Then I remembered….

To fix its current budget problems, the CA government has decided to withhold a larger portion of your income for taxes.  So basically, rather than making a  real fix, they are stealing from future tax collections to pay for current shortfalls.  Seriously, what kind of idiots do we have in Sacramento?  I’ll be really pissed if next year I am owed a refund because of this and CA sends me an IOU.  It’s criminal.  Really.  I definitely know Schwarzenegger had to sign off on it. He is the worst governor ever.  Does anyone think he’s a republican or is doing a good job?

Another view of the tipping point was alluded to in the WSJ Op-Ed entitled Obama and the Liberal Paradigm.  The strategy is the same, make people dependent on government, but the outcome is different.  Democrats take more and more responsibility and liberty away from people so that a tipping point is reached.  But in this view, the balance shifts the other way.  Liberals view themselves as noble shepherds and view most American as innocent sheep that must be protected from the evil capitalist wolves.  What liberals have failed to comprehend is that the majority of Americans are closer to the capitalist wolves they demonize than the innocent sheep in need of protection. 

“But in a world where a majority of Americans work at white-collar jobs, have high-school and college degrees, own their own homes, and hold financial securities in their own right, the so-called wolves are now a majority. If liberals don’t begin to take that fact into account in formulating policy, the Obama administration will not only be an unsuccessful liberal administration, it may well be the last liberal administration.”

Which way will the balance shift?  I hope it is the latter, but do Americans really recognize their loss of liberty and are they really willing to take responsibility?

Media Bistro

Thank you to all those who have served our country.

We recently moved into a city that is close to a military base. Many of the people in our community are still in the military, some on active duty. Being in frequent contact with them and their families has made me appreciate their service even more. I admire them, and in some ways, envy them. They have put their lives on the line for me. I think my time for serving in the military has passed now, which makes me a little sad. I’d like to think that I’d be willing to do the same for them.

Thank you for fighting for our country. Thank you for helping to uphold our constitution. Thank you for making things like this blog possible.

My point is not to ridicule them, because who knows what’s really going on in each of their respective financial worlds.  However, from the outside, it looks like unemployment is paying the bills and gives them little incentive to find a new job.  To be fair, both are single and don’t have families to support.  For someone with a family, unemployment might not be so painless.  However, with unemployment benefits now lasting as long as 79 weeks, one wonders whether the programs are helping or extending the problems. 

I remember when I was 16 my dad told me I needed to find a job.  After a couple weeks he asked how my job search was and I said no one was hiring.  He said, well you know what, McDonald’s is always hiring and so if you don’t find a job by this weekend, you need to go apply at McDonald’s.  Guess what???  Miraculously I found a job that week.  If you’re on unemployment, it’s not that you can’t find a job, because there are jobs available.  It’s that you don’t want to take a job unless it pays more than your unemployment benefits.  If unemployment pays $400/week, that’s $20,800 a year.  Not a lot, but remember you aren’t working.  You dont have a commute or a boss.  So what is all your time worth?  Is it worth $10,000 extra to go to work 40 hours per week and deal with all the crap?  Probably not.  How about $20,000?   Who knows?  My point is, unless you find a job paying a lot more than unemployment pays, why would anyone accept any jobs?  That is the problem with unemployment.  It should be embarrassing, annoying, and painful to remain on unemployment.

First, there are currently relatively very few actual first generation Africans who have come to America, when compared to the overall “African-American” population in the U.S.A.  Most of the so-called African-Americans have been here for many generations; probably more than many white people.  Further, Africa is a continent, a geographic boundary of many countries; there is no African nationality. 

Second, white people are always referred to as “white” people in various official situations, without hesitation.  And it’s fine; it’s an easy identifier.  I remember the demographic portion of standardized tests:  If you were white, you shaded the bubble next to either “white” or “caucasian (white)”.  I do remember the first time I encountered the word “caucasian” on a form and I didn’t know what it was until it said “(white)” next to it.

