Life, liberty and the pursuit of happiness.
I was surprised to see that California is going to dramatically increase the cost of public education.
I am continuously surprised at the waste of our smartest and best educated. Many of them only trade money. Their abilities could be so much better utilized.
Personal finances, health care and physical well-being should be: 1. A personal desire and interest. 2. Available to everyone. 3. A matter of personal education, preparation and effort. 4. Cost efficient to all. 5. Protected from personal and corporate greed?
When I hear Sean Hannity say that we should save more; I agree, but then I say to myself; Where should I put that savings? If I put it into gold it helps no one. If I put it into savings in the bank, with the bank's current level of protectionism, in today's environment, there is little help in boosting the economy. If I put it in the stock or bond markets, I am subject to the fear and greed of macro economics.
Granted, with the low interest rates, the economy will probably recover, and I should be investing carefully into stocks, bonds and real estate. But I quiver at the current administration's lack of vision for public monies. They have had a golden opportunity to really provide life, liberty and the pursuit of happiness to all Americans, by competing directly with corporate fear and greed, and yet they are now backing off that position and stumbling back into a position of passivity. Where are the guts to really make a difference in our economic climate?
What are the values that will really make us great? And help us overcome the weaknesses that are still afflicting our economy, and which may saddle generations with onerous debts and burdens?
1. Realize that no one will be in a more concerned position to deal with and manage our own health care and finances, than each individual.
a. Do not turn this over to insurance companies, health care providers or the government.
2. Government needs to provide a balance between the excesses of fear and greed generated by capitalism.
a. This can be done with taxes, debts and competition.
3. Virtue and righteousness will conquer all of our economic ills.
a. We can produce more than we need.
Friday, November 20, 2009
Saturday, March 7, 2009
Circular Flow, Taxes and the Economy
For the circular flow of the economy to work efficiently, there needs to be an appropriate balance between capital and labor.
The disconnect between labor and the appropriate income for that labor is contributing to the weak economy today.
The irony of the current meltdown is that the layoffs are exacerbating the problems.
The Government bailouts of the banks and of main street America has not addressed the inefficiencies and the inequality of the appropriate income for labor.
Capital has a tendency to protect and insulate itself.
Labor gets compensated at the discretion of capital.
If capital does not efficiently compensate labor then the protectionism, inherent in capitalism, contributing to economic weakness, continues.
So how do we fix the problem?
First of all, there needs to be less politicization of our leaders.
For example, taxes should go up when the economy is doing well and when asset inflation takes place. A surplus from these taxes should go to form a rainy day fund. This fund should be balanced between equity and debt investments.
Taxes should go down when the economy weakens. The money for this should come from the investments in the rainy day fund.
Politicians have a tendency to get it backwards. They cut taxes to get elected and they raise taxes out of stress (as in the current environment). Their current policies are backwards from what it should be.
The disconnect between labor and the appropriate income for that labor is contributing to the weak economy today.
The irony of the current meltdown is that the layoffs are exacerbating the problems.
The Government bailouts of the banks and of main street America has not addressed the inefficiencies and the inequality of the appropriate income for labor.
Capital has a tendency to protect and insulate itself.
Labor gets compensated at the discretion of capital.
If capital does not efficiently compensate labor then the protectionism, inherent in capitalism, contributing to economic weakness, continues.
So how do we fix the problem?
First of all, there needs to be less politicization of our leaders.
For example, taxes should go up when the economy is doing well and when asset inflation takes place. A surplus from these taxes should go to form a rainy day fund. This fund should be balanced between equity and debt investments.
Taxes should go down when the economy weakens. The money for this should come from the investments in the rainy day fund.
Politicians have a tendency to get it backwards. They cut taxes to get elected and they raise taxes out of stress (as in the current environment). Their current policies are backwards from what it should be.
Wednesday, March 4, 2009
Banks, Capitalism and Competition
Have you ever had a banker call you up and let you know that you could receive a higher interest rate on one of their other types of accounts?
I haven't.
The variety of interest bearing accounts at banks is overwhelming. I believe that it is overwhelming to create opportunities for "maximizing bank profitability".
Does the bank find ways to attach and increase fees on all kinds of accounts and services?
Yes.
Why?
To maximize shareholder wealth.
