California Free Press

Frank Thomas on Need to Reduce Military-Industrial Complex

   

As I've been saying off and on for many months now on this blog, America is almost a third-class nation when it comes to social-infrastructure ... whether it be health care for all at a reasonable cost (e.g., compared to Canada), state-of-art transit systems, roads and railways.

Why? One of the main (if not THE primary) reasons is because we spend -- as I have previously shown with figures -- 45-50% of our annual Federal Budget on Defense (excluding Social Security and Medicare which have their separate tax inflows and payment outflows).

But anyone who suggests reducing the Military Budget is immediately characterized as endangering America's security and even of being unpatriotic. But the reality is that this very budget is bankrupting us. We simply cannot afford 700 bases; troops sitting idly by for decades in Germany, Japan, and North Korea; $18 billion a month for the Iraq and Afghanistan war adventures; duplicate aircraft of many types being purchased by the Air Force, Navy, Army, Marine Corp.; exotic airplanes and navy fleet ships showing enormous cost overrruns and doubtful practical utility; a stupendously costly outer-space "stars wars" technology that encourages others (e.g., China) to join the planetary militarization herd. The waste is enormous ... compounded by cost-plus contracts that end up being open-ended money trees for the Defense industry.

Obama wants to increase the Marine forces by 60,000 troops ... a questionable goal but if valid, then why not convert existing idle troops to Marines and save millions of dollars? This is a small example of how cost-efficient we must become WITHOUT compromising our security.

So must we begin to get line-item expenditure realistic and tough (as Obama is saying), but even in the Defense area where we are now spending over $585 billion annually -- excluding some $150+- billion Interest Cost on Deficits caused by bloated Defense budgets over past decades.

We should be considering a smaller high tech, fast in-and-out coordinated Military complex with highly trained troop forces and intelligence devoid of duplication ... while encouraging other Western nations to bump up their Defense expenditures by +- 0.5% from low average of 1.5-2.0% of GDP now.

We can then redirect scarce government funds to more productive internal investments
that multiply into more interesting expenditure dollars and jobs than investing in tanks and idle troops (including costly, diversionary and unproductive wars in Iraq and Afghanistan).

This is a perfect time to spend next 10-12 years concentrating investments on our internal economy and bringing Defense expenditues down to 3.0-3.5% of GDP or to 30% of annual Federal Budget over next 4 years. For we have a 10-12 year window of opportunity keep Defense spending at more prudent but responsible level since China and India are clearly completely preoccupied in controlling the industrialization of their potentially massive economies. Accordingly, they are in all probability in no grand rush or position to accelerate their military expenditures much above current 1.5% of GDP.

Meanwhile, not surprisingly, we still haven't reconstructed the damage done by Katrina after more than 6 years. WHY? ... because there's little money! Additionally, as most know, our social-infrastructure has been ignored for decades ... along with related added productivity improvements and job generation. This too must change!

European countries are far ahead of us here. They have conveniently acquiesced to US obsession to be the world's primary Protector and Defender ... thereby freeing up vast funds to maintain their social-infrastructures in tip-top, up-to-date shape. Under enlightened, collaborative, diplomatic US leadership -- this self-inflicted costly imbalance also has to change!

But first and foremost we had better get our own internal house in order. As I've said before -- having been in Europe for over 35 years working for European international firms -- Europeans never hesitate to pick our brains and to selectively incorporate partly or wholly our original ideas and successes into their own unique value systems. We could start learning a lesson here in areas we are particularly weak in, namely, health care; all aspects of a modern infrastructure embracing high-speed trains, inter-city transit, sewer and water systems; compact, highly efficient cars; bulk transport via inland water ways and rail; alternate green fuels, and energy conservation. Arrogant inclinations we know everything especially in the social services sphere must also change!

Believe me: I've witnessed first-hand how the rate of innovation has been picking up markedly in Europe over last 10 years ... while it seems to have been sliding into almost neutral gear in the US. This too must change!

Frank Thomas, The Netherlands
Wednesday, 26 November, 2008

Even a Third World Country Like Sri Lanka Has Universal Health Care

The US with its costly yet inefficient health care system is rapidly degenerating into a third world country which by definition is a country with poverty for the masses and wealth for a narrow elite. Bill McGuire CEO of United Health Care averaged almost $60 million a year in salary while 40 million people in the US went without health care at all, and even those with health insurance went bankrupt trying to pay their copays. McGuire left the company with over a billion dollars in stock options. But an impoverished country like Sri Lanka (formerly Ceylon) can afford universal health care. Why can't the US? It's simple: greed.

