The Political Edly

Tucson

2011-01-12T10:52:00.000-08:00

Folks-
I had a different subject in mind for my next blog post/diary entry, and in fact I did not intend to comment on the shooting of Representative Giffords in Arizona this last Saturday at all. But while driving to school this morning I heard a debate between radio show host Thom Hartmann and a representative of gunowners.com.

I absolutely must mention that I am, in fact, a gun owner. In fact, I own several. I have never pointed any of them at anyone, and hope that I never have to.

While listening to them, I felt they both basically missed the most important point: the NRA and gunowners.com both claim that people should be allowed to carry guns to protect themselves from bad people. Unfortunately for this argument, Arizona, where this tragic shooting took place, should have been the showplace for their argument. Arizona is one of three states that allow ordinary citizens to carry concealed guns without an additional background check beyond the FBI background check required to purchase the gun in the first place, or a permit from any local or state agency. Representative Giffords often carries a gun on her person (I do not know if she was carrying it when she was shot.) There was another person carrying a gun nearby, but he didn't get to the scene until the gunman had already been wrestled down by unarmed bystanders, and according to accounts, the gun-toting citizen almost shot the wrong person!

In short, having guns with extended magazines available to anyone did absolutely nothing whatsoever to make anyone at this event safer, and if that availability somehow didn't contribute to the tragedy, it easily could have.

So, the "Arizona Shooter" didn't just kill and wound all of those people, he also shot the NRA's argument full of holes.

Keith Olberman got it right

2010-08-19T11:40:00.000-07:00

Folks-
I don't get MSNBC on my satellite dish plan, but I really wish I did so I could watch Countdown. I found a link to the video I'm embedding below on an online comic I read daily, and I agree with the comic's author: This perfectly distills my thoughts on the "Ground Zero Mosque" into a roughly 10 minute monologue.

Here's the clip from Countdown. You need Flash to watch it.:

Visit msnbc.com for breaking news, world news, and news about the economy

Special thanks to Ryan Sohmer for linking to the video on his blog section of the comic Least I Could Do (Note: NSFW!)

-Ed Smallwood

What’s Happening to the Republican Party?

2010-04-08T15:37:00.000-07:00

I just went through the archives of my own political blog (http://thepoliticaledly.blogspot.com) and discovered that one blog entry I have been meaning to write for about 18 months now has never been posted. I’m now seeing what I had intended to write may have entered its end game.

Here’s a summary of my idea: I have no idea why the Republican Party has not split into several smaller parties. It’s made up of several conservative elements that, at best, have little in common: 1. There are the Fiscal/Small-Government/Anti-Tax Conservatives, who worry about the size of the government and the way it spends money. 2. There are the Anti-Abortion/Christian-Right Conservatives who worry about the morals of the country. 3. And there are the Big Business Conservatives who worry about government regulation stopping Wall St. from gambling with your money. The interesting thing to me has been that these three groups do not really have overlapping interests, and when the Republicans get into power they tend to ignore the interests of the first two kinds of Conservatives completely, even though they may voice agreement with them strenuously during campaigns. In fact, often the interests of the third kind of conservative are at total cross-purposes of the first kind (think of how Fiscal Conservatives and Big Business Conservatives each see bailouts and you will know what I am talking about.) I’ve been wondering when the first two groups would realize that the Republicans really don’t care about them at all, and are in fact simply using their votes at the ballot box to push the interests of the third group.

Well, I may be rather late with that idea. From one piece of news I saw this week, and some political signs I spotted yesterday on my way to drop my kids off at my mother’s for a few days, it seems to me that the Republican Party may in fact be in the process of splitting up.

Here’s the main news item that made me start to wonder about this:

…In recent weeks, a number of party officials — including Karl Rove, the former adviser to former President George W. Bush, and Ed Gillespie, a former chairman of the party — have set up an independent committee to help Republican candidates this fall. Top Republicans said they have advised donors to send checks not to the Republican National Committee but to the committees financing Senate and House candidates.

-Adam Nagourney, “G.O.P. Squirms as Spotlight Focuses On Its Leader,” April 6^th, 2010 The New York Times

When it becomes necessary for people to start donating to someone other than the leading committee of the party in order to get money to the candidates for political office representing that party, then you know there is trouble. And this article is dripping with it.

However, there were the political signs I saw on my way to my mom’s house yesterday that helped cement my feeling that the Republican Party is in its end-game before something big happens. I have to drive through part of the Central Valley of California to go from my Silicon Valley home up to my mom’s place up in the Sierra Mountain Range. I kept seeing these signs for former 11^th District Representative Richard Pombo for Congress (19^th District), and after I saw my second or third one I figured out why I kept looking at them. I expected them to say “Richard Pombo, Republican for Congress.” They didn’t. They state “Richard Pombo, Conservative for Congress.” (Emphasis added.) I decided to check his website today (http://www.pomboforcongress.com/home.html) to see if maybe I got it wrong, but nope, there it is—Conservative for Congress. You can’t tell from his website, but as far as I can tell from the Wikipedia entry on him, it looks like he’s running for the Republican Primary, but he’s just too embarrassed to admit it.

So here’s how I see it: The Chairman of the RNC has been embarrassing the party pretty bad lately through his comments and actions (think “Bondage Club”), and pulling “The Race Card” whenever he gets called on it. The “Tea Partiers” and the “Birthers” are pulling the party in directions it doesn’t really want to go, namely into the Financial/Small-Government and Loopy-Racist directions instead of the comfortable and very well-financed Big Business zone. The big question now is if there is a Republican candidate that can ride in on a white horse and appear to be the binding force for the party, or whether it will simply continue to break up into its constituent parts.

And that’s a big “if” no matter how you look at it.

Explanation of my NYTimes Letter

2009-12-15T15:46:00.000-08:00

Folks-
Back in October I had a letter posted in the New York Times about a bunch of people in Los Angeles who were fired by a clothing company because they could not prove that they were here legally. My letter was in favor of the firings, which could probably lead to some confusion for people, since I seem unfailingly liberal, and it has been a stereotype that liberals love illegal aliens for some reason.

Here's the deal: I don't hate immigrants. I do very much differentiate between legal and illegal immigrants. My wife is from the Philippines, and came here legally. We were married in Manila almost 14 years ago. At least in part, due to the Republicans shutting down the government several times that year, it took 13 months to bring her here to this country. That was a royal pain, but it was done legally. We later were able to bring both my mother-in-law and sister-in-law here legally. The government's metering of immigrants helps to make sure that our job market is not oversaturated. Why would this be of any interest to me? Because when the job market is oversaturated, as it is now, salaries suffer and we see companies, like the one I work for, start pressuring managers into firing experienced employees in order to hire cheaper inexperienced ones (I'm not joking.) In short, allowing unfiltered and unmetered immigration into this country, even in good times, means a kind of constant recession for our labor force, and in a recession things become depressionlike.

By setting some kind of basic employer sanctions for hiring illegal immigrants we help our economy. Yes, I know that many conservatives will claim that by lowering payroll we improve the economy, but there is absolutely no truth to that myth. The economy of the United States is NOT a Capitalist economy, it is a Consumerist economy. Without consumers buying the items sold by corporations you cannot support those corporations. No amount of capital sunk into a corporation will save it if consumers can't or won't buy it's products. And employees are the consumers.

So, illegal immigrants are saturating the jobs market and depressing the average income in the country, which decreases buying power of the consumers and contributes to a depressed economy. Got it?

In addition, there's the safety issue. My family didn't put themselves or anyone else at risk when they came here, which can't be said of illegal immigrants crossing the Sonoran Desert, many of whom die each year out there. Why would someone risk their lives to come here? Is it the health care system? Are you kidding? How about the welfare? Not eligable. Could it be the income they can get here, even depressed as it is, is still better than what they could get at home? Bingo.

So, what is the best way to keep these people from risking death and depressing our economy? Employer sanctions are the key. If nobody will hire you once you've gotten here, why bother coming? Canada does it and has no serious illegal immigrant problem. Is it possible to emulate a system that works?

Maybe, if the firings in Los Angeles are any indication.

[12-16-2009] Paul Krugman has blogged about a proposed decrease in minimum wage and it's likely effects over at the New York Times. Very timely.
-Ed Smallwood

My letter to the NYTimes got published!

2009-10-04T15:54:00.001-07:00

Folks-
For the last couple of years I've been reading the New York Times online, mostly because of economist Paul Krugman (I believe I've mentioned him a couple of times here.)

