swift and overwhelming, and attack on native Iraqi security forces will generate an immediate American military response. We approach another American Independence Day, so it is time to learn how to Fight Smart and Fight Safe. American military command may state this will not crush the Insurgents, but Vietnam has taught All that dedicated Insurgency cannot be crushed. A military Victory cannot be attained, but an intelligent 'Hearts and Minds' campaign can suck the energy out of an Insurgency. lgl
Saturday, July 02, 2005
Graphs Don't Match His Contention
Statement of
David R. Malpass before the
Subcommittee on Taxation
Senate Finance Committee
June 30, 2005
http://finance.senate.gov/hearings/testimony/2005test/dmtest063005.pdf
Malpass attempts to extol the benefits of the Bush Tax Cuts, but he should learn to truncate his graphs. Most show the initial Bush Tax Cut unable to match any performance of the Clinton Years, or even the reign of his father. The 2003 Tax Cut barely matches the scenario of the 1995-97 graph. The lengthened Graphs could be used as Proof that neither Tax Cut or Tax Increase has much effect on economic performance, an item dependent upon overall economic conditions.
The Malpass graphing effort does outline extreme Equity inflation due to the Tax Cuts, as expressed by the huge increase in Equity value without corresponding amounts of Household Income Growth. His data estimate of the impact of the Tax Cuts is widely overstated using Quarter gain estimates of the three following Quarters--where Production had already been in progress and reflecting the economic recovery made prior to the Tax Cuts. This Author thinks the prime characteristic about the Bush Tax Cuts (both) lies in their inability to graphically portray a assumed acceleration in economic performance.
Other Testimony of Real Contribution:
http://finance.senate.gov/hearings/testimony/2005test/shtest063005.pdf
Testimony of
Scott Harding
before the
Finance Subcommittee on Taxation and IRS Oversight
on the date of
June 30, 2005
on the subject of
Section 179 Expensing
and
STATEMENT OF
ROBERT WEINBERGER, VICE PRESIDENT, H&R BLOCK
"ENCOURAGING SAVINGS AND INVESTMENT:
STAY THE COURSE OR CHANGE DIRECTION?"
SUBCOMMITTEE ON TAXATION, SENATE FINANCE COMMITTEE
JUNE 30, 2005
http://finance.senate.gov/hearings/testimony/2005test/rwtest063005.pdf
lgl
David R. Malpass before the
Subcommittee on Taxation
Senate Finance Committee
June 30, 2005
http://finance.senate.gov/hearings/testimony/2005test/dmtest063005.pdf
Malpass attempts to extol the benefits of the Bush Tax Cuts, but he should learn to truncate his graphs. Most show the initial Bush Tax Cut unable to match any performance of the Clinton Years, or even the reign of his father. The 2003 Tax Cut barely matches the scenario of the 1995-97 graph. The lengthened Graphs could be used as Proof that neither Tax Cut or Tax Increase has much effect on economic performance, an item dependent upon overall economic conditions.
The Malpass graphing effort does outline extreme Equity inflation due to the Tax Cuts, as expressed by the huge increase in Equity value without corresponding amounts of Household Income Growth. His data estimate of the impact of the Tax Cuts is widely overstated using Quarter gain estimates of the three following Quarters--where Production had already been in progress and reflecting the economic recovery made prior to the Tax Cuts. This Author thinks the prime characteristic about the Bush Tax Cuts (both) lies in their inability to graphically portray a assumed acceleration in economic performance.
Other Testimony of Real Contribution:
http://finance.senate.gov/hearings/testimony/2005test/shtest063005.pdf
Testimony of
Scott Harding
before the
Finance Subcommittee on Taxation and IRS Oversight
on the date of
June 30, 2005
on the subject of
Section 179 Expensing
and
STATEMENT OF
ROBERT WEINBERGER, VICE PRESIDENT, H&R BLOCK
"ENCOURAGING SAVINGS AND INVESTMENT:
STAY THE COURSE OR CHANGE DIRECTION?"
SUBCOMMITTEE ON TAXATION, SENATE FINANCE COMMITTEE
JUNE 30, 2005
http://finance.senate.gov/hearings/testimony/2005test/rwtest063005.pdf
lgl
Friday, July 01, 2005
Snafu--Afghan Army and Police
AFGHANISTAN
SECURITY
Efforts to Establish
Army and Police Have
Made Progress, but
Future Plans Need to
Be Better Defined
GAO-05-575
http://www.gao.gov/new.items/d05575.pdf
Defeat built in: Afghanistan seems bound to again sink into anarchy. U.S. Military Command in Afghanistan has spent about $3.3 billion on an Afghan army, and $800 million building an Afghan Police force. 42% of the Army is trained as well as about half of the Police. Where has the money gone?
