RedState Inspired me. The Best & Worst of 2011 in no particular order.

Worst (Get the ugly out of the way)

I agree with RedState that the Kardashian's represent the absolute worst in what America represents today. However, since I do not know any of my Democratic friends who think differently, their fans must be Republican's.  They certainly do not have many minority fans.

The lies that the Republican candidates are using to try and get the Presidential nomination.  No one is being honest with the voters that a balanced approach is needed to deficit reduction and it must include health care reform either in the form of an improved Affordable Health Care Act or something similar.

The Republican Congress's inability to respect the President and at least let him appoint people to run the government.  Gridlock in the Office of Government Printing??

Where did MF Global's customer cash go?  Unforgivable, but we need the authorities to identify who specifically screwed up and whether it is criminal or not.

Israel's continued expansion of the West Bank Settlements.  How can there be peace if you keep taking the land away from the other side's population?

OK The best

Israel continuing to kick Hamas's pretend Army in the ass with targeted drones blasting the rocketeers to meet their virgins in the sky.

No more Osama Bin Ladan and no more a large number of other terrorists thanks to the drone's and our Navy Seals.

I no longer work for *****; nor do I own two homes anymore.

Everyone I know who found out they had cancer this year, had it discovered early and has a good prognosis for survivorship.

The U.S. economy is recovering; if only a solution could be found for housing so it is more like the cancer story of my friends.  Alas, it is not and the only thing I know is that a government solution is not likely to be a solution.  The market needs to work.  Renting, knocking them down, completing foreclosures, letting paying customer's refinance at lower rates regardless of the loan/value.  Continuing to prosecute the banks is not helping the economy.  Those who committed the ugly loan originations are already out of business.  Taking $ from those who bought them to fix them does not help the economy.  This might belong in the other column.

One of my neighbors in this building is drilling or sanding and it is giving me a headache.  Happy New Year.

Republishing a NYT Blog on Health Care Reform

The Wyden-Ryan Plan: Déjà Vu All Over Again

By UWE E. REINHARDT

Uwe E. Reinhardt is an economics professor at Princeton. He has some financial interests in the health care field.

After wrestling for decades and in futility with the triple problems facing health care in the United States – unsustainable spending growth, lack of timely access to health care for millions of uninsured Americans and highly varied quality of care – any new proposal to address these problems is likely to be a recycled old idea.

TODAY’S ECONOMIST

Perspectives from expert contributors.

The widely discussed new proposal from Senator Ron Wyden, Democrat of Oregon, and Representative Paul D. Ryan, Republican of Wisconsin, to restructure the federal Medicare program for the elderly is no exception.

The idea – generally known as “managed competition” — goes as far back as 1971, when Dr. Paul Ellwood and his colleagues at the Health Services Research Center of the American Rehabilitation Foundation injected it into President Nixon’s attempt at health reform.

Since then, the idea has appeared and reappeared in health reform in many variants and with different names, too numerous to permit a full listing here. Its most sophisticated renderings can be found in the extensive writings on the concept by the Stanford economist Alain Enthoven.

To describe the unifying theme running through these past variants, it is helpful to enumerate the major economic functions any health system must perform:

1. Producing health-care goods and services.
2. Financing health care, which involves extracting money from households (which ultimately pay for all of health care) and funneling it to the producers of health care, usually through the books of private or public health insurers.
3. Risk pooling by private or public insurers to protect individuals from the financial inroads of high medical bills through insurance policies.
4. In most modern societies, assuring that every member of society has timely access to a defined set of health-care benefits.
5. Purchasing medical treatments from the producers of health care, which includes determining the prices to be paid, claims processing for insured patients and controlling overall spending and the quality of that care with various forms of controls lumped together under the generic label “managed care.”
6. Regulating the behavior of the various participants in the system to preserve the integrity of health care markets and the safety of health-care products and services.

Most of the debate over health policy in this country has been over two questions.

First, to what extent should healthier or wealthier members of society be asked to subsidize the health care received by their poorer or sicker fellow Americans? Second, influenced by the answer to the first question, who should perform the functions listed above: government, private nonprofit entities or for-profit entities?

The Wyden-Ryan plan and similar precursors answer these questions as follows:

1. Let government perform the second, third, fourth and sixth functions listed above (financing, risk pooling, assuring access to care, and regulating) but delegate the first and fourth functions (producing health care and “managing” its purchase) to the private for-profit or nonprofit sectors.
2. Let there be a limit to the extent to which healthier or wealthier Americans are forced to subsidize the health care received by sicker or poorer Americans – that is, to the practice of social solidarity.

Together, these two responses may be called “truncated social health insurance.” The chart below illustrates it. Here an individual or a family is offered a choice between two health plans. In practice, such a menu could include many more competing plans.

Managed competition schemes, the Wyden-Ryan plan included, are typically operated through health-insurance exchanges of the sort provided in theAffordable Care Act. Rival health plans, which may or may not include a government-run plan, compete on this exchange under strict regulation of their behavior.

Each insurer must quote on the exchange the total premium it will charge for an assumed standard mix of actuarial risks and for a standard, defined package of health care benefits, as well as the portion of the total premium to be paid by the prospective insured.

Typically in these schemes, insurers cannot base their premiums on the health status and gender of the individual applicant and perhaps not even on age.

If government provides the defined contribution, as under the Wyden-Ryan plan, the health plan chosen by the insured will be sent by the government a premium contribution. In most designs, the contribution is adjusted for the actuarial risk the applicant represents, as best that can be done prospectively. It may also be means-tested, that is, tailored to the insured’s income.

There may also be ex-post risk adjustment, if, after the enrollment season, some some plans end up with risk that is more costly than average and other plans end up with lower-cost risk pools.

The major point of contention in the political debate over managed competition is not over these design parameters. Rather, it is over the nature of the “defined contribution,” which defines the extent to which the concept achieves social solidarity in health care. The crucial distinction here is between “vouchers” and “premium support” (as explained in Section B of this Brookings Institution document).

In a “voucher” system, the level and future time path of the defined contribution is set independently of the time path of the cost of health care per capita. If health care cost per capita in general rises faster over time than does the indexed voucher, the system naturally shifts more and more of health care costs onto the insured. That may be its chief objective.

The plan proposed earlier this year by Representative Ryan and passed by the House of Representatives on April 15 as part of its budget plan is a voucher scheme in this sense. In that plan, Medicare’s contribution to the private insurance purchased by Medicare beneficiaries was to be indexed to the Consumer Price Index, which historically has risen less rapidly than has health spending per capita.

The Wyden-Ryan plan is also a voucher scheme, because what it calls the “defined contribution” by Medicare is limited to the growth of gross domestic product plus 1 percent, adjusted for general price inflation. Historically, general health spending and Medicare spending per capita have risen at higher growth rates.

Alternatively, the defined contribution could be styled as a “premium support” payment whose time path is indexed to the growth in average health spending per capita (in the case of Medicare, per Medicare beneficiary) in a region.

The defined contribution in the Federal Employee Health Benefit plan enjoyed by members of Congress and federal employees is of this nature, as was the “premium support” in a plan proposed in 1995 specifically for Medicare by the Brookings Institution economist Henry Aaron and Robert Reischauer, then director of the Congressional Budget Office and now president of the Urban Institute.

Genuine premium-support models are designed to protect Medicare beneficiaries better against rapidly rising health care costs in general than would most voucher plans indexed to magnitudes that grow less rapidly than does health spending.

By the design of the defined contribution, the Wyden-Ryan voucher plan would be able to constrain the growth of taxpayer financing for Medicare, simply by shifting the risk of rapid health-care cost increases from taxpayers into the household budgets of the elderly.

As I noted in several earlier posts, the hypothesis that managed competition among private health plans can better control the overall health spending per Medicare beneficiary than would traditional Medicare lacks empirical support. It certainly has not worked that way in employment-based health insurance.

That hypothesis remains purely a belief.

Mitt Romney is starting to scare me

I have been trying to keep an open mind about Mitt.  Not that I think I would vote for him for he is sure to appoint Supreme Court Justices that would promote both the Republican Social Agenda and protect Corporate Rights to be seen as a human being when it comes to unattributed campaign contributions.