Today I finally bought a copy of the Sunday New York Times. That thing cost me almost $7 at my local grocery store!

The reason I bought it though, is because I've been writing letters to the editor for the last several months, and they finally published one of them today.

The letter was in response to an article about American Apparel being forced to fire 1,800 people who could not provide adequate documentation proving that they are eligible to work here.

I will go into my reasoning for my opinion soon, but I stand behind it.

-Edly

The Nine Most Terrifying Words in the English Language

2009-09-22T21:30:00.000-07:00

Folks-
Back in 1980, when he was running for President, Ronald Reagan said one of his most famous quotes: “The nine most terrifying words in the English language are: ‘I’m from the government and I’m here to help.’”

I don’t know why, but I’ve been thinking about that quote a whole lot in the last couple of weeks. For the life of me, I can’t understand how it was that the Democrats could lose back then against that slogan. The counter-ads simply write themselves. Imagine a series of Firefighters, Police Officers, National Guardspeople, Marines, FBI Agents, CDC Scientists, Search and Rescue Workers, and Coast Guard Officers, all one after the other coming on screen and saying: “I’m from the government and I’m here to help.” Not quite so terrifying now, is it?

Maybe it took nearly 30 years of perspective for those words to seem as silly as they do now. They really are ridiculous. Think about it, when your house is on fire, how badly do you want firefighters (all government employees) to come and extinguish the fire? Isn’t it more terrifying to think that they might not come? At the theater where I work, we have Police Reservists work there every Friday and Saturday night. When I have a belligerent drunk customer in my lobby, you bet I hope that the Government Employee is coming to help me. And they have, many times.

Really, now it seems that the nine most terrifying words in the English language are: “The Insurance Company called. Your health insurance’s been canceled.” Yeah, I know I cheated a bit back there, but that’s how you’d say it.

I think that it is well past time for our government employees to take those nine words that terrified that old man so much and wear them as a badge of pride. Why? Because they’re there to help.

So, to all of those Government Employees out there, current or retired (including both of my parents), thanks for the help!

Jon Stewart is right on

2009-04-14T10:09:00.000-07:00

I saw this one on Daily Kos:

The Daily Show With Jon Stewart

M - Th 11p / 10c

Baracknophobia - Obey

thedailyshow.com

Daily Show
Full Episodes

Economic Crisis

Political Humor

I love his summary at the end, especially this part:

I think you guys might be confusing ‘tyranny’ with losing…But when the guy you disagree with gets elected, he’s probably going to do things you disagree with…That’s not tyrrany, that’s democracy…See, now you’re in the minority. It’s supposed to taste like a s#17 taco. And by the way, when disagreement was expressed about [G.W.’s] actions when ya’ll were in power, I believe the response was: ‘Why do you hate America? Watch what you say! Love it or leave it! Suck on my truck nuts!’

I think that pretty well sums up my thoughts on the weird way the Blight have been acting lately. Guys, you lost. It’s not the end of the world. Get over it. Stop acting like children. Acting that way doesn't make people like you more. It makes them wonder what's wrong with you. That’s experience talking, by the way. If you want to be heard, you have to stop whining and start acting like adults. Even Newt Gingrich seems to be saying this, and he was very well known for using outrageous statements in his days before becoming House Speaker.

Think about it.

Going against the CW

2009-03-14T12:43:00.001-07:00

I should mention to you that I probably write three blog/diary entries for every one I post. One common reason for not posting something I’ve written is that the situation I was writing about has changed. The other common reason is because I’ve lost interest in the subject. I would guess that eventually my hard drive is going to become clogged with unfinished blog entries. I do expect to finish this entry, because it’s important to me personally. [Note: I was pretty much finished writing this entry a month ago, but because I lost my internet connection during my self-imposed editing period, I have not been able to post it until now.]

If you read my bio you’ll notice I’m a manager at a large movie theater in Silicon Valley. I’m not going to mention which one, or what chain we belong to, partly because I need the job, partly out of respect for my employer. We don’t always agree on things, sometimes by a lot. I’m hoping this is not one of those times, because this entry is all about something I did at work.

One of my personal traits that often causes me trouble is that I’m pretty good at focusing on what needs to be done now to the detriment of things that need to be done later. Short description: I procrastinate a lot. I’m especially bad about paperwork. This doesn’t necessarily make either my boss or my employees happy. It’s probably a good thing I don’t do hiring at my location, because we’d probably only have three employees and a hamster running the place if it was up to me to get the paperwork done.

My boss had to give me a deadline to get my employee reviews finished because I was procrastinating like heck about getting them done. However, I did get to thinking about it a lot.

I tend to follow the New York Times. I find that the economic coverage is quite good, especially Paul Krugman’s work. I’m sure it’s no surprise to you that we’re in an economic “downturn,” which is the tepid way of saying that the economy is going down in flames at the moment. For once (make note) I’m not going to assign blame to any politician or political party, okay. This might be the only time, so pay attention. This has affected the theater where I work in surprising ways. I wouldn’t have been more than marginally aware of them if I hadn’t been paying attention.

Several of the major theater chains have gotten together in a consortium to borrow money in order to buy digital 3D projectors for their theaters. Often banks will be more willing to lend money to consortiums, thinking there’s less of a likelihood of them defaulting on the debt if you have several of the majors involved. This hasn’t completely been the case this time. Although the banks have loaned some money to the theaters for digital 3D roll-outs, the theaters have had to cut back on the rate of installs because the banks just aren’t willing to loan as much as the theaters need for the ambitious plans they had. Dreamworks Animation head Jeffrey Katzenberg is definitely aware of this if industry emails are to be believed, and is trying to get the banks more motivated into loaning the money.

If you’ve read some of my past entries, such as the one about my financial situation (which hasn’t changed much at this time,) you’ve probably read my speculations that bankers are so freaked out about the economy that they’re just psychologically shutting down. To me it seems that they’ve traded out years of a “lend any amount of money to anyone, regardless of ability to pay!” attitude to replace it with a “don’t lend anything to anyone, regardless of who, why, or ability to pay!” attitude. They don’t seem to realize that neither attitude is going to help them. You can’t make money as a lending institution if you lend it out to people who don’t repay it, or if you refuse to lend it out to people who can. Basically, bankers, and a whole lot of other businesspeople have decided to hunker down, save as much as they possibly can, and hope for the best. They can hardly be expected to do differently, since the common wisdom (or CW) says that’s what you’re supposed to do. Professor Krugman calls this “Irving Fisher’s theory of debt deflation.” In his blog at the New York Times, he says: “As everyone tries to work off excessive debt, the combination of a contracting economy and falling prices puts everyone deeper in the hole.”

Professon Krugman describes this more fully in his editorial in the New York Times on Monday, Februrary 16^th, 2009:

And as the great American economist Irving Fisher pointed out in the 1930s, the things people and companies do when they realize they have too much debt tend to be self-defeating when everyone tries to do them at the same time. Attempts to sell assets and pay off debt deepen the plunge in asset prices, further reducing net worth. Attempts to save more translate into a collapse of consumer demand, deepening the economic slump.

The CW also says that movie theaters tend to thrive in bad economic times. People want to go out for entertainment, and if concerts and other promotions get to be too expensive, well, movies are still a good bargain. There has been some speculation that this time is different, that people will instead stay home and watch TV on their new big-screen HDTVs. I decided to analyze our box office for the month of January for both 2008 and 2009 a little while ago on a lark. In fact, I didn’t even have a reason in my mind for doing so other than I found out how easy it was to do it a few weeks ago while playing around with the company software in the office. My discovery was that, at least for our location, the CW was right. Year on year we saw a significant increase in attendance and box office gross. I feel that I can’t say exactly how much the increase was, but the percentage difference was in the low double digits. This is remarkable to me considering how much weaker I feel the movies were this January over last (that’s just my opinion.) I’m at least partly attributing the increase to having two different 3D titles that month at our theater. The industry as a whole is also reporting a record month this last January, so I know it’s not just us. Also, the increase isn’t just in gross or net income, it’s in overall attendance as well, so we know more people are coming to see movies.

So, in my opinion, and with the limited data I have at hand, the bankers are making a bad decision in deciding not to loan more money to the theater chains to install these projectors.

Reading the New York Times online has gotten me thinking a bit differently about how my actions affect things and people around me, especially the economy. As I started working on my employee reviews I found that I had to make a choice about how much of a raise I was going to give them. My opinion has been, and this is just my opinion, that if someone is doing a bad enough job that they don’t deserve a raise at all, I should fire them. That means that everyone I give a review to gets some kind of a raise. Confronted with the information above I had to then make a decision on how much of a raise to give my people.