I’m not black, I’m white, so maybe it’s impossible for me to say this, but I think it is insulting to black people to refer to them as African Americans, when the only things they share with Africans are some physical traits.  I would be so confused if, suddenly, people started calling me a German-American.  Using terms like “black” and “white” are very useful as quick identifiers, just like tall, short, male, female, skinny, fat?, etc.  If there are a group of white men that are 5′10″, except for one dude that is 6′4″ and you want to point out the 6′4″ guy, the easiest way is to say, “The tall guy right there.”  But what if it was looked down upon to say “tall”?  Human beings constantly label things in their minds for quick identification in order navigate through the world.  

So, is it simple-minded and incredibly narrow to label all white and black people as either “white” or “black”?  Yes, it completely is.  But it is so much better than constantly referencing the slavery-tinted African origins of many of the black people in this country.  I think as humans progress and the lines between white and black physically disintegrate, people will naturally come up with different identifiers.  But for the time being, black and white are so much better than African-American, German-American, English-American, etc.  Do you agree?  Or am I way off on this?

In recent years, Republicans have been involved in sex scandals. They’ve been using childish scare tactics to persuade public opinion, like “Death Panels.” Joe Wilson heckled the President during a speech. And of course, you’ve got Hannity, Limbaugh, and Beck on the air everyday spouting half-truths (they do speak some truth, but not all of it is).

So what do you guys think? Is the Republican party still the party of honor and values? I don’t want to hear any arguments of, “Childish scare tactics? Look at what the Democrats are trying to pull with this health bill?” I’m not talking about them right now. (Yes, they’re slimy, too.) I’m talking about the Republican party. Can they rise above it? Or must they stoop low in order for the American public to hear them? Is that the only thing Americans will pay attention to?

Harm Ahead for First-time Buyers? And the Economy?

A bill has been introduced into Congress for the FHA loan, commonly called the first-time home buyer’s loan, to have the down payment requirement increased from 3.5% as it is now to 5%.

That means on a house priced at $350,000, a person would need $17,500 down instead of $12,250.

How is that going to help more people attain home ownership?  How is that going to help our economy?

Remember, when a person buys a home, it helps real estate agents, appraisers, home inspectors, movers, painters, furniture companies, appliance stores, even pizza delivery guys, as well as lenders.  And when all these people receive income, they spend it at other businesses, who are then helped as well.  Home buying has a huge impact on the economy.  Is this the time to slow home buying down?

At first I laughed, then I was angry.  Every special interest thinks their particular industry is much more important than it actually is.  Heaven forbid a person actually has to save 5% for a downpayment instead of 3.5%.  I take the opposite side of the coin.  What if FHA lowered the requirement to 1%, or how about 0%?  Would that make the economy boom because homebuyers would be able to buy more homes?  Didn’t we already learn the lesson of excessive leverage with no skin in the game?  How quickly we forget the sins of our past.

I know much has been said about Congressmen not reading the healthcare bill.  But look at the size of it!!  It’s huge!!  John Boehner (no pun intended, no no no…) has it right when he says it’s 1,990 pages of bureaucracy.  I wonder how much each of those pages will cost taxpayers over the next 10 years.  Assume it costs $1 trillion for healthcare over the next 10 years.  That’s about $50 million per page.  Ugh.

The only consolation is that if healthcare reform is passed, at least we have 1,990 pages showing how it’s going to be administered.  There is no guarantee though that any of the words inside of those pages will translate into an efficiently-run healthcare system.  If anything, there will be terrible amounts of misinterpretation of the document at myriad levels of government.

Thanks, Andy, for the video.

A lot of attention is being paid to whether the bill will add to the deficit.  While is an consideration, it isn’t completely on point.  It simply distracts representatives and constituents from the more important questions.

Will healthcare be more affordable?

The bill is supposed to cost the federal government about $900 billion.  The bills also shift huge costs onto the states.  Yes, those are the same states that received billions of dollars from the federal government earlier this year in the stimulus so that their budgets would stay afloat.  The bill costs the fed less now because the they will just bail out the states later in separate legislation when there isn’t any real choice.

Industry studies have shown that healthcare premiums could triple!!!  How does that make healthcare more affordable?  See here.