However, I generally thought he governed Mass. in a reasonable way and he certainly ran the SLC Winter Games in a responsible way, so I have been trying to keep an open mind that he would not be terrible for the country.  This also would allow me to continue to have decent conversations with RSL about this as she has been genuinely considering him favorably.

Now, I am not so sure.  Mitt has said that he would bomb Iran to prevent them from getting a nuclear weapon.  Now he has said we should have kept the troops in Iraq and that means he won't be bringing them home from Afghanistan.  Never mind that the Bush Administration signed the Treaty that forced us to withdraw now anyway.

How will he pay for this?  Bombing Iran is almost sure to create military consequences that I do not believe we can even begin to imagine.  But I can imagine the economic consequences.  Oil will go to $150 a barrel before collapsing as the global economy sinks into a recession.  US Tax Revenues will go down.  Meanwhile, Romney would be promoting tax cuts to stimulate employment when the real problem is a lack of demand.  How exactly does he plan to pay for him military adventures?  How does he plan to balance the budget which we must start to proceed to do in the next administration?

So what would a Romney Presidency look like?  Military adventures continuing in Afghanistan to accomplish what?  We have already beaten Al Qaeda and the Taliban reproduce like rabbits, so there will be no shortage of people who want to shoot our troops.  Bombing Iran will create the potential for Iran to invade Afghanistan and take on US troops directly.  Then what do we do to keep our troops alive and in a "winnable" war? We will never conquer Iran and leave it in the condition that we did Iraq.  Car bombs driven by fanatics will cause tremendous harm to our troops or our troops will be shooting everyone in sight.  Meanwhile, the US Economy will be in a sink hole, our portfolios will be in a sink hole and I don't know how I will ever pay for retirement.   And I am better off than a lot of people.

So while I have previously thought that a Romney win would be good for my savings, I now doubt that.   Unless he is just a blow heart on all this Military Adventure stuff and saying it to win the nomination.  This is one thing I will hope for a flip flop on.  And I will also hope for his flip flopping his flip flop on Mass. health care which the Affordable Health Care Act is almost identical to.

I republish a Washington Post blog, not the best written but you will get the point.

Rubber soul

By Tom Toles

Oh Romney is worried now about the American soul. This from Mr. Bain Capital, soul central! Could it have a more Dickensian name?? The “soul” Romney is talking about is the licence to pursue capitalism in its most cold-blooded form, and define THAT as the “soul” of the United States of America. Way to go, Mitt! You can make your case for this business model if you like, and no doubt you will have more chance to do so, but could you leave the word “soul” out of it, please? WWJD?

And anyway, come on, do the boomer candidates have to keep demonstrating that they are still stuck in the 60’s? This choice between an “entitlement society” and “opportunity society” is so false and outdated as to be laughable, if anybody still recognized ridiculousness when uttered. You could maybe make the case that the Democratic Party, Lyndon Johnson Era, was all about consequence-free program manufacture, but after Bill Clinton and Barack Obama, if you actually took the time to look at their records, which neither the media nor the public actually do, you’d see that centrism and pragmatism have seized the terrain, and you can listen to the howls of the tiny remnant left if you don’t believe me.

But oh oh oh, there’s an eager raised hand waving in the back of the class. WHAT ABOUT OBAMACARE??? Well, what about it? It’s an insurance plan built out of mostly Republican-engineered parts with some added cost-containment wonkery. Health insurance is done either through the government or the private sector, or a hybrid. Obamacare is a hybrid. The ROMNEY HYBRID! Does logic even EXIST anymore? Maybe you want to make the case that people should not HAVE health insurance if they are poor and undeserving. So go ahead, make that case, and see if you can work the word “soul” into your argument.

Oh, How I Wish Bank of America Had Done Some Due Diligence

before they bought Countrywide.

Backdrop:  Back in 2007 when the markets were frothy, I decided that when it was time to invest my bonus I would buy some nice safe bank shares for the dividends.  Sure there might be some volatility, but how bad could it be.  Thinking there were more risks on the International front for reasons that I cannot remember, I bought a little of JPM and C but mostly I bought BAC because they were not that big in mortgages.

Then along comes 2008 and the next thing I know, BAC has bought Countrywide, which was a relief professionally because my bank analyst did not have the foresight to get us out of Countrywide (or anybody else for that matter, may she RIP unfortunately).

Now 3 years later, most of BAC's problems can be traced back to that purchase of Countrywide.  You all know about the RMBS lawsuits, but the reason I write this today is the news that Countrywide was pushing "qualified for prime status minorities" unnecessarily into subprime loans.  Now while I realize these people should have done some homework to protect themselves, it was sleezy behavior on the part of Countrywide.  Not to mention all the other sleezy things Countrywide and the others were doing originating liar loans and any number of varieties on that which have turned out poorly.

Sadly, I as a shareholder with a full time job did not have the time to do my due diligence on what any of the banks were doing, but I would have assumed that BAC would know what Countrywide was doing in general and figured out in due diligence what they were doing specifically and walked away from this mess to protect their shareholders.  Oh wait, I have a dim memory they tried to but the Bush Administration made them go forward.  Thank you Hank Paulsen!

It is now clear that BAC did no due diligence and we shareholders have suffered mightily.  That is how capitalism works so I am only kavetching (sometimes it is hard to know how to spell a Yiddish word) and expressing remorse that the management team "I hired" did not do their job better.

Of course, they walked off with huge paydays upon their exit because the Boards take care of their own and that is why I am at least sympathetic with the Occupy Wall Street crowd.  Even if I am perhaps a target of theirs.

Wise Words From jennifer Hudson

"In a recent interview, I was asked how I reconciled being a Christian with performing at events for my gay fans. I find it upsetting that some folks equate being a Christian with being intolerant of gay people. That may, unfortunately, be true for some, but it is not true for me. I have talked often of my love and support of the gay community. I have said again and again that it was the gay community that supported me long before and long after American Idol, and kept me working and motivated. It is the gay community that celebrated my voice and my size and my personality long before Dreamgirls. Yes, I was raised Baptist. Yes, I was taught that the Bible has certain views on homosexuality. The Bible also teaches us not to judge. It teaches us to love one another as God loves us all. I love my sister, my two best friends and my director dearly. They happen to be gay. So what? While some search for controversy, I hope that my friends and fans who know me, know where I stand."

I Don't Believe It

I just took an ABC on-line test to see which candidate positions were most in line with my own.

The fact that it showed President Obama as my 1st choice was not a surprise and not the reason for the title.  It was my 2nd and 3rd choices.  #2 was Michele Bachmann and #3 was Ron Paul.  The latter is not so surprising as I am a state rights guy and a libertarian on some points but #2 is a shocker.  I have no idea which position of hers and mine line up.

This is Going to Cruel

But I cannot resist.

It has to come my attention somewhat belatedly that Sarah Palin's second child, Track, is also facing a shotgun wedding, as did his older sister.  Apparently, Sarah who preaches abstinence over birth control and sex education didn't do such a good job teaching her own kids her values.

At least she is not in this looney Republican campaign.

Don't Hold Your Breadth But Could Compromise in the Middle Be Happening

A Republican Congressman in a leadership position, Paul Ryan, and a Democratic Senator, Ron Wyden have actually put forth a theoretical template to extend the Affordable Health Care Act principals to Medicare and, for some not old enough to be in Medicare, extended some Medicare concepts to the Affordable Health Care Act.

Not I am far to cynical about any Republican's intentions to not be concerned that Ryan's participation in this is a "Sheep in Wolves clothing".  But this proposal would separate health insurance from employment for some, thereby invigorating the market for individual health insurance.  It would also preserve a public option in the Medicare bracket while introducing competition to control costs.  If a public option works for the older set, why wouldn't it work for the younger set.  It could even use the Medicare infrastructure.