The bank says that they need to protect their own interests. They need to stay strong in the market place to be safe for their customers and shareholders.
Capitalism promotes competition. Competition promotes excellence. Excellence maximizes our potential.
But, competition often leads to cheating, overreaching and taking advantage of others.
As one ages, competition becomes less important, and the synergies of family, unity, teamwork and community become much more important.
In our telestial world, there are limits to maximizing potential.
Monopolies created out of competition distort that potential.
The spirit of capitalism needs to change.
It might as well start with banks.
Instead of corporate America having the mandate to "maximize shareholder wealth", maybe their mandate should be to "maximize shareholder potential through honorable competition and the synergy of community".
Maybe having a national bank, owned by taxpayers(that would include corporations), competing with corporate America, would help direct us that way.
The synergy of community is at risk, too, however, with the weaknesses inherent in the competition for power within socialism.
The old adage of absolute power corrupting absolutely, unfortunately, is often true.
Just as the banker is maximizing his and his shareholder's wealth, governments and the individuals governing, often protect their own self interests.
No wonder that we are in the economic mess that we are in.
The founder's of our constitution were really right.
There needs to be a balance between, and including, private property and government.
As the American experiment continues, my hope and prayer is that we the people will be wise, compassionate, productive and honorable in our dealings. I think that many are.
It feels to me that we the people, more than ever, need to trust in God, as we are not perfect.
I love Abraham Lincoln's famous quote, "Let us have faith that right makes might, and in that faith, let us, to the end, dare to do our duty as we understand it."
I haven't.
The variety of interest bearing accounts at banks is overwhelming. I believe that it is overwhelming to create opportunities for "maximizing bank profitability".
Does the bank find ways to attach and increase fees on all kinds of accounts and services?
Yes.
Why?
To maximize shareholder wealth.
The bank says that they need to protect their own interests. They need to stay strong in the market place to be safe for their customers and shareholders.
Capitalism promotes competition. Competition promotes excellence. Excellence maximizes our potential.
But, competition often leads to cheating, overreaching and taking advantage of others.
As one ages, competition becomes less important, and the synergies of family, unity, teamwork and community become much more important.
In our telestial world, there are limits to maximizing potential.
Monopolies created out of competition distort that potential.
The spirit of capitalism needs to change.
It might as well start with banks.
Instead of corporate America having the mandate to "maximize shareholder wealth", maybe their mandate should be to "maximize shareholder potential through honorable competition and the synergy of community".
Maybe having a national bank, owned by taxpayers(that would include corporations), competing with corporate America, would help direct us that way.
The synergy of community is at risk, too, however, with the weaknesses inherent in the competition for power within socialism.
The old adage of absolute power corrupting absolutely, unfortunately, is often true.
Just as the banker is maximizing his and his shareholder's wealth, governments and the individuals governing, often protect their own self interests.
No wonder that we are in the economic mess that we are in.
The founder's of our constitution were really right.
There needs to be a balance between, and including, private property and government.
As the American experiment continues, my hope and prayer is that we the people will be wise, compassionate, productive and honorable in our dealings. I think that many are.
It feels to me that we the people, more than ever, need to trust in God, as we are not perfect.
I love Abraham Lincoln's famous quote, "Let us have faith that right makes might, and in that faith, let us, to the end, dare to do our duty as we understand it."
Rush Limbaugh and a House Divided
Is Rush Limbaugh promoting a House Divided?
The irony of Abraham Lincoln's House Divided, Republicanism and Rush Limbaugh doesn't escape me.
The irony of Abraham Lincoln's House Divided, Republicanism and Rush Limbaugh doesn't escape me.
Monday, March 2, 2009
The Market Bottom
Will 6400 on the Dow Jones be the bottom of this particular bear market?
Some technicians are speculating that 6400 might be the bottom of this bear market, because it is a Fibonacci number relative to the lows of 1987 and the peak of 2007.
WD Gann used to say that the market would square it's range. That means that there should also be a relationship between the time and price of the market's highs and lows. When and where would he say that the market low will be in this bear market?
Time-wise, there will probably be a political agenda to the market low. If I was President Obama, I would want everything to look as bad as possible right now, so that in 4 years when I'm up for reelection, things will look much better. I'd say that the markets are set up for just such a scenario.