Let’s consider what we know.  The federal govt will pay $900 billion more than it currently does.  The states will pay more.  Those who pay for their own insurance will pay more.  Everybody pays more!  How is that making healthcare more affordable?  Supposedly more people will have healthcare, but overall, spending per capita on healthcare will increase.  Bet on it.

The only people that benefit from this legislation will be the people who don’t pay for their healthcare or the taxes that pay for their healthcare.  Everybody else will pay more in one way or another.

This is welfare, not healthcare.

Example 2:

When we had our baby at the hospital, there were certain bills that were not covered by our insurance.  When I called the hospital to pay the outstanding balance, I was given a 25% discount.  I was also told that if I paid in advance of the birth, I could get a 50% discount!  Next time, we will do this.

How would things have happened if I had government insurance?

1. We know that the government will reimburse a smaller amount to hospitals (20% to 30% less), so I should expect that some of the loss recovery will be passed on to me.
2. Private insurance companies’ nit-pick hospitals bills and regularly push back for unreasonable expenses. Will a government-run insurance company do the same? (see Example 3)
3. When voting in the future, will I vote for a candidate running on a platform of fiscal responsibility if it means reductions to my insurance?

Example 3:

A Big 4 accounting firm was appointed to compile the financial statements of a prominent company after it went bankrupt.  I met one of the team members who was miserable from his 8 months at 80+ hour work weeks.  He said the partner was happy, though.  Why?… The billing rates!

In the Big 4 accounting world, each team member is assigned a billing rate based on his or her level. Hours are tracked and then billed to the clients.  These rates are so artificially inflated that the firm often takes a 50% discount before the client is even billed.  In the end, the realization rate is commonly expected to be around 35% of the original amount.

BUT, when a court appoints the auditors, the firm can charge higher rates and in some instances realize 100% of their fees! Granted there is more risk, but it is important to consider:

1. Those responsible for setting up the terms (the court) are spending other people’s money, therefore they are not as responsible or thrifty.
2. Career politicians/governmentalists do not have business experience.
3. Getting government contracts involve networks of friends and relationships which result in inefficiencies due to favors being granted.

The crux is that the government is not powerful, in and of itself, but that it gains its power indirectly from your need for it.

For example, I do not fear a government run health-care system because I believe the government will make my decisions for me. Although they may limit the insurance plans that I have access to, I still have the option of getting no treatment or paying more for a private plan.

What I do fear is that people will actually use it, and thereby become dependent on it. And in turn, they will place a higher priority on programs that support their standard of living, than other areas that require funding and attention which I believe the government was created for (i.e. defense).

Anyone disagree? If so, why would AARP continue to lobby the White House for the asinine senior citizen tax rebate of $250 in a year that their cost of living decreased? Senior citizens, in this instance, would rather get $250 in their pockets than make a small gesture toward reining in government spending.

The innate dependence of socialism is why I believe a smaller, limited government is better for this nation. It’s not that “smaller” is better than “larger” in and of itself. I simply do not want more people employed by the government.

Why? The more people who have government jobs = the more people whose incomes are provided by the government. And when we have a crisis-level deficit, how many of those public employees are going to vote for a candidate running on a fiscally conservative platform? None… because the only way to truly reduce government expenses is to cut programs and employees. And who would vote “yes” if it would cost them their jobs?

It’s important to think about this when prior plans for entitlement expansion have created myriads of new federal and state agencies (and tens of thousands of new government jobs) to fulfill the government’s new functions. And lets not forget about that government pension after everyone retires…

Now I have two questions.  When do government run entities ever beat private enterprise when they compete?  Once set up, will legislators allow their private option to fail or will they continue to provide support to ensure that it remains viable and they don’t look like they screwed up? 

I think the answers are self-evident.  The public option won’t be able to compete on a level playing field.  It will bend to political pressure and made bad economic decisions that look good politically.  This will ensure increased usage of taxpayer money to fund a poorly run inefficient entity.  I honestly don’t believe the government is capable of changing and adapting to changes in the marketplace.  I think the US Postal service does  a pretty good job.  Letters arrive quickly and at a reasonable price.  However, it’s running in the red because it cannot adapt to the age of email due to powerful unions and legislative support.  I’d rather the government focus on undoing its past mistakes (i.e. social security) than creating new entitlements and new monsters that will grow and grow until they take over the world.  Does anyone really believe that legislators are capable of designing a business that can compete with giant insurance companies?  If they could, wouldn’t they be doing it and making a lot more money than being a legislator?  How many businesses has Harry Reid or Nancy Pelosi started and run successfully?

