OMB: Owner-Managed Business

Econolypse Continues: Consumer Borrowing Down In September

Sun, 8 Nov 2009 00:55:08 -0100

Worried Consumers Continue To Shun Credit : NPR

Borrowing by consumers for revolving credit, including credit cards, fell at an annual rate of 13.3 percent in September, the same as August. This category has declined for a record 12 straight months.

Borrowing for non-revolving loans, including auto loans, dropped at an annual rate of 3.7 percent in September after edging up 0.1 percent in August. The August gain reflected the surge in car sales as consumers rushed to take advantage of the government's Cash for Clunkers program.

The $14.8 billion overall decline in borrowing left total consumer credit at $2.46 trillion in September. The 7.2 percent annual rate of decline followed a 4.8 percent drop in August. The Fed's report doesn't include mortgages or other loans secured by real estate.

Since the government's whole "recovery" plan is to restimulate the excessive spending, lending, and borrowing that caused the collapse in the first place, this indicates that the so-called recovery doesn't really exist. But on a longer-term basis, this is positive news, or at least it could be.

What is not clear is whether declining borrowing is due more to consumers switching from consumption to debt-reduction and saving versus banks deciding to reduce or restrict lending activities. Over the past year or two, a number of credit card holders, for example, found that their accounts were being cancelled--not just past-due accounts, either--which reduced the amount of credit that was available for them to utilize. If the reduction in lending is the primary driver of the reduction in borrowing, then the insanity of the past twenty years, going back at least to the time of the Clinton White House, will be repeated, with similar (but even more intense) results in the future.

Please, Mr. President, listen. You cannot build a sustainable economy on consuming all your income and borrowing to fund even more consumption. Back when political conservatives still had some principles, they tried to convince President Clinton of this. (When President Bush came in and conservatives blindly supported him even though he violated the very principles they stood for, they lost those principles.) The only way to have a sustainable and growing economy is to set things back on an even keel. My suggestions:

Stop mollycoddling banks and other financial industries. The key to protecting Americans from the same sort of financial shenanigans that brought about the current recession is to make sure that banks and their executives face strong and quick financial penalties for dishonest or overly-risky acts. For financial corporations, this would be involuntary dissolution and bankruptcy. For the execs, this would be asset forfeitures, passport seizure, and getting one's picture on national television wearing a government-provided orange jumpsuits and jailhouse fraternity bracelets.

Stop protecting large out-of-area corporations (LOOACs), whether banks, for-profit entities, non-profits, or advocacy groups. As groups of "natural persons", they should have few special rights as organizations. Instead, they should get most of their rights through the cooperative actions of their investors, employees, board members, managers, donors, and other "members". For example, there is no constitutional reason why a corporation (and that means any of the above-listed entities) should be able to lobby either Congress or the executive branch, because their members already have said power. If this had been in place, Ms. Clinton and Mr. Biden could not have been influenced to take away consumers' bankruptcy protections against abusive lenders.

Loudly, publicly, and frequently, you need to make the case that buying products and services overseas means thirty year-olds living at home because they cannot get a decent-paying job. Start by requiring that all military and government purchases shall utilize domestic¹ labor, under locally-based management. This means that buying a new computer system will not be sending even more money to China, but instead into the pockets of American taxpayers.

Seeing that small, locally-owned businesses (SLOBs) create the majority of new jobs in this country, fund a small business initiative that will help potential owner-managers to obtain the skills (training, education), finances, and contacts / contracts they need to get started. This would be similar to what the SBA is doing with their SBDCs, but on a larger scale.

Restructure the tax system to make it simpler and easier to comply with.
1. For a start, get rid of ALL special-interest deductions and credits, including the mortgage interest deduction, because these distort the market, complicate the tax code, and enable deceptive financial industry companies to push otherwise inferior products with "tax advantages".
2. There are or were companies selling "tax loss" investments, so that buyers can use this loss to offset earnings from other activities. Bzzzt! Wrong answer. If you cannot reasonably expect a profit, taxpayers shouldn't subsidize your investments.
3. The mortgage interest deduction is particularly odious, because it inadvertently steers people toward bad loans by making them less likely to quibble over terms like interest rates. (The reporter should know this or should be assigned to another beat... like fashion or celebrities.)
4. This would include making sure that capital investments (buildings, computers, etc) are deducted over their realistic expected lifetimes rather than some out-of-thin-air term created via IRS rules. For a company buying standard Windows computers, for example, they are outdated in two years and nearly unusable by the fourth year.
5. The home office deduction should consider how you would utilize the space if you were not running a business there. I realize that most such deductions would be disallowed under that standard, but we want the tax code to encourage people to make realistic business decisions, not make otherwise bad decisions for the sake of tax benefits.
6. There should be three tax rates, and only three: the first $20,000 of income should be taxed at 0%. Income between $20,001 and $50,000 should be taxed at 20%. Income above $50,000 should be taxed at 35%. These rates assume zero deductions or special tax credits and a government that doesn't continue taxing its citizens to pay for the unsupervised and irresponsible investments of the financial industry.