Fundamentally, the markets could be priced just about anywhere. Putting an optimistic spin on potential earnings, there is the distinct possibility that the market is significantly undervalued. As the economy improves, 14000 on the DJIA could be reached relatively quickly.
If the current administration manages this properly, the capital gains on the taxpayer investments into corporate America should help balance the budget, allowing for some principal repayment.
So where is the market bottom and will the technicians be right?
6400 is probably a reasonable guess. The self-fulfilling prophecies of aggregate psychology could allow a bottom to be put in place at 6400 on the DJIA.
Some technicians are speculating that 6400 might be the bottom of this bear market, because it is a Fibonacci number relative to the lows of 1987 and the peak of 2007.
WD Gann used to say that the market would square it's range. That means that there should also be a relationship between the time and price of the market's highs and lows. When and where would he say that the market low will be in this bear market?
Time-wise, there will probably be a political agenda to the market low. If I was President Obama, I would want everything to look as bad as possible right now, so that in 4 years when I'm up for reelection, things will look much better. I'd say that the markets are set up for just such a scenario.
Fundamentally, the markets could be priced just about anywhere. Putting an optimistic spin on potential earnings, there is the distinct possibility that the market is significantly undervalued. As the economy improves, 14000 on the DJIA could be reached relatively quickly.
If the current administration manages this properly, the capital gains on the taxpayer investments into corporate America should help balance the budget, allowing for some principal repayment.
So where is the market bottom and will the technicians be right?
6400 is probably a reasonable guess. The self-fulfilling prophecies of aggregate psychology could allow a bottom to be put in place at 6400 on the DJIA.
Monday, February 23, 2009
How to lose $20 Trillion
How do you lose $20 Trillion?
The same assets are there. In fact, the demand on those assets is increasing, simply because of the increase in world population.
So what happened over the past two years that the wealth in the US is now about $20 Trillion less?
The simple answer is aggregate pessimism.
When markets decline, the aggregate need is to become more conservative as a method of self-preservation.
This conservatism, pessimism and protectionism contributes to lower overall aggregate demand. This causes job losses and economic contraction.
If President Obama wants to balance the budget in 4 years; in time for the next elections; he simply needs to reverse world psychology, creating progress, optimism and freedom, and the resulting wealth will balance the budget. His goal of shrinking the deficit by half or more should happen.
The same assets are there. In fact, the demand on those assets is increasing, simply because of the increase in world population.
So what happened over the past two years that the wealth in the US is now about $20 Trillion less?
The simple answer is aggregate pessimism.
When markets decline, the aggregate need is to become more conservative as a method of self-preservation.
This conservatism, pessimism and protectionism contributes to lower overall aggregate demand. This causes job losses and economic contraction.
If President Obama wants to balance the budget in 4 years; in time for the next elections; he simply needs to reverse world psychology, creating progress, optimism and freedom, and the resulting wealth will balance the budget. His goal of shrinking the deficit by half or more should happen.
Thursday, February 19, 2009
Sean Hannity - Capitalist or Socialist?
If I heard Sean Hannity correctly today, he said that he would not buy a stock (capitalism).
He said that he is putting his money into municipal bonds, treasury securities and a little bit in gold.
By default, he is saying that he doesn't know what to do with his money, so he is investing most of it with the government. They obviously know better how to spend and protect his money than he does (socialism).
Buying gold is a bet against the US dollar, and thus against America, as gold is mostly just a storehouse of value.
So he obviously thinks President Obama is going to lead us down the road of socialism. Therefore, that is where Mr. Hannity is going to invest his money.
Dear Mr. Hannity,
It appears to me that you are a capitalist in word and convenience only, because you are voting your dollars in favor of socialism.
He said that he is putting his money into municipal bonds, treasury securities and a little bit in gold.
By default, he is saying that he doesn't know what to do with his money, so he is investing most of it with the government. They obviously know better how to spend and protect his money than he does (socialism).
Buying gold is a bet against the US dollar, and thus against America, as gold is mostly just a storehouse of value.
So he obviously thinks President Obama is going to lead us down the road of socialism. Therefore, that is where Mr. Hannity is going to invest his money.