This is from a report by Dr. Sarath M. Samarage:

Sri Lanka holds a unique position in South Asia as one of the first of the less developed nations to provide universal health, free education, strong gender equality, and better opportunity to social mobility. Since its independence, successive governments have implemented welfare-oriented policies and programs which have allowed Sri Lanka to achieve relatively high standards of social and health development in comparison with countries of similar levels of economic development. As a result of this, the country has made significant improvements in social welfare, both in the development of public health care and education systems. The attainment by Sri Lanka of a high Human Development Index (HDI=0.74) with a life expectancy at birth of 72.5 years, and a literacy rate of over 90%, has thus been a well celebrated success for a less developed country. The health system in Sri Lanka is enriched by a mix of Allopathic, Ayurvedic, Unani and several other systems of medicine that exists together. Of these systems allopathic medicine has become dominant and is catering to the majority of the health needs of the people. As in many other countries Sri Lankan health system consists of both the state and the private sector. The Health Ministry and the Provincial Health Services provide a wide range of promotive, preventive, curative and rehabilitative health care. Sri Lanka has an extensive network of health care institutions.

The Sanskrit meaning of "Sri Lanka" is sacred island. Sri Lanka is an island located in the Indian Ocean off the coast of India. Sri Lanka was the first country in the world to establish a wildlife sanctuary. European colonists established a series of tea, cinnamon, rubber, sugar, coffee and indigo plantations. The British also brought a large number of indentured workers from Tamil Nadu to work in the plantation economy. The city of Colombo was established as the administrative centre, and the British established modern schools, colleges, roads and churches that brought Western-style education and culture to the native people.

Since 1983, there has been on-and-off civil war, predominantly between the government and the Liberation Tigers of Tamil Eelam (LTTE, also known as the Tamil Tigers), a separatist militant organization who fight to create an independent state named Tamil Eelam in the North and East of the island.

President Rajapaksa's broad economic strategy was outlined in his election manifesto Mahinda Chintana (Mahinda's Thoughts), which now guides government economic policy. Mahinda Chintana policies focus on poverty alleviation and steering investment to disadvantaged areas; developing the small and medium enterprise (SME) sector; promotion of agriculture; and expanding the already enormous civil service. The Rajapaksa government rejects the privatization of state enterprises, including "strategic" enterprises such as state-owned banks, airports, and electrical utilities. Instead, it plans to retain ownership and management of these enterprises and make them profitable. The influence of the World Bank and IMF towards privatization has waned here as it has in other parts of the world.

Exports to the United States, Sri Lanka's most important single-country market, were estimated to be around $2.1 billion for 2007, or 27% of total exports. As a result of the GSP Plus program, the EU as a whole is Sri Lanka's biggest export market. For many years, the United States has been Sri Lanka's biggest market for garments, taking almost 50% of total garment exports. India is Sri Lanka's largest supplier, accounting for 21% of imports valued at over $2.6 billion. United States exports to Sri Lanka were estimated to be around $230 million for 2007, consisting primarily of wheat, electrical apparatus, textiles and specialized fabrics, medical and scientific equipment, plastics, and paper.

Sri Lanka is highly dependent on foreign assistance, with the World Bank, the Asian Development Bank, Japan, and other donors disbursing loans totaling $1.4 billion in 2007. Iran is becoming the largest provider of foreign assistance. During the Iranian President's visit in April 2008, Iran committed $450 million for the Uma Oya multipurpose irrigation project. Iran is also a major lender to Sri Lanka and has provided infrastructure project loans and an interest-free credit facility for oil imports. Under this facility, Sri Lanka has imported  a substantial amount of oil (valued at $700 million as of June 30, 2008). Iran promised assistance for modernization of Sri Lanka's only oil refinery, though no firm commitments are in place. China has also become a major lender for infrastructure projects, such as a new port and a coal power plant. Foreign grants amounted to $275 million in 2007.

Sri Lanka's political system has also supported the development of a welfare state, with universal franchise since 1931. Visionary social policies introduced in the 1940s included sizeable and universal food subsidies, free and universal health care and free education. Such policies provided minimum levels of consumption for the entire population and helped to remove destitute poverty.

Rail Transportation in US Needs to Replace Car Culture

On Robert Reich's blog yesterday Linda said this:

I live out close to motown and over the years I have had many conversations with people who are studying the feasibility of alternative transportation systems.