The theater is doing pretty well right now, but that could change if the economic situation gets worse and people decide to stay home and watch TV. So, it might make sense to lower the minimum raise amount I give my employees so we can save payroll in case of a downturn in receipts later this year or next.

But what effect would giving my employees a smaller raise have?

My employees tend to be younger. Most are college age (with some of them going to college, and many not), with a few high-school age employees (some going to school, some not), and a few of them shooting for retirement. What is likely to become of the extra money my employees make?

The ones that are retirement bound are likely to save the extra money, or use it to pay off debts. That’s not such a bad thing. If they save the money in bank accounts, that means the banks have more money to work with which is likely to calm them a bit. They are just a little bit more likely to start lending money out.

Well, the ones that are high-school or college age are likely to spend that money for the most part. That money doesn’t disappear. It is mostly going to go into the local economy. That could mean that some local businesses that may be on the brink of bankruptcy, especially restaurants near the theater, may avoid that fate. Their employees could keep their jobs and continue to see movies at my theater.

That’s a big plus for my company.

So, what did I decide to do? I decided to increase the raise I gave to my employees by a lot. The employee that did the worst (which isn’t saying much since I have a good staff right now) is going to get a larger raise than I gave to my best employee last year. My best employee is getting a raise nearly twice what they got last year. And now my employees are going to have more money to plunge into the local economy. In addition I hired more employees in my department to deal with upcoming movies.

And this year the company changed from yearly reviews to biannual reviews, so in six more months I’m going to be doing this all over again. So, even if I go back to my usual raise amounts they’ll have gotten a nice one already this year. But hopefully I won’t have to, especially for the sake of the new employees I’m hiring who will be getting their first reviews at that time.

Here’s the thing, though. Even if I do this, and it has a small stimulative effect on my local economy, it’s not going to be enough to really get the economy out of the doldrums. One theater can’t stimulate the economy by itself. In order for this to have much of an effect more people will have to do the same thing. I’m sure there are a lot of middle managers out there who, like me, only have spending authority over their employee payroll and maybe some petty cash. Those of us that are looking at a good year, which should include almost all movie theater managers, should strongly think about increasing the amount that we pay our employees. If we don’t, we risk Irving Fisher’s theory coming back to bite us.

Sources:

Paul Krugman’s Editorial, Monday, Feb. 16^th, 2009: “Decade at Bernie’s”, link: http://www.nytimes.com/2009/02/16/opinion/16krugman.html?_r=1

Paul Krugman’s Blog, Sunday, Feb. 15^th, 2009: “Debt in Wartime”, link: http://krugman.blogs.nytimes.com/2009/02/15/debt-in-wartime/

Republican Hypocrisy Continues…

2009-02-28T11:19:00.000-08:00

I’m going to keep this one short. I’ve got a much longer post that will be coming soon (I was working on the longer post, but a computer failure brought it to a standstill for over a week.)

On February 25^th, the New York Times published an article on how the Democrats wanted to push the President’s agenda forward. In response, Mr. John Boehner (pronounced “BAYnor” not “BOHner”, no matter how much we wish it were), the MINORITY leader of the House, said the following at a meeting with reporters sponsored by the Christian Science Monitor:

You’ve all heard all the talk about fiscal responsibility. And based on everything I’ve seen, it looks like the era of big government is back. My questions for my Democratic colleagues are how are you going to pay for this?

My questions for Mr. Boehner are these: Why didn’t you show one tiny little bit of fiscal responsibility in the six years that the Republicans had control of all three branches of the federal government? Why did you let Mr. Bush increase the size of our government more than any previous President, even Mr. Reagan? Why didn’t you oppose the largest deficit in the history of the country, more than all previous Presidents combined? Why did you spend using credit like there was no tomorrow while decreasing revenue (taxes) for six straight years, and what did you expect the outcome to be?

And last, but not least, what makes you think you or your party have any credibility at this point?

New York Times article:

Democrats Vow Swift Action on Obama’s Agenda, By CARL HULSE

Published: February 25, 2009. Link: http://www.nytimes.com/2009/02/26/us/politics/26web-obama.html?hp

Bad Assumptions—“The Invisible Hand of the Marketplace” Edition

2009-01-29T11:28:00.000-08:00

Folks-
It’s past time to go over some of the bad assumptions that have been made that allowed some of us to make bad decisions, and why these assumptions are so wrong. I’ll tackle two of the biggest ones in this essay.

For several years now I’ve been saying that Communists and Free-Marketeers (often Neo-Cons) make the exact same fundamental error in their respective basic assumptions. Both are great theories, but completely fail in real life. They fail because they both make the assumption that everyone will do what is best for everyone all the time, instead of taking advantage of anyone, and that policing is not necessary. Communists claim that the government, once in control of the marketplace, will police itself. Oddly, Free-Marketeers claim that once the government gets out of the marketplace, the marketplace will police itself. Both are completely, and very obviously, wrong.

The big problem with a completely free market, and Adams’ “Invisible Hand of the Marketplace,” is that it requires transparency in order to work. If you have no policing mechanism, or one that is ineffective for any one of dozens of reasons, then all you need is one person near the top, or a few lower down, to be dishonest or incompetent to bring the entire system down. Just ask Bernard Madoff’s investors. Communists put that trust into the hands of just a few people in political power, which is why the Soviet Union is no longer with us. Free-Marketeers put that power into the hands of corporate heads without supervision, which is why we’re in our current economic mess, not to mention the last several economic messes, including the tech bubble, the S&L collapse, the Great Depression, and so on.

The assumption by the Free-Marketeers is that “The Invisible Hand of the Marketplace” will punish the dishonest, corrupt, or incompetent through the customers and investors that would avoid them. The reality, which any neutral observer would report, is that the people that the “Invisible Hand” is supposed to punish when they are incompetent or corrupt are the ones in control of the information that the investors and customers need to make sound decisions. Distort the information and prevent the punishment until it’s too late.

Another important assumption of the Free-Marketeers that is wrong is that increases in efficiency are always a good thing. You often hear when one company takes over another that the increase in efficiency by eliminating redundancy will improve things. Often you won’t hear what things will improve. What it really translates as is firing people that have the same job at the other company will improve the bottom line of the combined company. That’s true, it probably will. If this kind of combination happens when the economy is in a boom cycle, the effect of people losing their job can even be fairly benign. However, this isn’t always, or even usually, the case. Often the effect of people losing their job is that these people have less money to throw around to buy things—like the things their former company made, or services they provide, and decrease their participation in our economy.

Let’s just take the efficiency argument out to it’s logical conclusion. An increase in efficiency is an attempt to reduce the capital outflow while maintaining income, or in other words, you don’t pay as much out as you get paid. This sounds good at first. Companies can increase efficiency by using less material or by eliminating jobs that don’t help the company as much. The problem is as a company starts getting significantly more efficient, the economy starts to feel the burden. More money from the economy tends to go to the company, and less comes out. In fact, a company that is 100% efficient has no capital outlays, just income. It would have no employees, even executives (hence, no payroll) and would produce nothing (so no cost of manufacturing or providing a service,) while paying no taxes or dividends. This kind of company would simply suck money out of the economy without contributing anything, being a kind of economic black-hole. Conservatives would argue that Government fits this description, but a company of this kind has no employees and produces nothing, and the government does not fit either definition by a large amount. A religion might come closer, but still doesn’t hit that target (too many employees.)

This is what most companies strive for. One of our problems that we are facing is that we won’t have a sufficient proportion of our population working and participating in our economy to keep it going, meaning fewer people are buying products and services, making companies get rid of employees, causing our economy to spiral downward. As large companies consider downsizing, or whatever they are calling layoffs today, the executives need to be asking themselves the question Henry Ford (yeah, I know) asked when someone pointed out to him that he didn’t have to pay his workers so much: “Then who would buy my cars?”

The reality is that the economy works best with a certain amount of inefficiency, and the hardest part of this to explain to people is that the amount of inefficiency that economy works best with is a constantly moving target. Most people want to hear a specific number, but that number will change depending on economic circumstances, specifically the ratio of jobs to labor. If there are a lot of jobs openings going unfilled, you can have an efficiency level that is high, because most people who want to work are doing so. If there are few jobs available, a greater amount of inefficiency will help to absorb these people and keep them participating in our economy. This may involve taking pay cuts at the executive level, or giving up hours or benefits at the worker level. Flexibility is key.