Work toward stopping the collecting federal taxes to give to state and local governments. They have their own taxing powers. Let them use their powers to raise enough funds for their needs. This includes schools: let each state figure out how to adequately fund its schools, without relying upon Uncle Sam's wallet to do so. This primarily affects two kinds of communities. The first is the one where they don't do any extra taxing, because everything they do is covered by federal transfers. They'll have to raise taxes to cover the costs of their communities' needs. The second kind of community has an already-high tax structure, and utilizes federal transfers to prevent their citizens from slashing their budgets. This kind of community will have to decide whether to chase its citizens away or thin out its workforce.

Incidentally, has anyone else noticed telemarketers claiming to represent some unit Bank of America have been making a lot of calls to residences lately? I believe these are scammers, because I am sure that no one at BoA is stupid enough to train the public to give private financial information to callers who may or may not be whom they claim to be. I recently spent several months working out of state and our office's phones got dozens of "important information for homeowners" recorded solicitations each day. Let me make it clear: you do not know who it is on the other end of an incoming call (caller identification is of little use with telemarketers) nor do you know whether they represent the company they tell you they represent. Therefore, you should never give any kind of financial or payment information to such callers.

¹ I would assume that we would use North America (USA, Canada, Mexico, the Caribbean, Greenland, and the Central American countries) as our "domestic" zone.

IceRocket tags: econolypse, Advice To The President

Econolypse, Advice President

Change Now, To Benefit Later

Thu, 5 Nov 2009 02:43:22 -0100

Yahoo! Personal Finance: Calculators,Money Advice,Guides,& More

Cicero said something similar in his famous essay on old age, "De Senectute," from which my father often quoted. Almost everything you have in your older years is by reason of having it passed down to you by your younger self. Your habits of life and health, your home, your family, your savings. So said Cicero. (That's alliteration, friends.)

This is a powerful lesson for us all. If we want to have a decent life in our latter years, especially with Social Security and Medicare nearing collapse, we need to accumulate while we are young. We most of all need to accumulate habits of sensible living -- and especially not spending beyond our means.

The young you can save money, teach the old you how to live sensibly and train the old you in decent habits of care. The young you might want to take a few minutes every day to imagine the old you, unable to work, possibly because of health, possibly because of the economy, and plan accordingly.

We run headlong into the future, not stopping to think about the fact that whatever we save today is what we'll have to live on tomorrow. We spend hundreds or thousands of dollars per year on entertainment and electronic trinkets. And by living so lavishly, we train our next generation to expect to live like this. Instead, we should be living in the smallest home that will meet our needs, insulating it, adding a garden in the backyard and solar power in sunny areas or wind power in windy areas. We should be diverting as much as we can to savings, eschewing spending on present-day luxuries in favor of providing for ourselves in the future.

Not that we should put those funds into banks, where they'll earn two or three percent if we commit to leave the money in there for years at a time (less than that if we won't make that commitment). Instead, much of that should be placed in federal savings bonds, where we can expect the funds to be repaid with a decent interest rate and to be secured from loss up to an unlimited value, for as long as the government stays in business. Perhaps some could go into stocks, into state and local government bonds, and into investing in small, locally-owned businesses (SLOBs), the engine of the economy and source of 70 to 80% of all jobs.

It is exceedingly difficult to imagine how rough things can get, but many who were born toward the end of the "baby boom" generation or in the succeeding generations will find out that our lives of luxury were bought at the price of leaving nothing to live on in our twilight years. Further, our corporate overlords have shipped almost all our production overseas, because of the much lower labor costs. When Social Security is gone and we can't even get jobs as greeters at that Big Blue Discount Store, we will be getting what we earned.

I know what you're thinking: "The government will not allow Social Security to go down". Not that you can live comfortably on Social Security alone, anyway, but you know better. Deep inside, you know that even the AARP cannot forever resist the population curve. Thanks to our modern economy that is not based around small family-owned farms focused around subsistence farming, people are finding the cost of having and raising children to be very high. Thus most couples use birth control and other measures to keep themselves from having large families. The time is coming when we won't have enough births to replace everyone who dies. Only immigration will keep our population from declining, and even that will only continue until neighboring countries get far enough with economic modernizations that fewer of them need to leave home and they also start having smaller families as a result of the changes.