Now as I wrote a few weeks back, true cost control is a complicated process.  It includes getting everyone paying for health insurance, even the healthy, and getting people out of the emergency room and into non-emergency care through them having health insurance.  It includes getting away from paying for service and paying for events.  Simplifying billing through centralized process is another element.  And yes, tort reform is needed as is allowing Medicare to negotiate for lower prices on pharmaceuticals.  Both of those require Acts of Congress and competition will do nothing for it.

But something about this Ryan/Wyden proposal smells like it is a good path forward to both getting health insurance to everyone and controlling the costs.  We can only hope this is true for our fiscal dilemma.

Thomas Friedman Once Again Catches Up With Me

Here is the key excerpt from what he wrote today


"As for Newt, well, let’s see: If the 2.5 million West Bank Palestinians are not a real people entitled to their own state, that must mean Israel is entitled to permanently occupy the West Bank and that must mean — as far as Newt is concerned — that Israel’s choices are: 1) to permanently deprive the West Bank Palestinians of Israeli citizenship and put Israel on the road to apartheid; 2) to evict the West Bank Palestinians through ethnic cleansing and put Israel on the road to the International Criminal Court in the Hague; or 3) to treat the Palestinians in the West Bank as citizens, just like Israeli Arabs, and lay the foundation for Israel to become a binational state. And this is called being “pro-Israel”?"


I have never written about #3 because I don't see Israel going that way.  Following Path #1 or #2 is where I fear conservatives in both the Israel and the U.S. will go when the only reasonable path to a permanent peace is a 2 state solution.  Now I don't expect a 2 state solution to bring peace immediately.  But what I do expect is after the Palestinians have their state and Israel has to invade it on a temporary basis to get rid of terrorist activity, eventually the people will hold their Palestinian  leaders responsible for the lack of peace and the Palestine Government will start to act like one.  Then peace will be possible.  But until then, the Palestinian leadership cannot control the terrorists because there is too much acceptance of the terrorists within the Palestinian population.


Go to the NY Times.com to find Freidman's full column where he discusses how secular American Jews like myself are losing our connection to Israel.  Growing up I knew I had distant relatives somewhere in Russia, Hungary or parts in between and I knew that they had not likely survived German occupation in WWII.  So to me, Israel's foundation was always just and appropriate.  But Jews have survived all over the world through time by remaining true to their religion while adapting to the environment around them.  Israel's conservatives and their U.S. supporters have forgotten this.  Israel can only survive as an honorable Jewish State if they remember this.

How does a Drone Crash and not Destroy Itself?

While some are trying to make this the President's fault, I don't see how it is anyone's fault except the CIA pilot. You want to know something about Iran, what better way to find out then send a drone over it.

What I do not understand is the following.  These things fly at an altitude of at least 10,000 feet and maybe 30,000 feet.  So wouldn't it be standing operating procedure for a malfunctioning drone to crash from it's flying altitude and destroy itself.  Somehow, the great minds in the CIA ranks managed to fly this thing down to an altitude where it did not destroy itself.  You would think the CIA above any other agency would plan for contingencies and act in a prudent manner.

Not destroying the drone was a huge mistake.

Physicals and Regulations

Well there's a headline that is lucky if it attracts any of my non-regular readers.  B!O!R!I!N!G!

But here goes.  Today I had my annual physical.  All is well, which is good because my better half is undergoing chemo.  But, my Dr. let me know this cheery statistic.  80% of 80 year old males have prostate cancer!  Since I plan on living at least another 22 years, that means I have an 80% chance of getting prostate cancer.  Well I hope they figure out some better ways of dealing with it.  Right now, everyone I know who has had it, had the organ cut out and rebuilt their muscle controls.  That is not how I want to spend my days, so maybe I will go with the radioactive seeds and develop a glow you know where.

So where does regulation come in. It doesn't directly.

The NYT had two excellent columns today detailing how the Republican's are screwing up the progress the country could be making on key issues with their intransigence.  Neither column was written by RedState's favorite foil Paul Krugman which shows that even middle of the road columnists like Joe Nocera and David Brooks see the issue in the manner I do.

Mr. Nocera wrote about what the unconfirmed temporary appointed (and now resigned) Head of Medicare Dr. Berwick was able to accomplish in his 18 months trying to get people healthier with shorter stays in hospitals and reduce the cost of health care.  Of course, he was only able to just get started because Medicare is like a gigantic aircraft carrier on a medium sized lake.  Why did he have to quit?  Because the Republicans blocked a vote on his nomination.  Mr. Nocera explained why Dr Berwick is the most qualified person to accomplish this important task, but because he once praised a single payer plan.  Well Medicare is a single payer plan for U.S. Citizens 65 and over and it does need its costs fixed.  Beyond me why the Republicans wouldn't vote for someone committed to reducing its costs.

Mr. Brooks wrote how President Obama has included business people in his regulatory process.  62% of the people the administration meets with regarding regulation are business people.  Only 16% are activists.  Furthermore, President Obama has not increased regulatory costs as much as President's Reagan, Bush I and Bush II.  And I bet if you took out Dodd-Frank, the Gulf Oil Spill, and the Affordable Health Care Act, regulatory increase has been close to zero.  Now I don't know about you, but I think the Banks' that gave us our current economic mess should be regulated better.  Certainly, Halliburton, TransOcean and BP (and the others) need sufficient oversight to make sure another Macondo oil well spill does not happen again.  And as someone with a family member with a preexisting condition, I am glad that we will be able to buy health insurance when COBRA runs out.

yet, the Republicans are campaigning to undo all this supposed regulation.  I hope the Democrats defend themselves aggressively.  Mr. Brooks ran through a thought process that disputes these regulations are causing the employment problem and points out that two of the areas with the greatest increase in regulation (health care and energy) are actually the source of job creation.

As I pointed out recently, the Republicans continue to run on this point because they have no other solution to the employment problem and they think they can convince the voters that regulations create and maintain unemployment.  Republicans really want to pursue the same policies that Bush II used and put us in this mess.  I hope a sufficient number of voters see this my way in 11 months.

A Must Read

http://www.bloomberg.com/news/2011-12-01/raise-taxes-on-the-rich-to-reward-job-creators-commentary-by-nick-hanauer.html

Ding Dong, I just got something

The Republicans keep blaming Obama for creating regulations that are preventing job creation when the real thing preventing job creation is a lack of demand for the supply additional workers would produce.

Yet, the Republicans keep hammering on this regulation thing.  As far a I can tell, all the regulations they want to end are doing things to protect people from unscrupulous business people who have money to give to Republican candidates.  I mean who knew that imported apple juice would have arsenic in it.  Juicy Juice has it for God's sake and that is a brand that I used to work for, although I no longer think Libby's/Nestle still owns it.  And who wants their 3 year old to be ingesting arsenic.  Maybe that is why we have a problem getting kids out of HS and into college.

So what did I just get.  The Republicans have nothing else to talk about because everything else they want to do just enriches those who have wealth and they have no plan to create employment.  So blame regulations and keep at it.

By the way, housing/credit bubble bursts take 5 to 10 years to work through.  This one started in 2007 so  it will end sometime in the next two administrations.  The issue is how we get from here to there and which party you think will do more damage.

Since the Republicans want to return to doing more of what Bush II did and that caused this mess, that is not an environment that I want to encourage.  And the Democrats want to improve Health Care, keep a lack of regulation from harming us and bring about a balanced budget in a responsible way.  That is something I want to support.

RedState thinks I am not really a conservative, but then Richard Nixon, Nelson Rockefeller, Ronald Reagan or George Bush I would not be nominated by the current Republican party and my policy beliefs are not that different from theirs.  So am I no longer conservative or has the current version of Republican conservatism moved so far to the right that it is no longer mainstream.  48 weeks to go.

WSJ Distorts News to Sensationalize

I admit that when reading a Newscorp paper one should expect this and it has been a primary complaint of mine about the Wall Street Journal since Newscorp bought it.

But today, they slanted the news on something near and dear to my heart.  The definition of a defaulted bond.

The facts were reported correctly.  A Catastrophe Bond that protected an insurance company from loss claims arising from property damage caused by tornados is about to have principal reduced to pay such claims arising from the heavy tornado damage this past spring.