Amtrak needs to be subsidized in this country because it is such a small, archaic system. If you want to go somewhere, try finding a scheduled train that goes there. It doesn't exist...except for some old established routes in the Eastern sector that date back to the pre-highway days. Anyone who has been to Europe knows what excellent train service is...it is one of the most convenient, safe and comfortable ways to travel. Imagine being able to drink a cup of coffee and catch up on the morning news quietly on your way to work each morning.

The U.S. has put a huge investment in roads and creating infrastructure to support the auto industry because automobiles have been at the core of our industry since the industrial revolution. But personal cars may soon become obsolete, whether we like them or not. The oil supply could run out a lot quicker than people realize. For example, I live in a town close to the auto factories where people commute let's say 35 miles a day to work. When gas prices were high last spring, it cost upwards from $20 a day for some employees just to make the daily round trip to the factory. It is conceivable that in the next five years, or even the next couple years, that gasoline prices could rise to the point where a single commuter roundtrip would cost $100. What would happen then? How would people get to their jobs?

Trains are a much more energy efficient way to get people to their jobs than cars. Right now in Michigan, local government is looking into a way to get an old railroad line working in our community and people are very excited about it.

You say that it would take decades to build a good railroad system..not necessarily, especially if it were a major national priority. Obama wants to build the infrastructure: this would be a great way to put people to work and give people jobs, and in a very short space of time, it would be an industry that would be self-sustaining and stimulate other sectors of the economy.

Obama says he wants to work on the infrastructure by building more roads, and this worries me. I think it's time to get in there and suggest that we work on a railway system instead.

Linda

Tuesday, 25 November, 2008

Art a Layman said this:

As far as a profitable venture goes, that will greatly depend on our cultural propensities. Now we can argue chicken or egg but the fact is that American consumers don't want to leave their cars at home. That has been the reason for the long and prosperous car industry in America. Even more, in America cars have become an extension of our personna. Many consumers seek cars with styling that fits the image they have of themselves or dream of having. That's one of the reasons we still see big engines and high speed capability. Americans thrive on big and it seems that mankind in general is enthralled with speed, but none more than we Americans.

There are many areas around the US where existing rail infrastructure would be a good start. There are many others where suburban expansion, for miles around, has moved much of the populace away from existing railroad tracks. This will mean expanding tracks, establishing way stations, quite often on privately owned land. Some owners will jump at the chance to sell their land for a profit, others, for whatever reason, will not want to sell. No problem, eminent domain laws, simple. Except that lawsuits ensue, possibly all the way up to the Supreme Court and again, Tempest fugits.

Now I'm not familair with Europe but my understanding is that rail systems have existed there for a long time. Further the population/land density is significantly different than in the US. If rail transportation was vital as cities expanded certainly that would have been considered in municipal planning. In the US no such consideration was necessary. Major cities where the industrial sector is situated around the urban centers likely are better suited for rail transportation as a means of commuting to work, which would have to be the primary driver of the industry. In cities where I have lived there has been great movement away from urban centers by businesses, manufacturing, distribution, etc., to avoid crime and to establish places of work closer to where residents live and allow for ease of expansion, to say nothing of cheaper land costs. This has located many large employers, beyond retail, into small cities and towns within a 25 to 50 mile range of where their workers live, in all directions.

Art a Layman

Tuesday, 25 November, 2008

Here is my response:

I'm totally with Linda as to rail transportation. Art your remark that you've never experienced rail transportation in Europe is telling. They are so far ahead of us. As an example, I spent three weeks in Holland a few years ago. I could get anywhere in the country by rail and back to Amsterdam the same day. But here's the kicker: I never had to wait more than 5 minutes for a train to Amsterdam from any where in the country. Even in former communist countries like the Czech Republic you can get anywhere by rail and/or bus. Some of the connections are Toonerville Trollies but so what? When you add the TGV in France and other high speed rail, you have a marvelous transportation system in which you don't need a car to get anywhere. Even so there is a mix of cars, rail and air transportation in Europe.

Here in San Diego all city buses are LNG. That's what makes living downtown tolerable. You can stand in back of one of these buses and breathe freely, and they don't pollute. The only problem is the private charter buses are gas based and you don't want to get near any of these. San Diego has increased its trolley system (using European built cars) using existing and former rights of way. Only problem is it's underutilized due to car culture. It's still not to the level it was in the 1890s in terms of network. Also suburban commuter trains are doing well here. The Coaster transports commuters to north county using rail lines shared with Amtrak and BNSF freight trains. Just this year they added an east-west link from Oceanside inland to Escondido called the Sprinter - again using former rights of way.