So, what are the solutions to these issues? Giving money without strings attached to corporations is not going to make the situation better. The New York Times has reported several times that the original bank bailout money is being used not to free up the credit market for either homeowners or businesses, but rather to pay off debt, buy other banks, and hang onto for later. We need more than this to improve our situation. We need money to be used to create jobs and improve our country. We need oversight of our corporations. The SEC and FDIC need to be doing their jobs, and we need to be certain that the next time money is handed to these people that it goes to where it is needed by our definition, not theirs.

To constantly keep the correct efficiency level of our corporations, the best way is to pass the “Employee Free Choice Act.” Negotiations are the best way to make sure we have the right staffing level, not simple corporate decision making, because corporations will always try to reduce staffing levels and payroll. Unions prevent that, but sometimes even they get out of hand. The best way is for Unions and businesses to negotiate often, at least yearly. This may seem a waste of time, but how else are you going to make sure employment levels are optimal?

In addition we need to be investing money as a country. This is what most conservatives, whether crackpot Free-Marketeers or not, would say individuals do when they get tax breaks, while failing to acknowledge that Governments can invest as well. Most of them fail to see that putting money into infrastructure or education is the way governments invest. We all benefit when we can contact each other more easily, when we can travel faster and with less damage to our vehicles, when power sources are steady, and when someone who otherwise couldn’t afford an education gets it and invents something we need, like a new cure. We have to fix our roads, bridges, communications, and educate our people. In short, corporate aid needs to have strings attached and can’t by itself be expected to pull us out of this depression.

Higher education is a good solution both short-term and long-term to our problems. Giving people grants to stay in school in the short term reduces the labor pool, increasing wages, and in the long term increases the number of job options for those people and their wages when they attain them. It also makes them a bigger asset to the company that employs them. This is a win-win for the country.

Most importantly, we need to call those who insist on sticking to the completely free market idea crackpots, just as we do with Communists. Brand them with a catchy name, such as the “Free-Marketeers” as I have (feel free to copy me.) They have been completely discredited in the last couple of years, and we need to make sure they do not try to regain their respectability, or they will. Theirs is a simple and seductive chant. If we don’t make sure our children are aware of the dangers, then they will surely try to repeat our mistakes under the spell of these snake oil salesmen.

Odd Financial Situation I'm In

2009-01-21T11:29:00.000-08:00

Folks-
It's hard for me to believe that it's been over a month since I've updated this blog. In that time I've been entering a diary over at The Daily Kos, mostly because most of those entries fit better there, but also because more people check out my entries there. I will, for now, continue to update my blog here, but I will also continue to evaluate my using this blog from time to time.

Now, here's my most recent entry. It's also probably my most personal one.
I’m going to do something I haven’t done before. I’m going to open up about my current financial situation. The main reason I’m going to open up here is because in all of my years, I find myself in a bizarre situation that I haven’t ever been told to expect.

Whenever I’ve committed thoughts to keyboard, I’ve always held back a little bit from my private life, which I understand includes ones financial life as well. I’ve not understood why this should be the case, since politicians and celebrities seem to have so little financial privacy, but I’ve held back in order to protect those around me from some… unknown, unseen, possibly legal liabilities.

So, with no further beating around the bush, here’s the background of my situation. Like many Real Estate Agents in the last few years, I got duped into taking one of those toxic loans out in order to buy a nice new home that I should have known I wouldn’t be able to afford once the loan recast. I can’t really remember the reasons why I would do something that seems so dumb in hindsight, but I’m betting the banks are thinking the exact same thing right now, only from the other side (“Why did it seem like such a good idea to loan money to people while making such a point to make sure we knew nothing about their finances?”)

So, about a year ago, under mounting financial debt and looking at a home value about 2/3 what we paid, we looked at our choices. We could file for bankruptcy, go through credit counseling, have the counselors tell the judge that we couldn’t pay the debt, have the court auction off everything, etc., or try something else. The something else that seemed most honorable to us was to pay off our credit cards, which in hindsight seems like the best thing we could do (Citibank recently increased their lowest credit card interest rate to over 20%!) while negotiating with our mortgage company in order to see if we could change the terms of our mortgage.

I’m going to do something I really didn’t want to do at this point: Name the bank. I think you’ll understand why later. To the credit of Indymac Federal Bank, even while they were going through all of their problems, they kept working with us. At least they did until last September. They asked us to get our financial information together for them and call them back with the information. I got the information, just as they asked, and called them back at the number they gave me, and ended up leaving them a voice-mail message. Next day, I left them another one. I waited a few days, called them back, and left another voice mail message. Then I did the same the next week. The week after that, I did the same thing. No replies came. No calls, no letters, no emails, no faxes, nothing. I called again the next week. I kept this up until around the middle of October, figuring they were backlogged, and would get back to me when they had the time.

Then came mid December. I got a letter from Indymac telling me I owed them roughly half of our joint household income by January 19th, or they would start foreclosure proceedings. I called them back at the number provided…and left them a voice mail message. And another one. Same thing the next week.

I figured it was time to up-the-ante, so I contacted my Congresswoman’s office and left a voice mail for her assistant who handles these things…and got no response.

So last week, we contacted a company that supposedly will negotiate with our mortgage company for an up-front fee, and I was going to go with them until I went to the California Attorney General’s webpage and found out that it was illegal for them to take a fee from us until after they had provided the services. Yesterday I called Indymac and after leaving my voice mail message in disgust, I called the Consumer Credit Counseling Service in my area, as suggested by the AG’s office, and was surprised to hear only confusion on their end. They suggested that I try to find a branch of Indymac and go in and talk to them, even though there are no branches in my area (in fact, the nearest branch is an 8 hour drive away). That was their best suggestion after a roughly 20 second phone call. No service from them was suggested or provided to this consumer regarding credit or counseling, so I’d say they failed completely.

To me, this is a bizarre situation. In my experience, and in all of the classes I’ve taken from high-school on, I’ve been told that the person who is owed money is the one that constantly tries to contact the person who owes them money. This is completely the opposite of my current situation. I’ve been calling them for MONTHS, and I haven’t even gotten any kind of confirmation that I’ve contacted them. I feel like I’m hounding them. I imagine them cowering in some room someplace, saying “Don’t answer the door, that guy owes me money!” It’s nuts. We hear all the time that if you’re in financial trouble that the worst thing to do is to stop talking to your lenders. That’s not my problem. They have stopped talking to me, even before we could talk about a possible solution! Is this the Indymac Federal Bank who was supposed to be a model of working things out with their customers, as was reported just a few months ago?

I hate to say it, but the real feeling I have is that this problem is so large for these people that they actually have no idea how to tackle it. Indymac can’t figure out what they can do, Congress can’t figure out what they should do, and the CCCS doesn’t know who they are, what day it is, or remember how they got to work (“What’s that ringing thing? What happens if I pick this thing up?”) The problem of foreclosures has gotten so huge that they are unable to figure a way out, and have decided to simply shut-down all thought and hope the automatic systems take care of the problem, or that by some miracle, it simply vanishes; the nightmare over with the dawning of a beautiful new day. Unfortunately, the dawning morning is the dream, and the financial crisis is real.

My family and I would like to keep the house, but we have completely lost our investment in it. The question is: “Should I keep plunging money into an investment that is currently, and probably always will have a negative return on my investment?” The businessman in me says no. Any further investment is money lost, unless Indymac can reduce our payments to a reasonable level. No offense intended, but that’s the right business decision. However, this is about family. If I could work out something else, I would, but it’s going to require Indymac to at least return my phone calls. The question for them is: “Do you want to definitely lose 2/3 of your investment, or find some way to lose ¼ or less (or possibly nothing, but no more than 2/3)?” Their current actions say they would rather definitely lose big than risk losing small. They know where I live and have all of my contact phone numbers.

I would love to hear from other people. Do you have any suggestions on what to do next? Are you in or have you been in a similar situation? Do you work at Indymac and know what is happening? I’m completely at a loss, and for once in my life, I have no idea what to do next.

Republicans cut off our nose to spite unions and clean air

2008-12-12T10:23:00.000-08:00

In case you didn’t notice, the loan package that GM and Chrysler requested from the Government collapsed in negotiations last night. The reason: Republicans in the Senate objected to Union workers not immediately taking pay cuts more than they wanted to (ahead of contract negotiations) and because there were requirements to clean up tailpipe emissions. Even the current President was in favor of this loan package.