What I object to is that the WSJ repeatedly called this a default.  My definition of a default is when a contractual payment is not made.  The contract in this case says that the bond trustee will pay the insurance company the value of principal that the claims represent and the holders of the bond will have their principal value reduced.  That is the deal and there is no failure to follow the contract.  Therefore, it is not a default.

I never allowed Catastrophe bonds is my portfolios because you cannot predict the weather and no interest coupon compensates you for a loss of principal.  Usually a loss of principal is a default but in this case it is not.  Buyer beware of investment bankers promising you a good return on a portfolio of risks when you cannot assess the risk.

More Signs of Republican Priorities Favoring the Wealthy

Jon Kyl announced yesterday that he could not support the extension of the cut in Social Security Taxes.  Now 1st let me say that I was never a big fan of this approach for reasons that have nothing to do with Economics 10 theory that I am about to review, but I have given in to this logic at this time since the Congress passed this in a bipartisan manner.

Now for what upsets me about what Jon Kyl said.

He wants to end this tax reduction because he believes it did not create any jobs.  No tax policy creates jobs directly so this is not the proper analysis.  Tax Policy affects Demand or Supply.  Changes in Demand affect jobs.

So what does Senator Kyl propose?  He wants to end this tax cut which does increase demand by giving every worker in the economy about $1000 more per year in their take home pay. Now while the higher income people probably just saved this additional take home pay (I know I did), lower and middle income people spent it.   Reducing demand will reduce jobs.

Instead, he wants to cut the taxes of those who create jobs by limiting income taxes on the higher income people.  But this will not stimulate demand.  It will just increase the take home pay of the higher income people who will likely just save it as I did for my reduced FICA taxes.  Higher income people do not change their base consumption patterns because their take home changes.  Their savings rate goes up or down and perhaps their marginal luxury consumption changes.

What would incentivize a higher income person to create jobs?  Well, demand for their products or services need to go up.  It doesn't matter that their marginal tax rate is 28%, 31%, 35%, or 39%.  They will create a job if demand for the product or service is there and if demand is not there, they will not create the job.

So what policies increase demand?  The answer is policies that increase consumption of goods and services.  This is classic Keynesian economics (and please remember I am primarily a believer in monetary economics in most instances) and our current situation is when Keynesian economics is to be relied upon.  The government should be increasing consumption by spending money on infrastructure spending and paying for it by raising revenues from those who can afford it.  We need less saving by the wealthy right now and they have been the primary beneficiaries of the Bush tax cuts.  It is time for them to support the government that keeps them safe and provides the services that keep the country running.

Unfortunately, many of the unemployed need housing to come back.  So the other thing that could be done is some comprehensive solution to the empty housing stock situation.  I have seen a lot of ideas and  I am beginning to think just knocking down any foreclosed house that has not been sold in 360 days is a good idea.  RMBS holders might object however.

Finally, Grover Norquist who promotes this Republican nonsense gets 3 Pinocchio's from the Washington Post fact checker.  It is rare that he gives out 3 noses.

http://www.washingtonpost.com/blogs/fact-checker/post/grover-norquist-a-misleading-accounting-of-recent-history/2011/11/27/gIQAAhER2N_blog.html?hpid=z3

Republican Consistency for No Fair Design for Deficit Reduction

Mr. Cain wanting to remain mainstream announced what he stood for today.  Many other Republican candidates have voiced something similar.

Keep the troops in Afghanistan and do not pay for them by raising tax revenues.

How are they going to balance the budget?  by cutting entitlements alone?

Thanksgiving Musings

1st, I tried to copy a Bernie quote that shows he has been reading my blog, but as usual with technology challenges I failed.  I don't usually have much in common with Bernie's thoughts but he does agree with me that a significant portion of the cumulative deficit over the last 10 years was caused by the unfunded war on terror and that it is wrong to pay for it on the backs of entitlements.  Fix the entitlements and raise revenues to pay for the War on Terror.  And it is OK to fix the tax code while raising the revenues.

For that I would be thankful this Thanksgiving.  But it is unlikely to happen any time soon.

Some other things that people would be thankful for but are unlikely to happen any time soon.

Allow undocumented residents a path to citizenship and legality.  Since most of them work and pay taxes, we will prevent GDP from sinking if 10% of the labor force suddenly disappears and that will make everybody thankful.  Economics 10.

Control health care costs by doing sensible things that I have written about before.  Everyone will be thankful except for those benefiting from the inefficiencies.

Bring some moderation back into political discussions.  Both sides have good points when they stick to the middle.  Government has a role but the primary responsibility is with the individual.

And libertarians have a point when they say drugs should be legal.  Taking the  profit out of the production and distribution will bring peace to many Latin American countries and inner cities.  The profits can be used to pay for addiction treatment centers whereas today the tax payer pays for such treatment in jails.  That will help many state budgets.

Have a nice holiday.

Thomas Friedman Finally Adopts my View in Print

Obama has to push the country in the direction of the Simpson Bowles Commission.  It is the most balanced path forward for the country and politically.  Why he hasn't is a mystery to me.

http://www.nytimes.com/2011/11/23/opinion/friedman-go-big-mr-obama.html?ref=opinion

I just realized this a.m. that I have not been to a movie in over 3 months (I cannot remember what it was but it was at the Palace 9 in BTV) because of this moving and selling house stuff.  I need to get out more.

Confirming My View that $$$ Dominate Politics

60 Minutes ran a reaction to their story last week on Insider Trading by Members of Congress and their Staff's.  Both Nancy Pelosi and John Boehner protested the story!  I guess that is how everyone on the inside gets rich.

60 Minutes Profiling Grover Norquist

This is another thing that makes me angry.  Not 60 minutes, but Grover Norquist.

He is so focused on Taxes that he is ignoring the need to pay for government.  Osama bin Ladan forced the War on Terror after Bush II decided to cut taxes.  But we have not raised taxes to pay for the War on Terror.  We have borrowed the War on Terror and, by Grover's view, should pay for it by cutting spending on Social Security, Medicare and Medicaid.

Each of these have their own problems which need solutions specific to them without paying for the borrowed War on Terror.

If nothing else demanded voting Democratic I don't know what it is.

Newt once favored "Compulsory Health Insurance"

Thank you Lexington, of the "Economist" for those of you who do not read it.

Now both Newt Gingrich and Mitt Romney are on the record as having favored that every individual be part of the health care system economically.

And the Republicans hate the Affordable Health Care Act because it says everyone should pay for the universal health care that the system already gives them.

This hypocrisy is the reason I write this blog with such anger some times!!!!!!

Pre-Thanksgiving Sunday Paper Musings

I have a lot to do today getting the most recent car load of stuff from VT into storage or off to Goodwill after we found what we could keep in the limited remaining apartment space.  I fear that storage will run out of room today also.  So I will be concise from here on.

The "Anybody But Mitt" news analysis today was most revealing in what it told me about conservative pundit reviews of Newt's Freddie Mac employment.  Imagine what Fox, Bill O'Reilly and Rush Limbaugh would have said if this were payments to any Democrat.  Fox, ignored the news focusing on Newt's polling numbers.  B O'R called it "reasonable and normal". Rush blamed the media for releasing the news. My take away is that these guys have no principles as it relates to traditional financial relationships between the government and conservatives.  They just object when it is someone non-conservative who gets the money.  No wonder the Tea Party and Occupy Wall Street people are angry.  If only there were more transparency on who exactly gets all this money.  I assure you it is not most of the people who work in finance.

Ezekiel Emanuel has produced a fine series on that it will take to truly control health care costs.  Unfortunately, it is a little hard to find on the NY Times website.  But briefly, the last two articles focused on the two big areas of savings:  (i) centralized billing to the insurance industry so there is not duplicative efforts for either the provider or the payor; (ii) paying for chronic care by "bundling" (that is a fixed price for service).  This week he discusses how the latter will reduce the cost significantly (up to $80 billion per year; more than the $10 billion from malpractice reform which would help also).  AND YES, BOTH OF THESE ARE INCENTIVIZED IN THE AFFORDABLE HEALTH CARE ACT THAT IS SO CRITICIZED BY REPUBLICANS AS FAILING TO ADDRESS COST CONTROLS.