Having fully staffed
the Kabul central command with about 10,500 troops, OMC-A assigned the
remaining 7,800 troops to the four regional commands.The U.S. Army Corps of Engineers is constructing facilities at these locations. As of January 2005, funding provided to the Corps for this effort totaled $740 million.
Typical American largesse: These five facilities should not have cost more than $50 million apiece, and constructed to Shock and Awe Recruits who have never lived in such magnificent housing, never worked in such luxurious surroundings, and separates the Army from both their culture and their People. (afghan construction and living would have cost only $5 million per center). The Afghan Troops, on the other hand, as given wornout Equipment, inadequate Weapons and Transportation, and embedded American trainers who are Transfers' from other OMC-A TO without previous Troop-training experience.
The Afghan Army will most likely have to face the Afghan militias who are not disarmed (estimates of disarmament range from one-third to one-twentieth of the total number of militia troops), and said militia members unable to find employment outside the militias except from the Narcotics Growers and traffickers. The Later Group have produced a bumper Crop this Year, and can supply the militias with better Weapons, Equipment, and Transportation; also capable of supplying militia members with about four or five times the monthly salary of the Afghan Army recruit ($70 per month).
The United States and Germany spent most of the Funds directed to building the Police in development of Training facilities. Police recruits probably live in an environment envied by many poor Americans through the Training periods, after which they are transferred to Police Stations which have been destroyed--lacking Office equipment, Vehicles, Weapons, or Fuel for patrolling. They enter areas under the control of militia leadership, who insist they impose a Truck tax on vehicles traveling through the area paid to the militia. Recruits get to do all these fun things for $30 per month, an amount no afghan family can survive on.
Both Army and Police are outgunned by practically everything in Afghanistan, while lacking Transportation and Communications. OMC-A officials estimate that the Army will cost an additional $7 billion with $600 million per year Maintenance Cost for 62,000 Troops, while lacking 21,000 Support personnel. The Police Force will likely cost $2 billion, simply to supply them with Police stations, Vehicles, Fuel, and Radios. No One is suggesting a Weapons procurement capable of defending themselves--either Police or Army. lgl
SECURITY
Efforts to Establish
Army and Police Have
Made Progress, but
Future Plans Need to
Be Better Defined
GAO-05-575
http://www.gao.gov/new.items/d05575.pdf
Defeat built in: Afghanistan seems bound to again sink into anarchy. U.S. Military Command in Afghanistan has spent about $3.3 billion on an Afghan army, and $800 million building an Afghan Police force. 42% of the Army is trained as well as about half of the Police. Where has the money gone?
Having fully staffed
the Kabul central command with about 10,500 troops, OMC-A assigned the
remaining 7,800 troops to the four regional commands.The U.S. Army Corps of Engineers is constructing facilities at these locations. As of January 2005, funding provided to the Corps for this effort totaled $740 million.
Typical American largesse: These five facilities should not have cost more than $50 million apiece, and constructed to Shock and Awe Recruits who have never lived in such magnificent housing, never worked in such luxurious surroundings, and separates the Army from both their culture and their People. (afghan construction and living would have cost only $5 million per center). The Afghan Troops, on the other hand, as given wornout Equipment, inadequate Weapons and Transportation, and embedded American trainers who are Transfers' from other OMC-A TO without previous Troop-training experience.
The Afghan Army will most likely have to face the Afghan militias who are not disarmed (estimates of disarmament range from one-third to one-twentieth of the total number of militia troops), and said militia members unable to find employment outside the militias except from the Narcotics Growers and traffickers. The Later Group have produced a bumper Crop this Year, and can supply the militias with better Weapons, Equipment, and Transportation; also capable of supplying militia members with about four or five times the monthly salary of the Afghan Army recruit ($70 per month).
The United States and Germany spent most of the Funds directed to building the Police in development of Training facilities. Police recruits probably live in an environment envied by many poor Americans through the Training periods, after which they are transferred to Police Stations which have been destroyed--lacking Office equipment, Vehicles, Weapons, or Fuel for patrolling. They enter areas under the control of militia leadership, who insist they impose a Truck tax on vehicles traveling through the area paid to the militia. Recruits get to do all these fun things for $30 per month, an amount no afghan family can survive on.
Both Army and Police are outgunned by practically everything in Afghanistan, while lacking Transportation and Communications. OMC-A officials estimate that the Army will cost an additional $7 billion with $600 million per year Maintenance Cost for 62,000 Troops, while lacking 21,000 Support personnel. The Police Force will likely cost $2 billion, simply to supply them with Police stations, Vehicles, Fuel, and Radios. No One is suggesting a Weapons procurement capable of defending themselves--either Police or Army. lgl
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