And no, I won’t call it a “bailout package.” This was a loan package. What the financial sector got was a bailout package—money without strings attached or a need to repay any of it. I am against a bailout of the auto companies. I am not against a loan to them. There is a big difference.

As a devotee of Paul Krugman (economics editorial columnist at The New York Times,) when he mentioned an article at The New Republic titled “Panic in Detroit,” I went over there and read it. Here is (to me) the most important section of that article:

One reason for the casual support for letting GM fail is the assumption that bankruptcy would be no big deal: As USA Today editorialized recently, "Bankruptcy need not mean that the company disappears." But, while it's worked out that way for the airlines, among others, it's unlikely a GM business failure would play out in the same fashion. In order to seek so-called Chapter 11 status, a distressed company must find some way to operate while the bankruptcy court keeps creditors at bay. But GM can't build cars without parts, and it can't get parts without credit. Chapter 11 companies typically get that sort of credit from something called Debtor-in-Possession (DIP) loans. But the same Wall Street meltdown that has dragged down the economy and GM sales has also dried up the DIP money GM would need to operate.

That's why many analysts and scholars believe GM would likely end up in Chapter 7 bankruptcy, which would entail total liquidation. The company would close its doors, immediately throwing more than 100,000 people out of work. And, according to experts, the damage would spread quickly. Automobile parts suppliers in the United States rely disproportionately on GM's business to stay afloat. If GM shut down, many if not all of the suppliers would soon follow. Without parts, Chrysler, Ford, and eventually foreign-owned factories in the United States would have to cease operations. From Toledo to Tuscaloosa, the nation's assembly lines could go silent, sending a chill through their local economies as the idled workers stopped spending money.

Now do you understand why it is such a bad idea to let GM and Chrysler go bankrupt? Local economies would also feel the pinch of this kind of bankruptcy as auto dealerships immediately went out of business. Other, related industries would also feel the pinch, as local auto parts stores become unable to replenish their stores of parts, restaurants and entertainment venues start seeing fewer customers, stores and shopping malls make fewer sales, and all of them start going bankrupt. Some estimates for unemployment go as high as 5 million people just for the big three going out of business.

Why? Because Republicans want to crush the Unions, and you bloody well don’t have the right to breathe clean air, dammit! Nothing personal, it’s just business if you can’t work or breathe.

The Republicans keep saying that it’s to get the pay of the Union Auto Workers at domestic manufacturers here in the U.S. down to the same level that they are being paid at foreign owned plants in the U.S., but they aren’t mentioning the massive subsidies that they gave those foreign companies to locate those plants here.

Now that I’ve made all of that clear, do you feel any better about Republicans? I sure don’t. All they’re doing is making sure I never vote for a Republican again. It’s clear that you can’t trust them to make the right decision—even if the right choice is very clear.

And last night, was a very clear night.

Sources:

“Panic in Detroit”, by Jonathan Cohn, published by The New Republic, 11-14-2008. http://www.tnr.com/politics/story.html?id=a4893b49-36df-4784-9859-2dfa3a3211bf

“$14B auto bailout dies in Senate”, by Julie Hirschfeld Davis and Ken Thomas, published by Associated Press, 12-12-2008. http://news.yahoo.com/s/ap/20081212/ap_on_go_co/congress_autos

Or: http://hosted.ap.org/dynamic/stories/C/CONGRESS_AUTOS?SITE=MOJOP&SECTION=HOME&TEMPLATE=DEFAULT

Media Opportunity in Disaster

2008-12-10T18:51:00.000-08:00

By Ed Smallwood

This is an expanded version of a comment I made in an Openthread on The Daily Kos recently. Even if you read that posting, you may want to read this blog entry to see what I’ve added and reorganized.

Editor and Publisher predicts that several cities will be without a daily newspaper by 2010. The Miami Herald may be the first to go, but papers owned by the Tribune Company could beat it to the punch with their bankruptcy filing this week.

Some of the problems that the media are having are due to the current economic situation—many companies do not have as much to spend on advertising. Some of it is due to lost viewership. This is especially true for daily newspapers, but also local nightly newscasts are feeling the pinch as well. My feeling is that much of the lost readership of newspapers and lost viewership of local news is not because of shifting media habits—that’s just the symptom. Media habits are shifting because people feel that they are not getting the information they want from traditional sources. When you put on a TV news program that gives give both sides of an issue equal time and equal say in order to seem fair and balanced (yes, I typed it), even when one side is clearly wrong, people lose respect for you. They wonder why you are wasting their time on some loony. The main stream news organizations have, to a large extent, been cowed by pressure from these loonies (not always Republicans, but often enough) to give them equal or even more access by using the argument that the media (often called “the liberal media”) is not being fair in their presentation. We need news organizations that are strong enough to actually BE fair. Being fair doesn’t mean that the person with one poorly-done study gets equal say to someone who has 500 well done studies saying the opposite thing. Sometimes being fair involves telling someone that they are a batshit loony (ask any judge).

Right now we are in the time of the biggest economic upheaval that anyone has seen since the Great Depression. I can only hope that my last statement will be proved wrong in a positive way. But, with this historic economic disaster looming, there is a historic opportunity. Remember the overused saying that the Chinese symbol for disaster combines the symbols for danger and opportunity.

For virtually my entire life (40 years next month) the main stream media has been consolidating into the hands of just a few people. Now is the first time that this can change. Many of the holding companies for these media sources are going to go bankrupt in the next year because of dropping revenue from advertising, and because they borrowed heavily against now non-existent equity in those holdings. This means that they cannot refinance their debt to meet their obligations.

This may be an opportunity for those of us who would like to see reporting of the truth in the media. I'm guessing that with expanding problems for newspapers, CNN laying off their science and tech reporting staff, the Tribune Co. filing for bankruptcy, and Sumner Redstone's problems being just examples of what will be coming, there are likely to be main stream media (MSM) outlets in many markets that will become available to buy at firesale prices, certainly the lowest prices adjusted for inflation since the rules of media ownership were relaxed.

Right now everyone is facing an economic calamity. However, the rich can find themselves at a bigger disadvantage than the rest of us in this situation. The rich are trained to leverage other people’s money, mostly banks money, by investing a little bit of their own money and borrowing the rest. We have numbers going for us. Even in a depression, there will be more people making a living wage than there are rich people. Many of those wage earners will have a little bit to give for something like this. That is a whole different kind of leverage where the rich don’t have an advantage over us.

Yes, I know that there are people reading this who will say "it can't be done" and come up with all kinds of excuses why it won't work. The advantage goes to those who can organize better, and that’s something we CAN do. You just have to pool together enough people and their money to do it. Organization skills are more important in this case than being rich, and we do have some of those organizations in place—think Unions, political groups, and liberal churches. If you are reading this than you are witnessing one way to organize this kind of media take over. It will take hard work, but I am not willing to say that the conservatives can do something we cannot. The conservative elite didn't buy all of the media outlets overnight, and I'm willing to work at it over time as well. But if we are to do it, there has probably never been a better time to start than now.

It's well past time for the mainstream media to do it's job. This may be the only opportunity in our lifetimes to wrest some of these outlets from the hands of the corporate/conservative powers that be. I would love to be watching the news on KKOS in my area instead of the fast-food preprocessed pap we're getting now. I'd love to get involved in this kind of venture. We are going to need all kinds of people to help with something like this. Who would like to join me?

-Ed “Edly” Smallwood

Sources:

Editor and Publisher Article: “’Several Cities’ Could Have No Daily Paper As Soon As 2010, Credit Rater Says” by Mark Fitzgerald, Published Dec. 3, 2008. http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003918781

Columbia Journalism Review Article: “CNN Cuts Entire Science, Tech Team” by Curtis Brainard, Published Dec. 4, 2008. http://www.cjr.org/the_observatory/cnn_cuts_entire_science_tech_t.php

AP Article: “Tribune files for bankruptcy protection” by The Associated Press, Published Dec. 8, 2008. http://news.yahoo.com/s/ap/20081208/ap_on_bi_ge/tribune

Article Update

2008-12-07T08:59:00.000-08:00

Folks-
I've got a bunch of articles you should read.

I'm sure you've heard that the U.S. posted a much higher than expected 533,000 jobs lost last month, bringing the unemployment rate to 6.7%. Now, if you count those who have left the workforce (willingly or not) the underemployment rate is 12.5%. That includes people who only have part-time jobs but want full-time jobs, as well as those who can't find jobs. More at the New York Times.