There is a "hump" of baby boomers working its way through the workforce. It is now starting to reach the far end, where death and retirement pulls people out of the workforce. The size of this hump is such that it will only be a ten or twenty years before there could be two retirees for every three workers. I mention this because that's the time when supporting retirees could take half or more of a typical worker's income, and that's not counting all the other government agencies and programs out there that will require funds. Yes, Social Security as we know it is going to go down, and all the increases in withholding rates will do little to change that. It just isn't sustainable with the inverted population curve ahead of us. (You can tell I'm not a politician. You cannot get them to admit this yet. They won't admit it until the very day they vote to replace the present SS system, but any thinking person can see that they'll have no choice about it.)

Wherever you are, this is the time to start. Instead of spending hundreds of dollars on music and movies and dining out, join Netflix, Gamefly, or similar services, to keep your costs down while you eat your home-cooked dinners. Now, Netflix doesn't support streaming to Linux devices yet, so if I ever did have time for entertainment, I wouldn't use them. But you may not spend six to ten months per year working out of state or you may be using a supported platform, so their model may be right for you.

The days of eating out more than once or twice per month, likewise, have to end. Whether it is breakfast, lunch, or dinner, you cannot afford to give away money that you should be using to provide for your future.

Unfortunately, we are not teaching our younger generation this. I found that even providing the tools and the opportunity to train oneself in skills that could help earn more income does not motivate them to use those tools and the opportunity. They'd rather spend their time posting suicidal-sounding "emo" lyrics on social networking sites and moan about not having any skills to start a band than actually study and practice a skill. That goes for any skill, including guitar-playing, computer graphics, speaking a foreign language, or shooting a basketball, once they get to the point where they have to expend effort in not-very-enjoyable practice sessions.

The main point is that you and I must change what we are doing, or we can expect to join the ranks of those sitting at busy intersections with signs saying "homeless; anything will help". We also have to get it through to our descendants that they also have to change. At the rate they are going, they'll be homeless before we will. They will then try to come home, without dealing with their spending problems first.

Think about this: you already know that your company job is in danger. You know that the management will try to give you the least possible amount of advance warning before they dump you and close their local operations. Why haven't you kept your resume updated and sent occasional copies to other employers? Why haven't those who have always dreamed of independence gone ahead and started doing business on the side when they are not at work? In general, it comes down to allocation of efforts. In order to provide for your future, you have to be active and you have to be watching for opportunities to change what you are doing--changing positions, changing employers, changing locations, changing professions, changing outside-of-work activities--and you have to be faithful in looking out for your own interests (and often those of your family and close friends).

IceRocket tags: frugality, financial responsibility

frugality, financial responsibility

Health Insurance Plan Will Bankrupt Low-Income Workers

Mon, 26 Oct 2009 01:44:34 +0000

AP sources: Bill likely to cut employer mandate - Yahoo! News

For firms with more than 50 employees, the fee could be as high as $750 multiplied by the total size of the work force if only a few workers needed federal aid, these officials said. That is a more stringent penalty than in a bill that recently cleared the Senate Finance Committee, which said companies should face penalties on a per-employee basis.

These officials also said individuals would generally be required to purchase affordable insurance if it were available, and face penalties if they defied the requirement.

We have a similar requirement with auto insurance. What happens? Low-income workers, such as those who work for fast food companies, get insurance when they need to renew their licenses or auto registration, then let it lapse, so they don't have to live in their cars or do without food. Meanwhile insurance salespeople drive their mega-trucks, towing their boats to the lake. I have read that in some states, up to one-third of drivers are uninsured. I think that the insurance industry should be forced to offer an attractive product in order to procure customers, rather than have customers forced to buy the product because of legal requirements.

In the case of health insurance, I think any competent and unbiased observer will notice that the present system came about when the insurance industry promised that they would fix things sixteen years ago, instead of allowing then-President Clinton's plan to go into effect. To mandate that everyone give money to the same band of dishonest enterprises now is to pull out the kneepads and open wide.

The President is a very bright man, so I really cannot understand why he appears to be willing to approve a bad health care plan. We all know that we need a nationwide health care plan. We all know that the current situation, brought to us by our ever-friendly insurance companies, is intolerable and unjust. But why in the world would anyone want to use the force of law to squeeze poor workers in order to further benefit that very same insurance industry? That is such a bad decision that it boggles the mind to read about Congress considering it.

Medicare/Medicaid-covered and private insurance-covered patients' care is subsidized by self-paying patients

That's not all. This plan will bankrupt a number of businesses, including locally-owned grocery stores, local multi-unit restaurants, local multi-unit gas stations, local taxi services, and the like. I agree that a business that has fifty employees really should have already provided a health care plan. In fact, I agree that a ten-employee company should consider company-provided health care as a competitive advantage and make it a priority to provide it. But I do not agree that a smaller business, even at the fifty to ninety-nine employees level, should face penalties if they decide they cannot do so at this time.