In Shelton, CT, all the traffic lights along the main commercial road turn to yellow blinking lights after around 8-9pm.  So the traffic driving along the main road does not have to stop ever.  The cars driving across or turning on to the main road treat the lights like a stop sign.  I think it’s a great solutioin that could be incorporated into cities everywhere during less-heavy traffic times.  In California, we have sensored lights, so it at least cuts down on the wait time.  But every single car still turns the lights red on someone else.

I know this isn’t a big deal, but it still bothers me a lot.  I was going to try to make a comparison to politics, but all my analogies kept falling apart after a few thoughts.  Does anyone else have a good political analogy or a better solution for dumb, annoying traffic lights?

How can I make such a ludicrous suggestion?

First, as demonstrated by several recent drug trials, the placebo effect is becoming stronger! In fact, in several studies, as many patients taking sugar pill placebos felt the same restorative and pain-killing effects as those taking the actual medicines.  The cause is baffling the prescription drug industry but it may be due to the increasingly effective advertising techniques of pharmaceutical companies, the effect of an extremely empathetic doctor, or the increasing levels of worship that we put on medicines and doctors.

“The roots of the placebo problem can be traced to a lie told by an Army nurse during World War II as Allied forces stormed the beaches of southern Italy. The nurse was assisting an anesthetist named Henry Beecher, who was tending to US troops under heavy German bombardment. When the morphine supply ran low, the nurse assured a wounded soldier that he was getting a shot of potent painkiller, though her syringe contained only salt water. Amazingly, the bogus injection relieved the soldier’s agony and prevented the onset of shock.  Returning to his post at Harvard after the war, Beecher became one of the nation’s leading medical reformers.”

Second, prescribing placebos is already a normal part of the medical business.  ”Nearly half of the doctors polled in a 2007 survey in Chicago admitted to prescribing medications they knew were ineffective for a patient’s condition—or prescribing effective drugs in doses too low to produce actual benefit—in order to provoke a placebo response.”

Third, everyone deserves a trip to a foreign country and with the money saved, they can take it!  Actually, the trip may be necessary depending on the illness… “By the late ’90s, for example, the classic antianxiety drug diazepam (also known as Valium) was still beating placebo in France and Belgium. But when the drug was tested in the US, it was likely to fail. Conversely, Prozac performed better in America than it did in western Europe and South Africa.”

Now I know there will be objections, but I have a solution for that too - make it illegal to talk about anything medically bad.  We don’t want to have to worry about the “nocebo effect.”  This can cause problems such as “men taking a commonly prescribed prostate drug who were informed that the medication may cause sexual dysfunction were twice as likely to become impotent.”

If anyone is interested in the entire source article, see here.  :)

Lastly, I propose we make all the placebos taste like Skittles (or change the taste of current medicines if no one will go with my idea).

I was reading about the plans to “extend” pieces of the stimulus package.  Mind you, this is not a “new” stimulus package (cause that would be political suicide), but simply an extension of the first one.

Proposed items include extending and increasing the homebuyer credit, extending unemployment benefits and cobra subsidies, and an “emergency” payment to seniors.  And I fully expect Congresspeople on both sides to vote for all of it cause they want to be seen “doing something” for their constituents.

All I can say is, start acting responsible!

79 weeks of unemployment is enough, you don’t need another 14 to 20.  That is already almost a year and half!

Seniors don’t need that extra “emergency” payment as they’ve received a COLA every year except this one - even when prices went down.  It is a bribe to assure them that they will always be taken care of and to get them on board with the health care reform.  This suggestion alone proves that none of the cost savings presented in the Baucus bill will ever be realized.

I’ve already gone off on the homebuyer subsidy in other posts, but I didn’t touch on  the most obvious fact - this is just government subsidized home purchasing.  When is it going to end?

Sometimes Congress acts most responsibly by doing NOTHING.