The Columbia Journalism Review notes how CNN just added to those unemployment figures by canning their entire Science and Tech reporting staff. Guess I won't be going to them for cutting edge science news.

Keeping that information in mind, the Boston Globe has a great article on what the next Great Depression might look like. People huddled around the TV's, long lines at the ER, soup kitchens getting hit hard (like they are already), Detroit a Ghost Town, and nobody willing to call it a Depression because nobody wants to define just what a Depression is. Another fact from the article: At the worst point of the Great Depression the unemployment figures (which were much more like our underemployment figures because there was no Unemployment Insurance then) was at 25%--roughly double our underemployment figures today. We may be getting there folks, even if the Boston Globe doesn't want to call it.

And with all of that, Mark Fitzgerald over at Editor and Publisher notes figures that show that many cities may be without a daily newspaper by 2010.

Randi Rhodes pointed out on her show a few days ago that druggie Limbaugh and other hot-air-wave conservatives are calling this "Obama's Recession." Yep, it's all Obama's fault for going out and getting elected. The Recession, which I might add was recently said to have started a year ago, is entirely Obama's fault, even before he's had a chance to take office. Just goes to show you how reality doesn't have any affect on them. It's always the liberal's fault.

-Edly

A Fable for Hillary

2008-12-05T17:24:00.000-08:00

I’ve been sitting on this story for about 6 years. I came up with it before the last recession, but never thought to publish it because the people who really need to hear it would have ignored it. We have a new administration getting ready to take the White House, and this fable is especially for Hillary. I hope she honestly takes it to heart and listens to the moral at the end.

There was an elegant party held in New York, and pretty much all of the ambassadors from the United Nations were in attendance. While the ambassadors were conversing in small groups, the United States ambassador spotted the ambassador of a smaller country that had been causing some trouble to U.S. interests.

The U.S. Ambassador strode right over to the ambassador of the small country, and virtually shouted out: “I’m watching you! You make one dumb move, cause any trouble here or anywhere, I’ll blow your head clean off of your neck! You do anything and I’ll make sure your country suffers for generations!” The entire room fell into an embarrassed silence. “Remember,” said the U.S. Ambassador, “I’m keeping an eye on you!”

While the room started milling about and talking about the U.S. Ambassador’s actions, the ambassador of a European country spots the ambassador of a small country causing problems for the interests of his country. Using the ruckus started by the American as cover, he sidled up next to the ambassador of the troubling country and said: “That was quite an outburst!” Pointing to an ambassador of a country neighboring the country causing trouble, he adds: “By the way, did you hear what that ambassador over there said about your mother?”

The moral of the story is that there is more than one way to skin a cat. America needs to learn how to take care of business without being forced to invade other countries.

-Ed Smallwood

Deflation redux

2008-11-20T14:34:00.000-08:00

Folks-
Paul Krugman pointed out today in his blog one reason why deflation is bad for the economy-corporate cost to borrow money goes up. Read it at his site at The New York Times.
-Edly

Economics and the Auto Industry Bailout

2008-11-19T10:50:00.000-08:00

Folks-
In case you weren't aware (and since I haven't mentioned this on my blog, why would you be?) I am becoming a devotee of Nobel Prize winning economist Paul Krugman. He writes a column over at The New York Times several times a week, and has written several books. He is a self-labeled liberal, as am I, which is somewhat rare amongst high-profile economists, ([Edited 11-21-08: as I am not.]

In addition to his column at the New York Times, he also has a blog over there that I check out several times a week. He usually posts short entries there daily, including links to other sites with good information. That is where the first of two topics I'm going to mention come from.

Johnathan Cohen over at The New Republic has published an article titled Panic in Detroit arguing that we should bail out the big three automakers. His arguments are persuasive: The big three aren't the dinosaurs they used to be--the Chevy Volt, slated to come out in 2010 is a good example. Nothing like it is scheduled to come out of Japan, or any other country on any timescale. He also argues that the big three are coming up with cars of better quality than they have in decades, and according to Consumer Reports, better than the Japanese. In addition he argues that allowing GM to go under means not that they would reorganize, that is unlikely considering their position, but rather that they would be liquidated, meaning a loss of jobs not less than 500 thousand, but probably closer to 1.5-2.5 million, increasing the jobless rate by about a third immediately, and forcing the other two automakers to go to sources outside the U.S. for parts. That's only counting the economic hit for GM and it's parts suppliers, not the surrounding businesses, such as restaurants, hospitals, etc.

I've gone on too long about the article. Check it out for yourself and see if it changes your mind about letting GM go down.

The second topic here is also from the New York Times. It seems that for the first time in recorded history, the U.S. is looking at deflation instead of inflation happening. Jack Healy writes a report titled "Consumer Price Decline Prompts Fear of Deflation." This article is shy of some background information, which I'll try to provide here.

Economists of all stripes consider deflation, the increased value of money, to be more damaging than inflation, the devaluation of a currency. In our case it means that the value of a dollar is increasing, rather than decreasing, as it usually does. Why would this be a problem? If you have a whole lot of dollars stuck in a mattress, it isn't much of one. However, if you are working for a living, or have your money saved in any kind of interest paying instrument, such as a savings account or bonds, it means you will be getting no interest paid on your money, and you are likely to take a pay cut. It also means that there is less investment in the economy. In fact, deflation usually means that the economy is shrinking significantly. In most situations the Federal Reserve could stop deflation by decreasing interest rates and loaning more money, but at this moment the interest rates are already as low as possible. Doubt me? About a month ago yields on U.S. government bonds actually went negative for a short while (interest rates of less than 0%.) An example of negative interest would be buying a bond for $100 that was only worth $97 (these numbers are illustrative only.) That might seem an odd thing to invest in, something you know is going to lose money over the long term, but investors were so worried about the money they were losing anyway that they were willing to lose a small amount over the long term instead of losing their entire fortune immediately.

Now you're ready to read the article. Go ahead and check it out.

-Edly

Problems for Democrats

2008-11-12T15:38:00.000-08:00

This diary/blog entry is for Democrats. Republicans can come back some other day.

I have some very bad news for Democrats: On November 4th we won. Big. We got an honest mandate from the voters. We won the Presidency by over 50% (compared to McCaint’s just over 45%). We have big majorities in both the House of Representatives and the Senate (okay, not Filibuster-proof, but big.) According to the AP, when asked if it was good for the country to have just the Democrats in charge of Congress and the White House, 42% said it was good, 20% said it didn’t matter, and 34% said it was bad. CNN got similar results. So 2/3 don’t care or like it. In the same AP article, 72% voiced optimism that the new President, Mr. Obama, would make the necessary changes to bring life back to our dying economy. That number includes 44% of Republican respondants.

You know what that means? Democrats don’t have any excuses anymore. Nope, none of that “The President will veto it,” no “that’s too liberal for the public,” and no “they don’t want us to do anything.” “The Republicans won’t let us do it” doesn’t work either. We have a clear mandate, clearest since Reagan got elected 28 years ago.

So all of that “We need to be bi-partisan” stuff needs to be forgotten. Why? The Republicans want to come back next Congressional term. The best way for them to do that is to make it look like we can’t get anything done. Many of you are thinking “Then we have to compromise with them!” That’s not entirely true. That attitude simply allows the Republicans to set the agenda, again.

We’ve had the majority in Congress for the last 2 years, and for that entire time we let the Republicans not only set the agenda, but have their way on everything. The Democrats were the ones who took impeachment off the table, not the Republicans. The Democrats were the ones that refused to set a timetable to get out of Iraq, not the Republicans. Why? Because we knew that Republicans wouldn’t like it if we did this. We let them set the agenda for what would be done. We let them lead.

Well, now the majority of the electorate, by a large margin, have told the Democrats that they want something done. If we let the Republicans cow us into refusing to even schedule debates on the issues then they are the ones leading the country, not us. And in the next election cycle, that is what the electorate will remember: Democrats are ineffective leaders.

So what do we do? We have a mandate to do something. With an electoral victory like the one we had, what are we waiting for? 100% of both houses, the Presidency, and all 9 seats on the Supreme Court? That’s never going to happen. We need to do what we can with what we have. We’ve been saying for a long time that we want single-payer health care. Do we? We’ve said for a long time that we need to get off of oil and onto renewable energy sources. Are we going to do that, or not? We’ve said repeatedly that we want to bring back regulations on industry, strengthen Social Security, improve the environment. Do we, or is all of that just hot-air? We’re never going to get a better chance to do any of those things than right now.