And yet, I have to admit that the Constitution does not support a federal agency as the nation's central health care provider. In fact, even Medicare and Social Security are on shakier constitutional ground than they are on financial ground. What could work instead, though, is a kind of joint-powers authority of all states, territories, and commonwealths, with federal approval. Create this nationwide health agency, financed by a tax assessment collected by the feds on behalf of the states / territories / commonwealths, and limited to some basic level of care (to be known as "BasiCare"). Inform the insurance companies that they are free to offer coverage on top of BasiCare, but that they may not compete with BasiCare itself. Yes, this could and should work.

Seizing funds from low-income workers to subsidize a failing industry will not work, and liberal leaders like Barbara Boxer should know that it will not work. Furthermore, conservative leaders also know it will not work. They all know that what we have now isn't working. In fact, do you know that Medicare/Medicaid-covered and private insurance-covered patients' care is subsidized by self-paying patients? Insurers negotiate discounts and set caps on how much they will pay. If you walk in with your VISA card, you don't have that, so you pay full-ride, some of which goes to compensate for the discounts given to those insurers. We need to replace today's failing system, but not with something based on the same central principle (insurance: charge for services you don't provide; reject or drop coverage for those who are sick, so you don't have to pay for their care) that caused failure in the first place.

IceRocket tags: Health Coverage, Congress

Big Vendors and Bad Service

Sun, 25 Oct 2009 23:51:05 +0000

Over the past several years, I have purchased a number of computers from Dell. Have you noticed how poor their service is?

Dell is the brand I buy the most. Perhaps there is a reason. It seems that every year or two, the old Dell needs replacing. However, I believe Dell provides a decent product at a decent price. However, I have learned not to buy directly from Dell, but instead to purchase through Best Buy. When you buy through Dell, in my experience, even after multiple calls to multiple people, they still cannot get your name right, nor your address. This also applies to their financial services unit. My first purchase, financed through their finance company, involved bills being sent to some address where I had never lived, followed by phone calls--but not to my number, instead they called my employer, despite the fact that all the correct information including my phone number had been given to them during the initial phone call--and it never got any better.

I had bought another computer, again from Dell, and found that the operating system load was bad. I had to reinstall it, so that the screen would have a resolution greater than 800x600 with 16 colors. I hadn't bothered to contact them about it, because I'm the tech guy. I spent my time fixing their mistake after I gave them my money.

Another time, I had bought a computer as a gift. I didn't see a restore CD, so I called to get one. After a couple of hours of going through hoops, I hung up in frustration. I wiped Windows Vista from the machine and installed Linux Mint in its place. This time, I had purchased the computer at Best Buy, because I was tired of Dell's repeated missteps when you deal with them over the phone or the Web.

I want to point out that I am not dissing Dell here. Dell is a large company, and like any large company, they make more money by depersonalizing their service. Instead of having a single person handle every step and spend as much time with you as needed, they use industrial age assembly line techniques to reduce their costs relative to their sales. It is not Dell, specifically, that is the problem. It is large, out-of-area corporations (LOOACs) in general. As a tech guy that goes through computers regularly, I need to either build my own (which I do when I want a tower-style computer) or find a local vendor that will build them for me. Unfortunately, it isn't easy to find local vendors that will custom-build laptop / notebook / netbook form-factor computers, especially if you aren't looking to install the current version of Windows on it. I'm interested in laptop / notebook computers that work out-of-the-box with GNU+Linux (specifically, Debian, Ubuntu, Mepis, Mint, Fedora, or CentOS), or with FreeBSD / DragonflyBSD / NetBSD. If you're in Southern California's Inland Empire, or High Desert areas and you build these, I'd like to hear from you.

I also want to point out that I've purchased a few HP machines, all of which have turned out to be way underpowered (the last one was a lappy with a large screen, but poor resolution). I have never contacted HP, so I don't have the slightest idea whether their service is as poor as their products. Again, I'm not dissing HP. They are trying to make a profit and get their products in as many mass market outlets as possible. They have to keep their prices down, so it is no surprise that the user experience is not great. But, hey, they were featured in the "laptop hunter" ads because of their pricing. If you actually want to enjoy what you buy, find local sellers that carry locally-produced items. You will pay more, but you'll enjoy the difference in quality and service. A small, locally-owned business (SLOB) is usually going to be a better supplier than any LOOAC.

Surprisingly, I recently received a Dell catalog in the mail. They had my name wrong, and they sent it to the wrong address. Somehow, I am supposed to be motivated to give them more of my money?

IceRocket: Big Business, LOOACs, Small Business, SLOBs

Big Business, LOOACs, Small Business, SLOBs

More Of The Same: Financial Industries' Lobbying, Contributions Threaten To Sway Congress

Sat, 17 Oct 2009 23:47:59 +0000

ALL BUSINESS: Lobbyists influence financial reform - Yahoo! News

The House Financial Services Committee is one target of financial industry lobbyists, which have given more than $6 million to its members in 2009.