Why do the Republicans focus on malpractice reform rather than changing fee for service to bundle payments?  May I suggest following the money that fee for service provides to where it goes for political campaign contributions!  It is always about the money.

So now for my cynical comment of the day.  The absolute hatred for Obama is based upon his understanding that corporate america dominates the donation stream and corrupts policies to keep the flow government funds heading toward corporate america. This has pervaded the Supreme Court with Citizens United which codified Corporations as Individuals and now you almost have complete control of the system by Corporate money except for the President.  If Obama is reelected he may be able to appoint a sufficient number of justices to overturn Citizens United.  If Obama is defeated, it is almost certain that the Republican would appoint a sufficient number of justices to keep Citizens United in place for decades, if not forever.  Any I still expect Governor Romney who has already stated unequivocally that Corporations are Individuals to be the Republican nominee.  And we know Governor Romney respects Big Money since it made him wealthy.

And lastly, Thomas Friedman's column is "How About Better Parents".  Well dah!!!  RSL has been talking about the difference parental involvement makes in the class room for 35 years.  For my younger readers, remember this "15 year old students who parents often read books with them during their early years show markedly higher test scores than students whose parents did not read to them".  I have nothing more fondly remembered than reading to my son because I enjoyed it and he seemed to also, but it is nice to know there was another benefit.

Occupy Wall Street is Losing Credibility

As I have written I am sympathetic with their anger at the Establishment for failing to manage the economy well which is the primary function of the Establishment.   However, the OWS are showing their ignorance today and in general by continuing what they have been doing.

Today they hope to shut down the New York Stock Exchange.  What are they going to do, pull the computer plugs out of the electric socket?  Unbury the electricity lines from 150 feet under the street and cut them?  Do this everywhere that stocks are traded?  Don't they know the NYSE has lost a huge percent of its market share to computers somewhere else?

They have made their point.  It is time for them to sleep at home, look for a job during the day and get involved in the political campaign of their choice to try and bring about change the only way it is going to occur; by getting politicians in office who can try and improve the management of the economy.

That is one of the primary roles of government and the one that the Republicans do not believe in and the role they failed to do during the Bush Administration causing this mess.

Herman Cain saw my last post

And today he endorsed State's Rights for Medical Marijuana.

I had something more profound to write tonight after a news report driving to VT today, but dinner with RedState caused me to forget what it was.

Maybe it will come back tomorrow.

Would you buy your medical pot from this woman? Bad day I guess!

Selling a House These Days is a Drag

RSL and I never wanted to have two homes and it only came about when the best job opportunity, after being downsized because I knew how to find a job, was in the lovely city of Burlington.  This year we decided that another winter in BTV while working in a depressing situation could be improved on by retiring, selling our house and getting on with our lives in NYC.

Two weeks before we put our house on the market in March, an inferior house was listed for $560,000 and sold within two weeks.  We later found out it sold for $530,000.  So we listed for $575,00 and figured we'd be negotiated down, but our upgrades and view would get us an offer that we could negotiate with and be out of here by August 1.

Well, everyone loved our house but they had to sell something.  Months go by and nothing sells.  More units in our development come on the market undercutting us on price but they were not as nice.  Nothing sells.   

Finally, in August we start to hear that our potential buyers are getting offers and we might start to see some action.  We lower our price by 3% to show we are willing to negotiate.  No one makes us an offer because they think our price is fair but they have been so beaten up that they want to buy something for $400,000.  Finally, someone offers us $475,000 and we tell them it needs to have a 5 handle to be considered.  They offer $500,000 and we counter dropping another 2% trying to get to the middle which would be $525,000.  They disappear and are never heard from again.  A long time interested buyer sells their place and is so depressed by the process they buy a place, without giving us an offer, which when they are done fixing it up will be only $20,000 or so less than the $500,00 we would have taken at that point.

We decide that we have to get on with our life in NY so we hire a mover and schedule a move for early November while dropping our price to $524,000.  Dreams of traveling Indonesia end to end are replaced by the issue of it is time to start looking for a job in NY.

Well, as the movers are packing the truck, we get an offer from someone who has been looking around for 3 weeks or so.  $500,000; so we ask if there is any room to negotiate.  No, take it or leave it.  We take it but all ego in our superior value to that sale in March is trashed.  The good news is we have an offer.  The bad news is, of course, there are things to be addressed and I need to be in both NY and VT.  So back & forth I will go.

I tried not to have too much invested in any particular price, but I did really want to go to Indonesia and that will have to wait as we did not get the price to make that a go.  And my recommendation to anyone looking to sell.  Make sure your home is attractive relative to the others around it.  We are the only sale since that one in March because we had the nicest one and showed price flexibility.  It got us the next sale.  And do not get your ego tied up in any particular price.  It is a buyer's market and they don't care whether it's your home or some desperate family somewhere else in your locale.

Bottom Line.  8 months on the market.  Sale price 14% below asking.  Trend for comparable sales (last vs this one) -10% but it has been a long time since something comparable was on the market.

Oh, I Wish I Could Find Something Other than Politics to write about

This is getting boring except for the fact that the stakes are so high if the Republicans win.

So, where is this going?  This is going to be a list of things that the Republicans stand for.

A failed Presidency.  I quote Senate Minority Leader.  "There is nothing more important than making Barack Obama's presidency a failed one."  What about the health of the economy requiring coherent government policy?

Repeal the Affordable Health Care Act.  What about the right of people with pre-existing conditions to get health insurance?  What about the cost of the uninsured who cannot pay bills that get added to the cost of those who can pay bills?  What about the $2000 bill for the uninsured that gets knocked down to $300 for the insured?

Allow anyone to own an automatic weapon.  Anyone noticed who seems to suffer when a crazy person gets their hands on an automatic weapon?  Innocent children, students and random adults like judges and congresswoman.

Ignore Science.  Evolution, Global Warming, and Vaccinations are theories that are optional to be believed.  I am sorry, I had trouble typing that because if there is one thing in this world that is proven over and over again and subject to reviews, it is scientific publications.  No one has more to win by disproving scientific theories than another scientist.  Galileo was proven right eventually, but ostracized from the church because the church did not believe the earth rotated around the sun.  But the fact that the Republicans want to promote themselves as being against things that the scientific community holds as valid and well proven does not stop Republicans from saying that what they believe is truth and science is the theoretical.  This was hard for me to write as it is foreign to my core education.  I am floored that no one in the Republican Party sees a winning line by supporting evolution as a truth.

Doubt Birth Certificates.  Well if it looks real then it might not be real.  See Ignore Science. or maybe it is See A Failed Presidency.  I don't know but there is no Republican candidate right now that is going to get me to vote for them over a ticket of Donald Duck and Goofy because they know more than this group of Republicans.

Reduce Tax Revenue.  Are we going to let the social safety net fail before we raise taxes to pay for the war on terror?  Which by the way President Obama is winning!

I am sure I could come up with more but I left my punch line two paragraphs up.  4 1/2 hours to play 14 holes today because the golf course was backed up so badly.  I gave up so I could walk the dog before dark.

What a Trade! Not sure which party is better off.

Rick Perry is a Democrat turned Republican because he thought the Democrats left his views unrepresented.

I am a Democrat turned Republican turned Democrat because the Republicans core values no longer represent my views.

What has happened to the middle in terms of elected officials?

Banker Must Be Part of the Solution

A common theme running through several news items should give bankers pause on their current tactics for arriving at a new regulatory world.

The country is clearly frustrated on any number of fronts with political economic environment. From the Tea Party, to the anti-Wall-Street crowd, to the silent majority that is hunkered down and fearful for the future, anger at The Establishment is higher than at any time since the Vietnam era.

Usually, I would defend the banks from having any obligation to help with the defeasance of such anger. After all, banks are private businesses that have an obligation to maximize returns for their shareholders.

But there is an obligation to insure the safety and soundness of the system for the allocation of credit and the smooth functioning of the financial markets. That is a critical underpinning for maximizing returns to shareholders.