So, what of the Republicans? We don’t have a filibuster-proof majority in the Senate. Well, if the Republicans threaten to Filibuster a bill we call them on their threat. If they do it we say that they’re standing in the way of progress. Scream it to the hills! If they don’t then they look weak. If we refuse to bring up a bill that they threaten to veto then we’re the weak ones. Being bi-partisan in what we are willing to introduce gets us nothing. If the Republicans really want to be bi-partisan, let them be. If they are willing to make compromises then they are welcome to. If they do, we can do the same. If not, damn them to Hell.

The important lesson here is that we have a choice. Let’s say that whatever we do, next Congressional election cycle we lose seats. Would you rather say that we played it safe, got nothing we wanted, and lost, or say we tried? I know which one I would like to say. Carpe diem!

Reconciliation? Why?

2008-11-11T16:48:00.000-08:00

Folks-
Democrats won big on the 4th, and don’t let anyone tell you otherwise. Lots of people are trying to convince all of us that this country is “Center-Right” or slightly conservative. All you have to do is look at the results of this election to see that this is not true. Americans are pragmatic, and want what works. That is more important to Americans than party or political ideology. That is the message of this last election.

The Republicans took over our government by arguing that they were better at governing than the Democrats. They promised a better government, better economy, and a better, more moral, stronger America. In every one of these arguments they proved themselves tragically wrong.
So, now that the U.S. electorate has handed the Republicans their walking papers, what are they saying? They’re saying that the Democrats better quickly reach across the isle to them.

Say what?

Let me get this straight: For the last 20 years the Republicans have been openly lying about Democrats, from the Clinton health plan to the “Swift Boating” of John Kerry. They have been calling us “Socialists,” “Terrorists,” “Cowards,” “Traitors,” and I’m not exaggerating here. All of these terms have been used against Democrats repeatedly. Against going to war when the President openly lies about why we should? What are you, a terrorist-loving traitor? Sound familiar? Actually risked your life in Vietnam? Cowardly act, not worthy of a President. That’s what they said about Kerry. Is Obama a terrorist? Palin said we would have to decide ourselves. We did.

While the Republicans were in control of all three branches of government, about the only time they reached across the isle was to whack Democrats with a stick. Remember when they wanted to eliminate the Filibuster because the Democrats didn’t want certain Judicial appointments? Now THAT was bi-partisan. Really reached across that isle and hit us good there.

I have to be honest here: I feel absolutely no need to reach out to Republicans right now. They screwed up this country in more ways than I can mention here. They trashed our economy with their laissez-faire economics. They started a war with complete, bald-faced lies when we should have been paying attention elsewhere. They allowed thousands of people to die in preventable natural disasters and tried to convince us that they couldn’t have foreseen them coming when it was obvious to everyone what was going to happen.

They need to apologize to us. They need to reach across to us. I don't just mean Democrats, I mean everyone.

They must realize that cooperation is not the same as capitulation—they must give something up to cooperate. It’s not about them always winning. Reconciliation requires two sides, and they aren’t ready for it. Until they realize this, it can’t happen. And I see no reason to try to force it.

Updating tomorrow

2008-11-06T17:11:00.000-08:00

Folks-
I'm still celebrating the Presidential Election Victory, and being disappointed over the loss on Prop 8. I'll update the site with another post soon.

In the meantime, here are a couple of articles you may want to read. I'll be commenting on them later.

The first is on how there is an upcoming problem with Private Equity Firms: http://www.nytimes.com/2008/11/03/business/economy/03equity.html?hp

The second is on the damage Bush and his cronies are causing in their final days in office:

http://www.nytimes.com/2008/11/04/opinion/04tue1.html?em

Enjoy!

-Edly

The game is on

2008-11-04T16:32:00.000-08:00

Folks-

All of the pre-game work means nothing. By tomorrow we will almost certainly know who won this election. I am not predicting an outcome like in 2000, when we didn't know who won for over a month. I believe we will know who our President-Elect is when we get up tomorrow morning.

All we can do is pray for our country. I am praying that Obama wins. If you haven't already voted, please do.

-Edly

What we need to do NEXT Part 4

2008-11-02T14:22:00.000-08:00

This is the fourth part of my massive essay, "What we need to do NEXT." For the previous three parts, read them below.

Education

In the 1960’s, the average college graduate had little debt when given their diploma. Most of their education was funded through grants or the GI Bill. Now, most students graduate with a minimum of $30,000 in debt, usually more. Most of the funds spent on tuition and books come from loans. This needs to end. With credit becoming scarcer, we need to start funding our higher education. This is where fortunes are started, through education. Businesses cannot produce good products without well educated people. Government doesn’t work well without well educated people. Money spent on education is not lost, it is invested, and we need to start treating it this way, instead of treating it like it’s money thrown down a well.

We need to support our troops by giving them a free education. Honestly, how can we say that we are supporting them when in fact all of the funds they are getting for education right now are a part of their pay? We need to do more for those who would sacrifice themselves for us.

Money paid into colleges also helps our country by supporting basic research. The more basic research that is done, the more our industry benefits and the more jobs that are created.

For primary education, we need to start the reforms by paying our teachers better. The starting pay for an elementary school teacher in California is about $24,000. That’s nothing. Two teachers together aren’t making $50,000 per year. That needs to be changed dramatically. You absolutely can’t get a first-rate education from someone who can’t survive on their pay, let alone pay off their college debt. It’s scandalous.

After doing this, we need to reform our textbooks, and how they are written and chosen. History text books are written as propaganda pieces, and chosen based on how much they project the way we wish our country had been, not on actual history. That’s nuts. Let our kids know what has happened in our country, or they might make some kind of dumb mistake, like allowing a depression to happen again.

None of this is optional. If we refuse to do these reforms we have in effect decided that our country will fade away into history.

What we need to do NEXT Part 3

2008-11-01T15:58:00.000-07:00

Folks-
This is the third part of my work. This part focuses on Energy and the Environment, areas being neglected as the economy unravels.

Energy and The Environment
In the economic crisis that has finally gotten covered by the press in the last couple of months, we have somehow forgotten the environment. Global warming isn’t going away. Pollution isn’t going away either. For the last 8 years or more, both of these issues have gotten short-shrift from the Republicans. We need to get back on-track on these subjects.

The first thing we need to do is cut tax rates for green power companies. Specifically those that build and use wind turbines and solar power. Current tax breaks for these companies are set to expire this year, right when we need them the most, and Congress has yet to extend them. Not good.

Next we need to invest in research on these areas so we can introduce our technologies to the rest of the world. If we fail to do this, we will be buying these technologies from other countries instead of exporting them. The more of these companies that are producing green energy for us, the better. Not only will it create jobs here, but it will bring back wealth that we have been shipping out to other countries by the shipload. And we need it back, badly.

In my opinion, the Pickens Plan isn’t perfect, but it’s a really good start. Nobody in political power has come up with anything better that could be implemented. I strongly recommend we adopt it in some form.

I remember a study that was done sometime before I was born that came to the conclusion that nuclear power plants didn’t make economic sense. It cost more in energy to build and remove a nuclear power plant than the plant produced in its useful life. These power plants are being used for longer than was expected at that time, and for longer duty-cycles without incident. It’s time we funded a new study on this important question, and if the answer ends up being that the energy cost of building, fueling, and decommissioning these plants is still larger than the energy produced in it’s useful life, we need to bury this technology once and for all instead of bringing it up over-and-over again. If, however, it turns out that newer information shows the opposite, that a nuclear power plant produces a net-gain in energy, then we need to carefully implement them in a safe and secure manner. Either way, the debate needs to end.

Earlier this year we had a wake-up call over Peak Oil. Speculators pulled their money out of financial stocks and put it into oil futures and ran up the cost of oil, giving us a picture of what the world will look like in a few years if we don’t start cutting our oil usage. We really need to get off of oil as a fuel as quickly as possible. Not just because we use so much oil as fuel, but also because oil is our only feedstock for plastics and the only source of jet fuel. There is no biological alternative for either of those yet. Once oil is gone, so are single use medical items and jet airplane flights, including passenger planes and military planes. Don’t like sharing needles? You may not have a choice in the future. Unless we stop using oil and move over to alternatives, our future may start looking more like the past.