In fact, 27 of that House committee's 71 members have received more than one-quarter of their total political contributions from the financial industry, according to a study by the Sunlight Foundation, a nonpartisan group that promotes government openness.

"It's wrong to draw any cause and effect from that," said committee spokesman Steven Adamske, who pointed to other actions taken by the committee this year in areas like credit-card reform and predatory lending.

We already know that one of the problems behind the economic crisis was that federal agencies intervened on the behalf of financial companies when states sought to regulate the behavior such as predatory lending. This is why a centerpiece of any so-called reform effort must be that federally-chartered and federally-regulated financial firms must be required to submit to the states' regulatory efforts.

State government is much closer to the citizens than the federal government is. States are among the first to know when a company's behavior is abusive or endangers the economy. Meanwhile, federal agencies are in far-away Washington, where lobbyists have the inside track. Therefore, the best place for most of the regulatory powers is right there in the state capitals, closer to the individual citizens and families whom financial corporations prey upon.

There is a reason why so many laws are so one-sided in favor or corporations and their interests. It isn't necessarily corruption, but it is certainly undue influence gained through lobbying and campaign cash. Washington is a cesspool of corporate interests, and the absolute worst place (well, second only to the United Nations) for vitally-needed financial industry regulations to originate. As this article illustrates well, if we want effective regulations that benefit citizens instead of large out-of-area corporations (LOOACs), we need to disperse the center of power away from the federal government and drive it closer to the citizens in the individual states.

The other thing that I disagree with is that the article agrees with the lobbyists this the constitutional right of corporations, but the constitution is silent on corporations, despite the fact that the document is very explicit about what powers are granted to the government and what rights are reserved for citizens or the states. It seems to me that this silence suggests that corporations, being groups of individuals organized for a particular purpose, should have few rights, if any, outside of those that belong to its owners, managers, and employees. Specifically, I do not believe that corporations are granted any right to lobby, contribute to campaigns, or seek redress of grievances, because their members (enumerated above) already have those rights. "Corporations" includes for-profit organizations (e.g., General Electric or Mattel), but also not-for-profit organizations (e.g., Greenpeace or the YMCA), member-benefit groups (e.g., your local credit union or the Teamsters) and political-action groups (e.g., MOVEON.org or the National Rifle Association). Names mentioned are merely examples, not singled out.

IceRocket tags: Economic Collapse, Lobbying

Economic Collapse, Lobbying

Foreclosures, Unemployment Rate Spike; Economy In Near Future Still Grim

Sat, 17 Oct 2009 06:13:33 +0000

Foreclosures rise 5 percent from summer to fall - Yahoo! News

The number of households caught up in the foreclosure crisis rose more than 5 percent from summer to fall as a federal effort to assist struggling borrowers was overwhelmed by a flood of defaults among people who lost their jobs.Unemployment is the main reason homeowners are falling into trouble. While the economy is likely out of recession, the unemployment rate ? now at a 26-year high of 9.8 percent ? isn't expected to peak until the middle of next year.

Insurers dropping Chinese drywall policies - Yahoo! News

Thousands of homeowners nationwide who bought new houses constructed from the defective building materials are finding their hopes dashed, their lives in limbo. And experts warn that cases like the Ivorys', in which insurers drop policies or send notices of non-renewal based on the presence of the Chinese drywall, will become rampant as insurance companies process the hundreds of claims currently in the pipeline.

At least three insurers have already canceled or refused to renew policies after homeowners sought their help replacing the bad wallboard. Because mortgage companies require homeowners to insure their properties, they are then at risk of foreclosure, yet no law prevents the cancellations.

Well, if you consider that around 70% of the economy is consumer spending, and consumer spending is still being crimped by existing unemployment and continuing job losses, the recession is a long way from being over. That point may come next year or the year after that. But it isn't here yet.

That is before the problems caused by substandard building materials--Chinese-made drywall--used in recent construction. Foreclosures surged, and are poised to do so again. And on top of that, insurers are about to put a number of people out of their homes.

And the government, with the help of the mainstream media, is telling us that the worst is over. It is over on Wall Street and in bank and insurance company boardrooms. For regular people, we have some more roughness ahead. Here are some clues:

The EPA is poised to regulate carbon dioxide emissions as though this necessary trace gas was a dangerous pollutant. Over the next few years, factories will have to invest in expensive and unproven "capture" equipment, as well as paying for underground disposal. Vehicles will given CO₂ quotas, raising their prices. Fuels will gain "carbon surcharges" to discourage use. Since the use of energy-consuming equipment is the primary difference between present-day society and that of the mid-1800s, you can expect some significant declines in living standards to follow. If Congress passes the climate bill, the effect will likely be even worse.