I have no idea what either extreme really wants, but it is easy to identify the lack of employment and the inability to seemingly make progress on the housing front as interlinked issues that are frustrating the country and holding back progress.

Add to that a lack of contrition on the part of bankers and a failure to acknowledge, that whatever might be wrong with Dodd-Frank, an improved regulatory oversight function with transparency is a necessary part of the future. The "trust us" era is over. The "culture of risk management" that was supposed to protect everything broke down at Bear Stearns, Lehman Brothers, Merrill Lynch, Countrywide, Washington Mutual, and most astonishing of all, AIG.

So fighting regulation designed to reduce systemic risk places the industry in the position of being insiders undoing things that protect the average person. And it is average people who are angry.

I know this is too simple, but there are things the industry can do to help itself:

• By all means work to improve Dodd-Frank so that it is practical, but don't undermine the fact that strong regulation is needed to prevent another 2008. Right now the only thing people hear is the Republicans saying repeal Dodd-Frank. Working behind the scenes with the regulators to fine-tune regulation is the traditional manner, but the general population believes that the bankers are trying to pull a fast one on the general public. The industry needs to be clear what parts of Dodd-Frank are good policy that will avoid a repeat of 2008, and what parts need to be improved and what can be done to improve them.
• Work to get the GSEs to relax their rule forbidding people, who are current on their mortgage, but underwater on loan/value, from refinancing the entire current balance at current interest rates. The GSE risk is reduced because the payments are more affordable while the loan/value in unchanged. It would also help disposable income and should raise economic activity on the margin.
• Work with businesses that need bank credit to grow and hire employees. Do so in a prudent manner, but also do so with an attitude that is seen more commonly in a bullish economy.
• Provide any insights possible to regulators to try and reduce the volatility in the stock market from all this computerized trading. It is draining the average person’s confidence that they can be treated fairly with their investment plan for their savings.

Originally published in the American Banker "Bank Think" on October 13th.

It's a Global Economy and We are in Adjustment

Thomas Friedman presented today in his NYT column two contesting intellectual views of where the world is.

I did not spend the time to be able to critique them from my vantage point which I will present here.  I believe that we are in a period of economic adjustment and there is only so much that the government can do to help people and there has been much that the government could do to harm people.  Unfortunately, the latter has happened and we are in this current state.

My number one (and only) son will recognize that I have held this view for some time and have urged him to be sure his career is in the global economy so he can be on the more fortunate side of things that are yet to come.

40 years ago when I graduated from high school, the U.S. economic activity was primarily focused on US domestic activity with some exports.  Multinationals were the dominant firms but in each country they primarily manufactured for that country and export only within that continent.

Since then we have had a great transition to the point where companies manufacture with fewer people in larger plants in the place where the combination of labor cost and transportation cost are lowest to the greatest point of sales.  Global trade volumes as a result have exploded and those people who have the skills to work in this global economy are in the highest demand and garner the highest wages.

The domestic economy is proportionately smaller, but unfortunately, that is where the largest number of people work and therefore wages there are depressed by the basic laws of supply and demand.  There is little the government can do to help people transition from the domestic economy to the global economy as they must do this themselves through education and networking.  Or find a skill that is in demand in the domestic economy.

The downsizing of manufacturing has been the primary location of decline in domestic incomes.  Over time, foreign incomes will rise and some of these jobs will transition back to the US to overcome unfavorable costs of transportation.  However, this will take many years to happen in size.

This is where the government did a lot of harm.  It was not apparent at the time, but cutting taxes and borrowing the war on terror, combined with an insufficiently regulated banking system, created a housing bubble that when it burst crushed the domestic economy and those who work in it.  Now the government has little flexibility to improve the domestic economy.  In fact, the only policy that would have any impact beyond marginal impact on growth is massive repair of infrastructure over a 5 to 10 year period so projects can be planned and worked on.

Where does this leave people in the domestic economy?  Well angry as shown by the Tea Party, the 99%'ers demonstrating in the major cities, and the 53%'ers on Facebook who are angry at the 99%'ers.  Republicans are mad at the Obama Administration and Democrats are mad at the Republicans for not compromising and allowing policies to improve.  Almost everybody is angry with somebody and I am not excepted from this as my regular readers know.

But I digress.  My point is to make a good living you need to be in the global economy or in a part of the domestic economy where there is demand for your skills.  The private sector has gone through an enormous contraction and no longer provides enough revenue for the public sector to continue without reducing costs.  People will need to migrate from the public sector to the private sector in the aggregate.

And lastly on this point, the cost of health care is burying the economy hurting employment in both the private and public sector.  Not implementing the Affordable Health Care Act, Not working to control Medicare and Medicaid expenditures through compromise on various issues is the biggest obstacle, after housing, to improving the domestic economy.

Someone Agrees with me

From a Bloomberg.com series of excerpts on the different nations within the boundaries of the U.S. written by Colin Woodard.

His Conclusion:

"One thing is certain: If Americans want the U.S. to continue to exist in something like its current form, they will need to respect the fundamental tenets of our unlikely union. It can’t survive if we end the separation of church and state or ban the expression (or criticism) of offensive ideas. We won’t hold together if presidents appoint political ideologues to the Supreme Court, or if party loyalists try to win elections by trying to stop people from voting. The union can’t function if national coalitions continue to use House and Senate rules to prevent decision-making on important issues."

"Other sovereign democratic states have central governments more dysfunctional than our own, but most can fall back on unifying elements we lack: common ethnicity, a shared religion or near-universal consensus on many fundamental political issues. Our constitutional order -- an arrangement negotiated among the regional cultures -- assumes and requires compromise in order to function at all."

"And the U.S. needs its central government to function cleanly, openly and efficiently because it’s one of the few important things that bind us together."

Musings on a Tuesday Night

All from the Newshour on PBS which is now in winter mode up here in Vermont.  That means I watch 48 seconds, have to flip to another channel and then back again.  I guess I should explain that we are still watching a White Plains feed rather than a Burlington feed and why that matters is a complicated story about the tilt of the planet and the satellite and where they aim Channel 13 from NYC.  Not to mention why we watch NYC TV rather than BTV TV on Direct TV.

1st.  Why aren't the Republicans renouncing the Koch Brothers for making $$$ off of trade with Iran?

2nd.  The Physics guys who won  the Nobel Prize today understand why the universe is expanding and proved it.  I hope they find other great insights and are rewarded for it.  I sure do not understand but I do try to understand.  Jason Wyman please call me.

3rd.  The people of Liberia are trying to improve their selves after a horrendous era.  I wish them success.

Let's Get Real

I will hold both Republicans and Democrats responsible for this type of unwillingness to deal with the hard reality that we need shared sacrifice to balance the budget.

Seriously, do energy companies, beer brewers and horse farms need tax breaks?

http://www.nytimes.com/2011/10/03/us/lawmakers-want-to-end-tax-breaks-if-they-can-agree-what-they-are.html?src=recg

The E.P.A. and Texas

Governor Perry wants to abolish the E.P.A.  Well then who would look after air, water and soil quality i's n the wake of yesterday's chemical fire south of Dallas?

The E.P.A. was on the scene in a matter of hours starting their gathering of facts.  Would Governor Perry prefer that each state maintain such expertise?  That is not a way in which to gain economies of scale and efficiency in government!

Where Does the War on Terror Go From Here ? Part II

Post Script:  Christiane Amanpour put out a piece indicating that what I believe cannot work until Pakistan is no longer supporting the Taliban and other Terrorist groups.  Furthermore she suggested that we might have to invade Pakistan to do so.  Well, we have shown limited ability to facilitate nation building to date and I do not believe that we should proceed down that path as Pakistan is limited in its ability to govern itself already.  It would be prohibitively expensive for the U.S. in both $$$, troops and fostering more Muslims to take us on in the form of Jihad.  Not to mention that Pakistan has nuclear weapons that it could use on us.  I am shocked that Ms. Amanpour could suggest something like this without putting some caveat in there.

News Flash

Thank you Al Hunt for this.