Dear Mr. Hannity,
It appears to me that you are a capitalist in word and convenience only, because you are voting your dollars in favor of socialism.
Wednesday, February 18, 2009
Economic Paradoxes
What is interesting about economic downturns is that human emotion contributes to the problems.
In other words, here are some interesting paradoxes:
As the economy worsens, the savings rate increases, causing the recession to worsen.
As the economy worsens, the tax rate goes up, causing the recession to worsen.
Government handouts can stabilize prices, but may enable low productivity.
Capitalistic greed often destabilizes prices. It often promotes protectionism, restricting wealth creation.
Note to President Obama:
To maximize the benefits of the stimulus plan:
1. Higher prices are the recipe for a larger crop.
a. But unstable pricing causes unrealistic expectations and/or fear.
2. Energy and work overcome entropy.
3. Protectionism destroys wealth. Teamwork increases wealth.
I'm glad the economic stimulus plan has been approved and signed. It appears to me that it will help, even though the long-term benefits will be suspect and slow in coming.
The paradoxes of socialistic enabling and capitalistic greed are still with us, but maybe we'll learn from this experience and be better off for it.
In other words, here are some interesting paradoxes:
As the economy worsens, the savings rate increases, causing the recession to worsen.
As the economy worsens, the tax rate goes up, causing the recession to worsen.
Government handouts can stabilize prices, but may enable low productivity.
Capitalistic greed often destabilizes prices. It often promotes protectionism, restricting wealth creation.
Note to President Obama:
To maximize the benefits of the stimulus plan:
1. Higher prices are the recipe for a larger crop.
a. But unstable pricing causes unrealistic expectations and/or fear.
2. Energy and work overcome entropy.
3. Protectionism destroys wealth. Teamwork increases wealth.
I'm glad the economic stimulus plan has been approved and signed. It appears to me that it will help, even though the long-term benefits will be suspect and slow in coming.
The paradoxes of socialistic enabling and capitalistic greed are still with us, but maybe we'll learn from this experience and be better off for it.
Wednesday, February 11, 2009
Memo to Congress:
As TARP and the Stimulus Plan get implemented, these thoughts come to mind:
1. If you give a man a fish, you feed him for a day. When you teach a man to fish, you feed him for a life time.
a. Apprenticeships, mentoring, education and innovation should be top priorities.
b. Bonuses to try and keep talent is protectionist. Protectionism will hurt the recovery.
1. If you give a man a fish, you feed him for a day. When you teach a man to fish, you feed him for a life time.
a. Apprenticeships, mentoring, education and innovation should be top priorities.
b. Bonuses to try and keep talent is protectionist. Protectionism will hurt the recovery.
Tuesday, February 10, 2009
Our Friend, Abe Lincoln
Abe Lincoln. What a remarkable man. What a wonderful President. We get to celebrate his birthday this week.
If he were here today, I think he would say, "It will be OK."
With his birthday being celebrated on Thursday of this week, I wanted to reflect on some of his reflections.
1. He often told the story of the Eastern Monarch (probably King Solomon from the Old Testament), who called all of the wise men of his kingdom together and charged them to find a statement, that he could hang prominently in his castle, which would be appropriate for any time and for any occasion. They came up with the phrase, "And this too shall pass." It consoles in times of sorrow and it chastises in times of pride.
2. He said that he was often driven to his knees, because the wisdom of all about him was insufficient for the day.
3. His favorite poem reflected on the fact that we are all going to die.
4. His compassion towards nature and men was often reflected in his actions.
If he were here today, I think he would say, "It will be OK."
With his birthday being celebrated on Thursday of this week, I wanted to reflect on some of his reflections.
1. He often told the story of the Eastern Monarch (probably King Solomon from the Old Testament), who called all of the wise men of his kingdom together and charged them to find a statement, that he could hang prominently in his castle, which would be appropriate for any time and for any occasion. They came up with the phrase, "And this too shall pass." It consoles in times of sorrow and it chastises in times of pride.
2. He said that he was often driven to his knees, because the wisdom of all about him was insufficient for the day.
3. His favorite poem reflected on the fact that we are all going to die.
4. His compassion towards nature and men was often reflected in his actions.
Saturday, February 7, 2009
TARP, Stimulus Package and other Random Thoughts
With the Stimulus Package ready to be passed next week, I've had some additional random thoughts.