Real estate prices are still too high in major population centers, including California and Nevada on the West coast, and New York, New Jersey, and Connecticut on the East coast. When a substantial fraction of the populace can again afford to own their own dwelling units (not necessarily single-family detached housing), and I'm talking about 40% to 60% or more, without having to depend on long-term loans to complete the purchase, then housing will be in balance. But remember that many of those will also require a loosening of restrictive zoning and CCRs in order to enable the new owners to derive maximum benefit from their properties.

We're still supporting and subsidizing big corporations and financial institutions at the expense of individuals and families and the smaller, locally-owned businesses (SLOBs) that provide most people's jobs. These same big companies are shedding American jobs, replacing them with low-wage (and often low-skilled) foreign labor. This is going to continue to eat away the American middle class, leaving only managers and investors feeling good about their futures.

We are still expecting our school system to be a job-training enterprise. The function of schools has always been to give a common base set of skills that would enable employers to start from a known state and train their newly-hired employees to do the job. Unfortunately, we have given away our industrial base, and with it any need for a common skillset. Each employer needs a slightly different set of skills, different in emphasis and in the overall balance, and the schools are not set up to provide anything like this. Meanwhile, each state and federal administration commits more and more resources to centralizing and "standardizing" something that needs to be as decentralized and destandardized as possible. What this means is that high school and college graduates will be worse and worse prepared for the workplace, as jobs require less and less of "the mushy middle" and more and more specialized knowledge and skills. It means that employers have to retrain their employees, attempting to wash out all the garbage they absorbed in the school system while teaching the employees the background and basics necessary to perform the job. This is in the now, but will only get worse as time goes on.

The economic distress has motivated an unexpectedly large number of people to retire early, because they could not maintain or obtain suitable employment. This will move forward the year that Social Security starts to run a deficit and taxes must be raised to cover the difference (redeeming the bonds that Social Security's surplus has purchased over the years). Remember that the size of the population by age groups is such that we could see one retiree for every three workers. In plain terms, for every $1,000.00 in the average retiree's monthly benefit check, this would require the average employee to pay $333.33 in monthly direct and indirect taxes to support that retiree. Any other government needs will also need to be raised through taxation. It will also mean that large numbers of retirees will be drawing down their retirement funds (often heavily invested in stocks and bonds), affecting securities prices, rates of return, and even the kinds of securities that will be offered. A lot of the current twenty and thirty-somethings will see stifling taxes paired with miserable investment returns. Admittedly, this is a long, long way off, and not really germane to the near-term economic environment.

The current medical insurance plan that Congress is debating will dramatically increase prices and waits for service, without making it substantially easier for lower-income workers to partake in the medical system's benefits. Nearly everyone in the middle and lower income brackets is already stretched to near breaking. Mandating the purchase of health insurance smacks of fascism--not socialism, Mr Glenn Beck, fascism--placing government enforcement mechanisms behind the marketing efforts of selected privately-owned enterprises. Most of us who are not currently covered cannot afford to obtain coverage without taking a major hit to our lifestyles (like say, living under a bridge instead of in a domicile), but the bill will make us lawbreakers and force government agencies to pursue financial penalties and jail time against us. The other thing this will do is suck up a huge amount of our economic resources, meaning that many businesses will suffer revenue declines as people reshuffle their spending to comply with the requirements. (Don't get me wrong. I am not defending the status quo, which is quite unacceptable. However, the only sensible way to go is to remove the private insurance companies from what I call "BasiCare", rolling that level of coverage into an agency that is owned by the several state, commonwealth, and territorial governments [in order to comply with the Constitution's restrictions on federal power] and making its premiums fully taxpayer-paid.) This vast subsidy to an industry (health insurance) that has failed to live up to its promises is going to hurt the economy, even though providing health care to all is sure to bring positive economic impacts.

I am not a financial advisor, so do not change your plans based on what I write. Instead, consider what I am saying and do your own research to decide for yourself what is your most advantageous course of action. In fact, I suggest you start doing that for everything. Don't allow supposed "experts" to do your thinking. Even if the decision later turns out to be the wrong one, you should make up your own mind and make your own decisions. Whatever it is: whom to vote for, what vehicle to buy, where to live, what color pants to buy, what time your ten year-old should go to bed, and much more should be your decision and yours alone.

IceRocket tags: Economy, Econolypse

Economy, Econolypse

Quake Simulation

Fri, 2 Oct 2009 03:24:13 +0000

The following video by USGS and So Cal Earthquake Center shows shaking in the vicinity of the Cajon Pass from a major earthquake on the Southern segment of the San Andreas Fault. Remembering that the I-15 freeway and a major rail line pass through the area, connecting San Bernardino and the Los Angeles area with the Las Vegas area.

It looks like the video has been taken down. Sorry about that.

Looks like it would be a long time before traffic or freight flowed up or down that route again.