The Heritage Foundation, a conservative think tank, helped Mitt Romney design the current Massachusetts Health Care Framework.  Since this is the base for the Affordable Health Care Act (derisively known as "ObamaCare" by the current group of Republicans), the Heritage Foundation designed the Affordable Health Care Act.

Yet, somehow a conservative designed health care framework aimed at reducing costs is a socialist design according to today's Republicans.

Where Does the War on Terror Go From Here ?

Unfortunately, due to the fact that the Bush II administration did not pay for the War on Terror with current revenue during their time in office, then answer to this question cannot be divorced from the current fiscal dilemma.

Fortunately, the success of the military and the CIA with the blessing of the Obama administration has had great success in achieving our primary post 9/11 goal of keeping the country as safe as possible.  With yesterday's elimination of Anwar al-Awlaki and two of his key lieutenants the world is a safer place today. This now brings the near total elimination of experienced leadership to Al-Qaeda.  If only we could find Zwahari (sp?  The Egyptian hiding in Pakistan).  I note the use of drones, airpower and covert people in this success.

This does not mean we can let our guard down, but it does mean we need to reexamine what we can and cannot achieve with military might and our intelligence capabilities.  Monitoring bad guys is necessary.  Killing them is necessary since they want to kill us.  Nation building appears not to be necessary and is perhaps beyond our means both in capability and cost.

Now I do not mean we should simply abandon Iraq and Afghanistan in a matter of weeks or months.  We should leave them with as much capability to govern themselves effectively as we can, but we need to recognize what they are truly capable of becoming.  Iraq has a shot at being a Federated state with a national military.  But they will be a violent place while the politics of all this are being worked out.  We are on a path out of there that the Iraqi government approves of and I don't think we can aim for much more.  They are a sovereign state and not likely a source of terror plots upon the U.S..

Our use of drones successfully in Yemen, Pakistan and Afghanistan show that we do not need troops on the ground to fight terrorists.  So what should be our goal in Afghanistan?  It no longer is the War on Terror.  It is to somehow leave them as a functioning nation-state.

However, there is a series of article on Bloomberg that started Thursday that shows even the U.S. in not a nation-state but rather a federation of nations within the United State of America.  The key distinction between nations and states is that the former is a set of common culture and values while the latter has clear borders and the powers of government.

Well Afghanistan has multiple nations within their state and the nations do not get along.  Furthermore, Afghanistan does not have a natural source of revenues for the country except for Opium Poppies.  They do have mining potential but you need some semblance of law & order for that to be achieved.  I am not an expert on how to achieve law & order in Afghanistan but I do believe our military has the best insights in how to achieve what can be achieved.  What they need to be held accountable for what is the best way to achieve this, how much will it cost and reminded that we cannot be there for as many years as we have been in Korea.  Our troops are basically safe when in Korea.  They are not safe patrolling Afghanistan.   Leaving our troops in a position to be attacked through Acts of Terror does not constitute attacks on us in the manner that 9/11, the Underpants bomber or any of the other Al-Qaeda methods did.

We need to declare victory for the War on Terror in Afghanistan and leave in a defined manner.  Our troops safety and our national finances depend on that.

Republican Debate?

it's amazing that they call these things debates.  Debates are when two opposite points of view are argued on the facts and the viewers decide which of the debaters made the more convincing case.

The only thing the Republican candidates disagree on is which of them can pander better to an illogical belief that the budget can be balanced without raising revenues and ending the wars and that somehow we are better off with the Affordable Health Care Act being repealed.  Then people with pre-exisitng conditions can be thrown into the uninsured camp, people who do not have health insurance through their employers can be royally screwed, and the cost of medical care in this country can continue to rise.  Oh, and I forgot, we will turn retiree benefits back to the states.  Mitt actually did a good job of trashing this one, but wait, Tea Party house members don't trust the states to run gun control as they see fit so what do they trust the state's with?

If you live in NY, you know you can't trust the state with much of anything except gun control.

Who does the Tea Party Sound Like?

President Ahmadinejad of Iran.

He denies the Holocaust!  He denies Israel's right to exist in the body that authorized it!  He denies 9/11 was an Al Qaeda event!  and now for good measure, he states that the U.S. started World War II.

This is not an individual who lets facts get in the way of his statements.  It is his way or the highway.

Well, that is exactly what the Tea Party advocates.  Their way or the highway.  They will not compromise on any point.  They will not acknowledge that other views may have validity.  They will not adhere to consistent philosophy.

I am not suggesting that any Tea Party person believes that Ahmadinejad does, only that stylistically they are following the same script.

Of course, most Tea Party people want us to bomb Iran, but the U.S. cannot afford a war of that magnitude with our fiscal situation unless we were forced into it by Iran starting the shooting.

Logistics Require an Exit Strategy from Afghanistan

Those who know me professionally know that my 1st Rule of Emerging Market investing is never put a dollar in a country ending in "stan".  I have that rule because you cannot trust those countries to behave by rules that we recognize.  Unfortunately, the U.S. government cannot follow that rule because when you leave the "stan's" to their own natural outcome you end up with Al Qaeda in Afghanistan.

But Pakistan is the big problem now and we cannot invade Pakistan.  Unfortunately, we cannot keep the troops in Afghanistan without the fuel they need passing through Pakistan. Mike Mullen called out the ISI for things I have believed for some time and he has more access to hard evidence then I do.  We can't give the ISI money to shoot at our troops and we can't keep our troops in Afghanistan if ISI will not allow the fuel to be delivered to them.

It would be nice if Afghanistan military/police were ready to battle the Taliban on their own without U.S. help, but since Pakistan wants Afghanistan to be on their side, maybe the Afghan's could cut a deal with ISI and we could leave sooner rather than later.   Then we could use the money we give Pakistan to pay for drone coverage of anywhere Al Qaeda and its affiliates hide out.  The drone's are a big improvement on the cruise missiles that we missed Osama bin Ladan with in 1998.

And we could bring the troops home, call out ISI for what it is, a sponsor of state terrorism, and save a lot of $ in the effort to balance the budget.

The Art of Negotiation

I took a course in Negotiating a long time ago and learned that the first rule of negotiating is defining what you want and figuring out what the other side wants.  But for negotiating to work there has to be some overlap between the desires.  No overlap, no point in negotiating.

This is the essence of what the Constitution was designed to preserve.  A path forward for the nation to move along has to accommodate a variety of views.  The Tea Party instead just wants to lower their taxes to they have more to spend on themselves and then they have the nerve to say the Democrats are promoting Class Warfare.  The Republican assault on government through the failure to preserve budget balance through the last decade by failing to pay for the War on Terror instigated this class warfare.

Now it has become clear that the Republican Party nationwide is abandoning negotiating because they think that by stopping all progress on everything they will win reelection.  Well I can only hope that the voters wake up and vote them out, but it will take the Democrats to make that an issue.

Where does this come from?  Well we see it in Congress every week as they fail to compromise on raising revenues even from limiting tax deductions/subsidies and lowering the overall tax rate.   We see it in NY, as they fail to pass the enabling legislation to create a Health Insurance Exchange even though Republican dominated Utah has one and it works fine as a competition enabling vehicle.  And now, Jerry Brown has found in CA, that the Republicans in the legislature will not agree to anything that allows the voters to express their opinion on how to fix their miserable budget mess.

Republicans are not interested in negotiating, they are only interested in tearing down the safety net.  Democrats need to learn how to run on this point and get the voters to give them a mandate to fix our fiscal problems by addressing entitlements while preserving their important role in providing a safety net that helps those who lose their way in this market economy.

Focus on Middle Schools

NYC's schools are not the easiest to administer, and with the multiplicity of ethnic and language backgrounds, not the easiest to achieve uniform performance.

So, some time ago in an effort to reduce drop out rates, Mayor Bloomberg promoted the establishment of smaller high schools.  My cousin's daughter attended one of these and did fine and the overall program has had success.  So now the Mayor wants to do this with Middle Schools. This is a great idea because if you lose a kid in middle school, it is almost impossible to get them back in high school.  You also need good elementary schools if a kid is to perform well in middle school.  And you need parents who care.  The last one is probably the most important one in forming a good base for a kid's effort.  (Thank you RSL for teaching me that over the last 29 years.)