One of the best things we can do to fight the problem of peak oil is to stop burning so much of it for transportation. We can stop using nearly as much oil as we are by converting our fleet of personal cars to electric with diesel powered generators that kick in for longer trips. The conversion of our fleet to electric should be done by giving auto makers tax breaks and research dollars to move over to electric. Heavier taxes should be imposed on purely gas driven cars, which in my mind includes Toyota’s Prius and all other hybrids on the market today. Giving owners of electric cars breaks on solar power installations would also help get people to buy these vehicles.

Other things we can do to reduce our reliance on oil as fuel would be to start designing our cities so that cars were less necessary. Urban sprawl and suburbs are the real reasons most people have cars. If you live a long distance from where you work, a car becomes the best way to get to work each day. Design cities so that they are more compact, so that there are well defined living, working, retail, and industrial areas, and suddenly public transportation, bicycles, and walking become viable alternatives.

This also has the interesting side effect of stopping the conversion of farmland to paved-over housing subdivisions. I’ve been watching this happen to Silicon Valley (formerly the Valley of Heart’s Delight) all of my life. I live on a side street of Blossom Hill Road, named so because it used to run through orchards. Now it runs almost continuously through retail and housing areas from one end to the other, a run of more than 10 miles. I sense that we will probably want most of that farmland back at some point. It would be better not to pave it over in the first place.

What we need to do NEXT Part 2

2008-10-31T12:12:00.000-07:00

This is the second part in a series. For the introduction and first part, read yesterday's entry. By the way, normally I include end notes for each individual blog post. This time I'm going to create end notes for the entire series. I should have mentioned in the first post that these suggestions are being posted in no particular order.

Wage Disparity

Now, once we have taken care of the coming credit crunches, we need to deal with a serious problem of income disparity. Are you aware that in 2005 the average CEO made over 821 times what the lowest paid employee that worked for him or her made? Ten years earlier it was about 275 times. So, if the average company has an employee making California’s minimum wage of $8 per hour, then the CEO of said average company was probably making around $6,568 per hour, and making around $13 Million per year (assuming 40 hour work weeks and 50 weeks per year.) That compares to the roughly $16,000 that the employee made. So the CEO made in less than 3 hours what his or her lowest paid employee made in a year.

I’m going to be honest. I really don’t believe that any CEO is worth that much. I might have a different opinion of this if executive pay rates went up only while a company was doing well. This has not been the case. Studies show that executive pay rates go up regardless of how a company is doing. Executive pay boards, which are used at most companies to determine how much company executives should be paid, are usually made up of CEOs at other companies. Imagine if you could have your friends decide how much you should get paid. That is exactly what these CEOs are doing, and it explains why executive pay can go up even when the CEO of the company is running the company straight into the ground.

So, how do we tackle this? Do we increase minimum wage to $400 per hour? Oh, heck no! That really would cause inflation and monetary devaluation. Let’s not go there!

I have a much better way of dealing with this.

Let me sketch this out instead of giving a detailed plan. You’ll see why later.

Instead of setting the minimum an employee can make, we set up a maximum disparity between the lowest paid employee and the highest paid employee or executive at a company. If the company goes over that multiple, then it forfeits all tax deductions.

Wait, what would be the outcome of that? Well, some companies would choose to increase the minimum pay of their employees to allow the executives to keep being paid well. That would increase the disposable income of those employees and increase the tax base simultaneously. Some companies would choose to pay their executives less, leaving more money for the company to invest in expansion, diversifying their product lines, or research. Some companies would choose to do neither. These companies would end up paying the government higher taxes, which could help offset tax breaks for individuals. Most companies would do some combination of these.

Now, how would we flesh this out? My first suggestion is to set the multiplier to 100 to 150 times the minimum employee’s pay. This ensures an executive pay of $1.6 to $2.4 million annually at a minimum. If the company wants to pay their lowest compensated employee more, then the executive’s pay would only go up. At $10 per hour the executive compensation goes up to $2-3 million.

Next, we count all compensation in this formula excepting only commission pay. Stock options? Count. Stocks? Count. Company condo? Count. Vacations? Count. Sold that multi-million-dollar super-computer to the government and got a $5 million dollar commission? Not covered. You made it, it’s yours. The best businessmen often pay their salesmen better than they pay themselves, realizing that a good salesman will bring in business that they can’t get themselves.

Now there are a couple of areas that I haven’t filled in yet even in my own mind. Do we want to implement this plan immediately, or phase it in over time? Do we want the cut-off point to be a hard cut-off, or do we want to phase-in the reduction in tax-breaks? How do we count contracted or temporary employees? Do we count the employees of a firm contracted to do certain kinds of services, such as janitorial firms? These can, and should, be debated at length.

One of the things I really like about this plan is there is so much room for compromise. Go ahead, change the multiplier! Count stock options differently than straight pay! Leave out corporate jets! Phase it in over time, or not! Allow companies to wait until the current executive contracts are over before it counts! All is negotiable!

It also allows every company the flexibility to determine what is an acceptable way to meet these goals. They can pay their executive less, or their employees more, or some combination. Maybe paying all of their corporate taxes is perfectly acceptable to some companies.

The upshot is that employees are going to be paid more, and more will be paid in taxes to the government. This is a win-win situation for our country.

What we need to do NEXT

2008-10-30T15:57:00.000-07:00

By Ed Smallwood

My most recent blog entry is so long that I'm going to have to divide it into several entries. I'll be posting one part per day until the election. First up is a quick overview, followed by what we have to do for the economy.

In the next several days we will have selected a new President. I can only hope at this point that good sense will take over and Senator McCaint will be shown one of the most humiliating defeats in U.S. History. I can also only hope that the Democrats get their Filibuster-proof/veto-proof majorities in both houses of Congress.

My biggest fear should this happen is that the Democrats will celebrate until late January, and then fall victim to infighting as to what should be done. This would be just what the Republicans would like to see. Divide and conquer. All the Republicans need is for the average citizen to believe that the Democrats are ineffective in ruling to take back Congress the following term.

This is what Congress needs to do in the next 4 years. If the Democrats take over, then we stand a chance of some of this being done. If the Republicans hold on just a little bit, our chances of this happening are slim.

The Economy

We must take care of the home mortgage crisis. This should be the number one concern of Congress right now—doubly so if we have to wait until late January. Corporations and the rich have had their bail-out, and its clearly not trickling down. In fact, in an article in the New York Times published on October 24th, Joe Nocera detailed an employee conference call he sneaked into with an executive of JPMorgan Chase where the executive stated pretty bluntly that the money they had received from the Federal Government was going to be used to purchase other banks, not to free up lending to individuals.

People have no money to buy things because they are paying so much of their income (more than half for some families in the Silicon Valley) for housing. This is leading to layoffs at companies because people aren’t buying products. If we don’t stabilize this now, we stand the chance of having a depression, not just a recession. Just ask the auto industry. I can’t keep count of the dealerships that have been going out of business around here lately, and Chrysler just announced that it would be laying off 25% of its staff, and is actively looking into a merger with General Motors just to survive.

The reality is that the banks are going to have to write-off some of the value of the homes they financed at exorbitant rates in the last few years. Nobel Prize winning economist Paul Krugman said last March that he thought home values in this country might drop by as much as 7 Trillion Dollars. You can make all kinds of arguments about who needs to pay for this loss from all kinds of angles, but the fact is the banks are going to have to lose some of the value on these properties. The government doesn’t bring in anything like enough money through taxes or bonds to cover these mortgages. This is, in fact, several times the annual GDP of this country, so nobody makes enough money to cover this loss. No reasonable suggestion as to how to deal with this has gotten around this fact. Yes, the government can buy up these loans, but if they buy them at face value, taxpayers are going to be stuck with a whopping big bill that could sink our government.

The best option, then, is for the banks to lose some of the value on the bad loans they made either from greed or stupidity, the homeowner should absorb some of the loss for taking out the loan they never would have been able to pay back anyway, and the government should absorb some of the cost as well. This frees up the maximum amount of capital to allow the economy to recover.

The alternative is to throw the homeowner out into the street, let the bank take the full loss on the loan when they sell the foreclosed property at distressed rates, and watch property tax rates plunge for the local government. Are you ready to watch crime rates soar because the city has to lay-off police officers due to declining property tax revenues? Meaning the former officers can’t make their mortgage payments. Making the economy worse. And so on.

I’m not depressing you, am I?

So, if we don’t take care of the housing mess quickly, we won’t have the ability to deal with the looming corporate credit crunch (which sounds like a name for a candy bar.) We also will not have the capital to do other necessary things, which will be covered later.