What is a preexisting condition?  Well, it’s pretty simple really.  It’s a condition, usually medical in this context, that you have prior to adding insurance coverage.  For instance, if I have a condition that the insurance companies say I had prior to being a customer, they won’t cover me for that condition.  Politicians and citizens are outraged over this.  Should they be? 

I think it depends.  If I am irresponsible and I know that insurance companies aren’t allowed to deny anyone coverage, then why would I buy insurance when I’m not sick?  It would make sense for me to wait until I needed the insurance once I was already sick to actually buy it so I’m not stuck with the bill.  It would be like buying car insurance after you’ve already been in an accident and expecting your new insurance to pay for your accident.  Of course they wouldn’t pay for it.  You would because you weren’t covered at the time of the incident. 

However, if I have insurance through my work and I get sick while I’m insured, but then I lose my job or change jobs and get a different insurance.  Who pays then?  In that case, I think we have a problem.  I shouldn’t be screwed if I lose my job or choose to take a different job with different insurance. 

How do you solve this problem without creating the other?  End the third-party payer system.  Remove the tax incentive that businesses have to provide employees with insurance.  Give that tax credit to citizens to buy their own insurance.  There are many benefits to this, but ending the preexisting condition problem is one that would be solved.  You’d be able to take your insurance to new jobs or keep it if you lost your job.  We’d also need to be able to carry insurance purchased in one state across state lines.

So, a lifetime of ugly light in order to have one less mortgage payment.  Where is the quality of life in that?  I think it’s worth the extra few dollars a month to have quality light in your house; good light that makes reading more enjoyable, hard times not so depressing, etc.  Maybe I am giving too much credit to incandescent light.  But my point is that we often rush to small lifestyle-changing decisions in order to save a few dollars.  But often those decisions add up to such a little amount, that the sacrifice of quality of life is not worth it at all. 

I recently watched a talk by New York designer, Stefan Sagmeister, where he explained that he takes a year-long sabbatical every 7 years.  He completely closes his design studio and everyone has a year off.  He says that, roughly, we spend the first 25 years learning, the next 40 years working, and the last 15 years in retirement.  He decided that he would take 5 of the retirement years and intersperse them equally amongst the 40 working years.  So, he has to work 5 more years before he retires, but he has had year-long breaks where he can do whatever he wants while he is young and energetic.  For him, that is quality of life.  The idea is very intriguing.  Obviously it’s easier for him since he owns his studio; it would be much harder for an employee of a huge conglomerate.  But we can embrace the idea in little ways if year-long sabbaticals are not plausible.

So, in our race toward retirement, I think there are things we should let up on slightly.  Maybe spend an extra $25-50/month and have decent light, a cool house in the warmer summer months, and do something new/unique with the family.  In no way am I endorsing reckless spending on whatever you want.  We still need to be able to afford the extra and save for retirement.  But if we have to work 1 more year in order to enjoy the journey a little more, maybe it’s worth it.

1. the Fed for keeping rates so low and causing a bubble?
2. Congress for requiring and pushing the lenders to make loans to people who could not afford them?
3. the banks for their “predatory” pricing and foreclosure process on people who shouldn’t have had a loan in the first place?
4. ACORN who pushed for more loans to be extended to the poor, then filed lawsuits when the banks foreclosed because the people couldn’t make their payments

Either way, as Congress and the Obama Administration go forward to “reform” the system, here is a great video forwarded to me by a friend.  It is of Daniel Hannen, a conservative MEP from England. 

Favorite quote: “REFORM, aren’t things bad enough already?!”

“Meantime, the city’s [New York's] fixed pension obligations to its workers—which Albany hikes in good times and bad—have hit a projected $6.6 billion at last count, up from $1.6 billion in 2003. Barring a sharp recovery, the city’s tax-funded pension contributions are likely to double or triple over the next five years, with higher taxes on a declining private sector picking up the tab.

“We don’t want to lose people who work on Wall Street,” Mayor Bloomberg said recently, neatly summing up the dynamic in which high taxes on the rich pay for a padded public-sector work force while squeezing out entrepreneurs. “We need the tax base. Our teachers need to get paid.”

See here for full article.