Last week the Economist focused on what type of school organization produces the best results around the world.  Beyond parental involvement, and teacher preparedness, one key takeaway was availability of schools in proximation to youth. Smaller, multiple schools.  and they pointed out that a such a structure stills supports the employment of teachers, it is just that they have to held accountable for their success or failure.

There is no greater problem in these times than our mass of undereducated young workers, who are only qualified to do construction and we don't have much need for more of that.  So, I applaud Mayor Bloomberg for this focus and want to say that I think school vouchers with family choice of schools is a good idea.  It will take a while for that to have improvement and the states will have to come up with a way of making sure the schools actually are doing there job or else we will have a bunch of Rick Perry's out there who think evolution is a theory and the million year old skeleton of Lucy an oddity that has no relevance to understanding science.

Inconsistency in the Republican Philosophy

The one thing I ask of anyone is consistency in belief, unless the facts change to support a new view.

But when it comes to philosophy, there should be only consistency.  You believe what you believe.

So the Republicans believe in State's Rights for Health Care and any other number of issues, including historically, gun control.

Now, the House Republicans are trying to pass a law that will allow concealed weapons with permits from Florida to be legal in any state, even if concealed weapons are illegal in that state.  Do state's have the right to control their own guns or not?

Gun Control, particularly hand guns, has had me perplexed for a number of years because there is no greater risk to Police Officers than automatic weapons and hand guns.  Yet, the NRA has fought efficient permit processes and any regulation of these weapons that have nothing to do with hunting.  Meanwhile, the Republicans who support law & order and protecting the police, endorse the NRA positions.

It is bad enough that this allows haphazard regulations across states, but at least I know as a resident of NY, that there is some effort to protect me from some random person starting to shoot a concealed handgun when I am in proximity to them.  Now, the House Republicans want to end that comfort for me and allow Florida's laws to override NY's.

Are they for State's Rights or NOT!  and if they are not, where does that put the philosophical back drop  to fight the Affordable Health Care Act

How Republicans Can Get the Mandate They Desire

This morning there is an AP article that all the Republican Presidential candidates are coming up with proposals to privatize social security in one manner or another for younger people.

Never mind that most people (including me) are frightened by the volatility in the stock market and wondering how that fits with our retirement needs.  Putting one's retirement money in the stock market is basically a gamble on where the economy is when you retire.  Economy good, stock market good, you win and have a nice retirement. Economy bad, stock market low, you lose and have whatever you can afford.  Oh, and good luck selling your home so you can downsize and free up money from that to live on. (Sorry, that one is hitting me personally right now and I am a bit bitter about it.)

So if the Republican want to balance the budget by privatizing social security and medicare (I am still wondering how they plan to privatize Medicaid, even with Pat Robertson urging Alzheimer care givers to divorce and put their spouse in a home on Medicaid?), they should run on the following platform.

Voters here is your choice for budget balance:  Republicans: Let us privatize social security and medicare and we will cut your taxes while maintaining tax subsidies for multinational companies.  Democrats:  We must raise revenues to pay for the War on Terror and keep social security and medicare viable (albeit with some changes).  If you want  #1 vote Republican,  If you believe in #2 vote for the Democrat.

That way, at least every winning candidate will know where their voters stand and there can be a reasoned discussion in Washington

Saturday Musings

Well, it has certainly been a tough week for those of us who would like to see rational discussion of serious complex issues and the only thing I can say about the special election results is "Hang on, it is going to be a wild ride through the 2012 election and I personally doubt that the 2012 election will give us a definitive direction."  If Obama wins reelection, the Republicans will still do everything to keep him a failure (and the country will suffer as it has for the last 10 years).  If the Romney wins, the Democrats will still have 40 senators and will adopt the Republican scorched earth policy of protecting whatever they can through obscure Senate procedural rules that the Republicans use so well to maintain their agenda.

On some other points briefly:

1.  I see the Republicans do not want to fund the Food Safety administration because it would be an "increase in taxes", even though the Food Industry, which would pay the fees, supports the changes and funding.  Is there no regulatory role that the Republicans will support?  It was a failure of banking regulation that put us in this dire economic situation and the fact that 99.9% of our food is safe is the result of good oversight of food production and distribution.

2.  The President's Israeli policies are blamed for the loss of the Congressional Seat in NY.  Yet, the U.S. is suffering deteriorating relationships with every Middle Eastern country other than Israel because we are seen as Israel's protector.  Now, I know that the Palestinians do not present the ideal negotiating partner, but no one short of someone willing to commit genocide can fail to see that the Palestine must come into existence as nation if peace is ever to be found.  Israel's government and its supporting majority (there is a minority that see this as I do in Israel) cannot fathom giving up the West Bank settlements for a successful peace process.  The President has simply tried to get Israel to step up to the plate and negotiate in a sincere manner.  For that he is blamed for insufficient support for Israel.  Well, somebody has to tell the Israeli's to start dealing with reality.  The Arab world is not willing to suffer intolerant autocratic governing.  That is the message of the Arab Spring.  Military control of a nation is seen as intolerant autocratic governing and that is how Israel's control of the West Bank is seen in the Arab world.  This is not a sustainable position and Israel has to be willing to allow change.  Otherwise, it will find itself (and the U.S. will as well) more isolated on this point and the risk of someone terrible happening to Israel will increase.  Israel has benefited from peace with Egypt and Jordan.  That could end if they do not find a way to allow a Palestinian state.  This is where President Obama has been cajoling Israel to go and for that he is blamed as being an insufficient supporter of Israel.  Well, the U.S. has a right to develop its own Middle East policy and not be a prisoner of Israel's policies.  We can support and protect Israel while urging them to find a path to the negotiating table.  We can urge them to give up the West Bank settlements to attain a peace treaty.  Mutual religious fervor, which is what you have between the most conservative wings of Islam and Judaism, will inevitably lead to conflict and that must be defused by both Israel and a responsible Palestinian government.  Only a government that is in charge of a Palestinian nation will have the necessary respect to make that happen.

3.  RedStateVT renewed his high deductible health care policy recently and was upset that the cost went up from $220/month to $300/month (for those who do not recognize those $ costs be aware RedState has a $25,000 deductible) despite his son getting a job and dropping off the policy.  The HealthCare company blamed the Affordable Health Care Act, so RedState did also.  Now I know my healthcare provider is losing money on our high deductible so it is entirely possible that RedState's was too and the person on the phone didn't know that or didn't care to share it.

But that is just background for the point I want to make here.  RedState paid almost his entire deductible over the last year with a series of medical needs.  Because he had access to the insured price for those services they fit within his deductible and what he could afford.  If he had not had access to the insured prices, I bet they would have been closer to $75,000 and RedState would have been complaining about that.  There is no justice in the uninsured paying one much higher price and the insured another lower price.  One of the primary goals of the Affordable Health Care Act is getting the uninsured access to insurance so everyone's cost is on the same playing field.  The Insurance Exchanges are supposed to be the market based vehicle for that to occur, but Republicans everywhere are fighting the establishment of these exchanges.  Why do the Republicans want to prevent the establishment of a market based solution to providing heath insurance for the nearly 50% of the population that no longer gets health insurance from an employer?  Nothing frustrates me more about the current state of political interaction between Republicans and Democrats than the unwillingness to allow a market based solution to develop on this point.

4.  And that readers, is why I am very pessimistic about where this country is going.  Unlike many, I do not blame the President.  The Republicans set up to make his Presidency a failure and they have been successful in domestic policy.  I note that the President has had a very successful Presidency in Foreign Policy (absent Israel, but that is not his fault).  Republicans have worked themselves into a state where they believe that the government can do nothing to help anyone in any area other than National Defense.  For those of us who have seen the government do things to help people over the last 80 years and seen the nation accomplish great things, this belief defies my logical base and is an exhibit of self interest at the expense of societal progress or even maintaining what society has accomplished since 1930.