IceRocket tags: Earthquake information

Horse and Barn Dept: Papers Seek Payment Technology

Mon, 14 Sep 2009 05:28:37 +0000

Tech giants offer ideas on charging readers online by AP: Yahoo! Tech

Some of the world's most prominent technology companies are offering suggestions to publishers on how they can charge readers for news online.

IBM Corp., Microsoft Corp., Oracle Corp. and Google Inc. ? a company some newspapers blame for helping dig their financial hole ? responded to a request by the Newspaper Association of America for proposals on ways to easily charge for news on the Web.

But building the infrastructure for charging readers is one part of the equation. The other part looks more challenging: getting publishers to make the leap and stop giving news out for free on the Web.

This whole idea is based on a falsehood, that the availability of news on the Web is what is causing the newspaper industry to decline. Living in Southern California, I remember the demise of the Los Angeles Herald-Examiner in the 1980s. A lot of large papers around the country either folded or went into one of those DOJ-sanctioned cooperation agreements (where two competing papers join their printing and distribution operations into one as a way to cut costs and keep them both alive) in those days. Why? There was no public Internet in the 1980s, so why were papers folding and depending on special government forbearances?

Actually, the reason is clear. Newspaper publishing was a high-margin business in the past. This justified the high costs of publishing and distributing newspapers. Over time, new competitors, beginning with radio and television news, began to cut into those margins. Even in the 1980s, people got most of their news at no charge through the radio and television. It was a foregone conclusion that newspapers needed to dramatically cut their costs, even while improving their reporting and their coverage of local events. And, no, cutting costs isn't just about cutting reporters and editors. It means avoiding the corporate buyout (with its debt repayment headaches), getting rid of the shiny building, and very likely dumping most of the printed version, too.

In Los Angeles, there were two all-news stations, KFWB 980 AM and KNX 1070 AM, that reported the top stories every half hour. As traffic congestion picked up, they added traffic updates every ten minutes. KNXT (now KCBS) channel 2 added newscasts beginning at 4:30 PM (followed by 5 PM and 6 PM editions) MON-FRI leading up to the CBS network news. And let us not forget the 10 PM (small local stations) or 11 PM (network stations) news.

In Los Angeles, the afternoon Mirror-News was closed by the Los Angeles Times in 1962, when Hearst's Herald-Express was merged into the Examiner to form the Herald-Examiner. This was a classic shootout, with "this town's not big enough for the both of us"

So what we had was all the news we could stand via radio and television, and then, 8 hours later, the paper would come and rehash the same events. Now, in the 1980s, the quality of the writing was better (fewer misspellings). I can't tell you about the factuality of it because I really never had any personal acquaintance with the subjects covered. I do know that whenever I am acquainted with the subject matter these days, the news consistently gets important details wrong.

In addition, media bias is real and visible. Think about that the next time you read about "anti-abortion" protesters, or even worse, "anti-choice"; when you read about "climate change deniers", or whenever you read a story that uses a demeaning or pejorative term to describe those whose viewpoints the author / editor may disagree with. How trustworthy is news from an organization that intentionally "colors" or distorts the news to support a particular viewpoint?

So newspapers are failing because of:

Pricing: it costs me nothing to turn on the TV or the radio. They make enough money from advertising that I needn't pay any extra.

Timeliness: printed editions of the paper come out in the morning. I can pick it up on my way to work and hold onto it until lunch. On the other hand, I can turn on the radio and get news on the way to and from work. I can check the Web for news without leaving my desk and without violating company policy (try reading your newspaper or magazine, even one related to your work, on your employer's dime).

Cost: running those presses is very costly. In the old days, the return was worth it. These days, it isn't. An even worse cost is the debt repayment for those corporate buyouts that the industry went through over the past decade.
- Printing presses
- Distribution systems
- Big, impressive buildings -- these were great in the 1950s and 1960s, even the 1970s, as a way to show everyone how permanent your paper was.
- Corporate structures (that is, holding companies), multi-outlet ownership, and corporate buyouts
- Vanity symbols such as owning a sports team or buying "naming rights" to a stadium.

Quality: I've already mentioned the bias and quality issues. Honestly, the problem is partly that reporters don't cover enough of one subject to develop any expertise. And partly, it is laziness. It is far easier to write an article from a press release than it is to actually research your subject matter.

Generic coverage: When a paper relies on wire services for much of their content, it means that their competitors all have the exact same story available to them. You cannot charge a premium for content that is available from competitors, because people will find whomever charges the least for it. Newspapers must focus intensely on their local areas, down to the level of writing up youth sports league games and water board meetings. Either that, or they must become subject matter experts. The Wall Street Journal is able to charge and people pay for it because of its expertise in its field.