The Stock Market: It still seems to me that the stock market is incredibly undervalued. It wouldn't take much to shoot the stock market up 200 or 300 percent.
What would prevent this from happening?
1. Additional greediness, fraud, fear, incompetency or dishonesty on the part of corporate and government leaders.
2. Too much inflation.
3. Laziness, idleness, dishonesty, fear and/or greediness on the part of people in general.
4. A weak US currency.
Representative Jim Matheson, from the State of Utah, voted against TARP, but in favor of the Stimulus Package. Many of our other government leaders are in the same boat. His reasoning for voting against TARP was the increase in the national debt. Since the Stimulus Package is another layer of debt, it seems inconsistent and contradictory for him to vote for one and not the other. I'd like to hear his explanation for the sudden change of heart. But, I guess that I already know the answer to my concern. He's a politician.
Should we nationalize Bank of America? Absolutely. Let the taxpayer own this institution. It seems to me, in the interest of fair competition, that it is time to nationalize some of our corporate institutions. I don't see any other way to reign in the cozy abuses of the leaders of many corporations. Corporate boards are just too cozy in justifying their own high pay packages.
The Stock Market: It still seems to me that the stock market is incredibly undervalued. It wouldn't take much to shoot the stock market up 200 or 300 percent.
What would prevent this from happening?
1. Additional greediness, fraud, fear, incompetency or dishonesty on the part of corporate and government leaders.
2. Too much inflation.
3. Laziness, idleness, dishonesty, fear and/or greediness on the part of people in general.
4. A weak US currency.
Representative Jim Matheson, from the State of Utah, voted against TARP, but in favor of the Stimulus Package. Many of our other government leaders are in the same boat. His reasoning for voting against TARP was the increase in the national debt. Since the Stimulus Package is another layer of debt, it seems inconsistent and contradictory for him to vote for one and not the other. I'd like to hear his explanation for the sudden change of heart. But, I guess that I already know the answer to my concern. He's a politician.
Should we nationalize Bank of America? Absolutely. Let the taxpayer own this institution. It seems to me, in the interest of fair competition, that it is time to nationalize some of our corporate institutions. I don't see any other way to reign in the cozy abuses of the leaders of many corporations. Corporate boards are just too cozy in justifying their own high pay packages.
Random Thoughts
Last night at 2 am I was awakened by a noise outside. On the front lawn of our cabin were 20 elk eating the grass. There was one beautiful 4 point bull elk and the rest were cows and calves. It was fun to watch them feed and then bed down, right there on the front lawn. They were gone by morning.
Also last night I watched six or seven muskrats and at least one beaver work up and down the stream that runs in front our place. Busy as a beaver is sure appropriate for these little animals.
This morning a lone bald eagle soared overhead, 4 mallard ducks circled the cabin a couple of times, and 16 small mule deer, all does and fawns, paraded in a straight line in front of our cabin.
Winter is a fun time to watch these animals as they scurry about. They must know that spring is approaching. They seemed unusually busy.
Also last night I watched six or seven muskrats and at least one beaver work up and down the stream that runs in front our place. Busy as a beaver is sure appropriate for these little animals.
This morning a lone bald eagle soared overhead, 4 mallard ducks circled the cabin a couple of times, and 16 small mule deer, all does and fawns, paraded in a straight line in front of our cabin.
Winter is a fun time to watch these animals as they scurry about. They must know that spring is approaching. They seemed unusually busy.
Tuesday, February 3, 2009
Dear President Obama:
Dear President Obama:
As the economic crisis is still getting a majority of press, the self-fulfilling prophecies of doom and gloom are permeating economic activity.
Both Republicans and Democrats are trying to get funding for their respective projects. Some of these projects will improve economic activity, but many will be a long-term drag on productive assets.
Historically, socialism has not worked very well.
Capitalism has it's own problems of fear and greed.
So what is the best solution to overcome our economic problems?
The main economic problem is job loss.
Second to job loss is the loss of aggregate income; reflected in declining real GDP from fear and protectionism.
There are several ways to solve these problems. Here are just a couple of thoughts:
I. Work: Productive work will generate wealth sufficient to cure our economic ills. Real asset wealth creation can take place by 1. The improvement of the utilization of productive assets, 2. Alternative productive usage of productive assets, and 3. Technological advances in the usage of productive assets.