Voice of Moses attitude: Most newspapers act as though they are the voice of Moses coming down from the mountain with the true commandments. When printed newspapers were the leading medium, the letter to the editor was a primary way of getting a contrary view before an audience. These days, many news sites are not built to encourage discourse and conversation. For example, many of them place the newest comments first and do not have threading or nesting to make it easier to see what comments refer to what other comments. Then, too, newspapers tend to look down their noses at bloggers, Tweeters (microbloggers), and tumble-loggers. The papers themselves have blogs and Twitter accounts, but the papers act as though their efforts are superior to those of others. When news breaks, it no longer matters whether it come from a blog, a tweet, or a text message... get it verified and then get it posted! Be sure to give credit where credit is due

Copyright ugliness: People have always discussed what they've read in the paper. They've clipped articles to send to one another. They've used news stories as jumping off points for expressing their own opinions. If newspapers try to prevent this in the online world (or even worse, to charge for it), people will cut them out of the picture.

Neither Google, nor Yahoo!, nor Microsoft, nor Apple, nor CircLabs, nor any other company will be able to enable newspapers to again be the high-margin, high-profit businesses they used to be. As always when your profits are above average, competition and economic & social change and "substitute goods" will work together to reduce those profits back toward the mean.

IceRocket: Newspapers

Newspapers

Feeder of the Flock Passes

Mon, 14 Sep 2009 00:57:42 +0000

Borlaug, who saved millions from hunger, dies - Yahoo! News

"Norman E. Borlaug saved more lives than any man in human history," said Josette Sheeran, executive director of the U.N. World Food Program. "His heart was as big as his brilliant mind, but it was his passion and compassion that moved the world."

He was known as the father of the "green revolution," which transformed agriculture through high-yield crop varieties and other innovations, helping to more than double world food production between 1960 and 1990. Many experts credit the green revolution with averting global famine during the second half of the 20th century and saving perhaps 1 billion lives.

I never heard of this man before. I'm truly surprised that no one made a big deal out of his accomplishments while he lived. I'd say his work was very important. In fact, I would call him the "feeder of the flock" for his efforts to prevent starvation.

IceRocket: In Memory

In Memory

Hypersensitivity, False Calls of "Racism" Wrecking Country

Sun, 13 Sep 2009 22:34:01 +0000

I was recently in a discussion that led to charges that this or that celebrity was racist. After thinking about it, I realize that this is one of the main things that is destroying our country. As a Black man (not "African American"), I want our nation to have a frank discussion about race, because I believe we'll see that almost everyone, in every racial or ethnic group, wants the same basic things: a clean, safe, warm home; a job that pays more than just enough to live on; the freedom to believe what they choose and to practice those beliefs (with reasonable limits); an end to conflict over such unimportant things as one's ethnic background; and the hope that their descendants will continue to live in such a land.

My judgment: Mr. O'Reilly does not have any close Black associates. He probably gets his impressions of Black people and Black culture from television. Can you imagine going to a restaurant with Chris Tucker's character from Rush Hour? Can you imagine going to a restaurant full of Black people, expecting them to act like that character?

We need to stop imputing the worst motives to everything people do. I doubt that Mr. O'Reilly has any animus toward Black people in general, even if he dislikes the things that Rev. Jesse Jackson and Rev. Al Sharpton do and say, along with the message of the rap music industry. A lot of us who are Black dislike those same things. Does that make us racist?

I have to admit that I have wondered how someone who sat under Rev. Jeremiah Wright's teachings all those years could be anything but a racist. However, President Obama has not done anything to earn that epithet. Calling the man a racist is not productive. It does not affect the huge decisions being made in Washington at all, and it is those decisions that I believe Mr. Beck is more interested in. So, this is just my opinion, but I don't think Mr. Beck helps his cause by calling the President a racist.

If anything, I think Mr. Beck (and Mr. O'Reilly, for that matter) should sit down with President Obama, off-camera, and try to discuss their ideas. Explain to him what you would like to see in regard to health care, what you would like to see in regard to combating global warming, what you would like to see in regard to the economic problems that affect our nation, and what you would like to see in regard to the ethnic divisions that have plagued our nation.

Katrina was a devastating event. But I doubt that the aftermath proved much of anything except that we should not depend on government. Certainly, it does not prove that former President Bush doesn't care about anyone (including Black people). I like much of Kanye West's music, but I don't think that pretending that the problems in New Orleans were caused by government racism is helpful to anyone.

I say this as someone who was a semi-libertarian conservative before Bush was elected. When all the conservatives supported Bush as he went off into the wilderness of extra-Constitutional acts, they lost me. It seems to me that this racial conversation, this healing of divisions, is not advanced by endless cries of racism over small, unintentional statements. I would appeal to those who feel Mr. O'Reilly, Mr. Obama, Mr. Bush are racists to offer to be their friend, so that these individuals will have a stake in what happens to people in your group (whatever group that is). The way to end racism is to build so many bridges across racial divides that it serves no one's interests to sever them.

IceRocket tags: Racism, Racial Reconcilliation

Racism, Racial Reconcilliation