II. Education: As stated above, the technological advances in the usage of productive assets will enhance wealth creation. For example, the work by scientists in such technologies as catalysis and surface chemistry, can, in some cases, nearly eliminate waste and pollution.
III. Morality: The people of the world at the time of Noah, the people of Sodom and Gomorrah, and the people of Pompeii may have all been destroyed because of immorality. The elimination of immorality in our society will lead to prosperity.
Mr. President, I applaud your efforts to unify our country. I believe that improving our roads and making them more productive will help us. I believe that a better education for all of us will help. I believe that additional infrastructure improvements, such as building dams, will help us. For example, rebuilding the Teton Dam near Pocatello, Idaho would create jobs, create energy production, improve irrigation and farming capabilities, mitigate flooding, utilize efficient surface chemistry technologies, and provide recreational opportunities.
Best wishes to you Mr. President as you tackle our economic challenges. I very much want you to succeed.
As the economic crisis is still getting a majority of press, the self-fulfilling prophecies of doom and gloom are permeating economic activity.
Both Republicans and Democrats are trying to get funding for their respective projects. Some of these projects will improve economic activity, but many will be a long-term drag on productive assets.
Historically, socialism has not worked very well.
Capitalism has it's own problems of fear and greed.
So what is the best solution to overcome our economic problems?
The main economic problem is job loss.
Second to job loss is the loss of aggregate income; reflected in declining real GDP from fear and protectionism.
There are several ways to solve these problems. Here are just a couple of thoughts:
I. Work: Productive work will generate wealth sufficient to cure our economic ills. Real asset wealth creation can take place by 1. The improvement of the utilization of productive assets, 2. Alternative productive usage of productive assets, and 3. Technological advances in the usage of productive assets.
II. Education: As stated above, the technological advances in the usage of productive assets will enhance wealth creation. For example, the work by scientists in such technologies as catalysis and surface chemistry, can, in some cases, nearly eliminate waste and pollution.
III. Morality: The people of the world at the time of Noah, the people of Sodom and Gomorrah, and the people of Pompeii may have all been destroyed because of immorality. The elimination of immorality in our society will lead to prosperity.
Mr. President, I applaud your efforts to unify our country. I believe that improving our roads and making them more productive will help us. I believe that a better education for all of us will help. I believe that additional infrastructure improvements, such as building dams, will help us. For example, rebuilding the Teton Dam near Pocatello, Idaho would create jobs, create energy production, improve irrigation and farming capabilities, mitigate flooding, utilize efficient surface chemistry technologies, and provide recreational opportunities.
Best wishes to you Mr. President as you tackle our economic challenges. I very much want you to succeed.
Wednesday, January 28, 2009
Toxic Financial Asset Dump
It seems to me that taxpayers should not be the owners of last resort of assets at above market valuations.
As a taxpayer, and as one of the lenders and owners of last resort, I want to own these so-called toxic financial assets at reasonable prices.
It does seem to me that we the people, as the lenders and owners of last resort, through government operations, should be stabilizing markets, investing in the future and providing productive goods and services.
Reflections on the future:
If I make the assumption that we are all going to be living longer.
And that we are wiser and still productive as we age.
And that competition is less important to each of us, the longer we live.
Then as productive citizens and taxpayers, being the lenders and owners of last resort, through government operations, we the people should compete with the capital markets of the world, making sure that our lending and investing maximizes wealth and long-term prosperity for ourselves and for our posterity.
As a taxpayer, and as one of the lenders and owners of last resort, I want to own these so-called toxic financial assets at reasonable prices.
It does seem to me that we the people, as the lenders and owners of last resort, through government operations, should be stabilizing markets, investing in the future and providing productive goods and services.
Reflections on the future:
If I make the assumption that we are all going to be living longer.
And that we are wiser and still productive as we age.
And that competition is less important to each of us, the longer we live.
Then as productive citizens and taxpayers, being the lenders and owners of last resort, through government operations, we the people should compete with the capital markets of the world, making sure that our lending and investing maximizes wealth and long-term prosperity for ourselves and for our posterity.
Subscribe to:
Posts (Atom)