Car culture in this country is created by advertising. Why else do you think every other add is a car ad on TV? (The rest of the ads are for pharmaceuticals - something that should be outlawed.) Urban cowboys are created by advertising. It's that simple. Remember when smoking was accepted as de rigueur? Smoking culture was created by advertising. Since it has been verboten and negative ads went on TV against smoking we've seen smoking come to a point of being socially unacceptable. The same thing could be done with car culture. It would take government prohibitions against certain forms of advertising as it did with smoking.

The trolley and streetcar network was deliberately sh*tcanned by the auto industry to get people to buy cars and use more gas. In LA they used to have a wonderful network of streetcars and trolleys. This is being brought back. Many people don't know this, but LA has built a wonderful trolley system using mainly old rights of way. You can go to Pasadena on the Gold line, anywhere in downtown (yes, there is a downtown in LA) on the Red line. You can even get from Union Station to LAX on the Blue line. They just need to extend the Red line all the way to Santa Monica. Right now you have to get off and take the Metro Rapide which is a high speed, limited stop bus that can control the traffic lights in its favor. Exclusive bus lanes for buses on freeways is also being done in southern CA.

Fortunately, we don't have to wait for the Federal government to do everything. Cities and municipalities have already been taking action to get cars off the road and reduce the senseless suburban commute. Urban planning such as the CCDC in San Diego has been encouraging high rise infill projects next to trolley lines and downtown high rises as an alternative to living in suburbia.

All that cities need from the Federal government is a little encouragement (and money) to do more along these lines. That's how it normally works anyway. So I disagree with Art's pessimism about rail transportation. It can be done, Art, but you gotta believe. Just like the EV1 which was crushed by GM, rail in this country was deliberately deconstructed by the auto and gas industries especially in LA, the epicenter of car culture.

Trucks use the public highways at little expense for maintenance while railroads have to pay to maintain their own track beds. Government could change this incentive structure. The widening of freeways and creation of additional lanes, bridges and underpasses has gone to insane heights in CA in order to accomodate more and more vehicular traffic, a large portion of which is trucks moving goods that could be moved by rail including all sorts of toxics and nuclear waste. Do you like driving in the next lane alongside that? On some freeways around here it's a permanent non-stop building project. It never ends. It's nuts.

Art, do yourself a favor. Go to Europe and ride the trains! It's very convenient. The scenery's outstanding and the food's not bad either!

Big 3 Auto Bailout Boondoggle

The Big 3 automakers flew corporate jets to Washington to beg for $25 billion from Congress. I suppose they just expected Congress to say, "Here take the $25 billion - no strings attached!" But no, Congress was not going to be such an easy mark. Nancy Pelosi said, "Show us the plan before we show you the money." This is all well and good, but it does not go far enough. Why should Congress take some plan that the automakers come up with as the last word on the subject? What are they going to say, "Oh I see you have a plan; here's $25 billion." No Congress needs to come up with its own plan. They need to commission a group of experts to independently come up with an alternative plan. Then there would be at least two for Congress to mull over, choose one or the other or a combination of both.  They shouldn't be stampeded into giving the automakers $25 billion. Also they should conduct an independent audit to see if they really need the money. The automakers need to prove they really need it. No one should just take their word for it. What about all their successful foreign operations? Are they firewalling their profits from overseas operations? If so they have the money; they're just using accounting tricks to isolate it.

Now Obama wants to create 2.5 million jobs, and he wants to encourage a green auto industry. Here's his chance to at least preserve a million jobs and maybe create some too. He can kill two or three birds with one stone. Congress should impose demands on the auto makers in return for the $25 billion. Here's what I  think they should demand:

1) All the executive management should step down. They're responsible for the mess the American auto industry is in. They shouldn't profit from any bailout.

2) It should be mandated that all gas only vehicles be phased out as rapidly as possible. Only plug in hybrids, flex-fuel vehicles, all electric and various combinations thereof should be built after present inventory is exhausted.

3) Caps should be set on executive compensation.

4) No dividends should be paid for a period of time.

5) No lobbying for a period of time.

6) Congress should have one seat on the Board of Directiors to oversee what's really going on going forward.

7) The industry should build mass transit vehicles in addition to personal automobiles.

8) No jobs can be outsourced.

9) Government gets an equity stake.

Ralph Nader had some good thoughts:

In 1979 when Chrysler was on the verge of bankruptcy, the automaker came crying to Congress for a bailout, which they eventually got, but Congress wasn't as much of a pushover. Back then, at least the corporate chieftains were grilled by Congress and had to agree to give something back for Uncle Sam bailing them out -- good jobs and pensions for their workers, and more efficient cars to reduce reliance on foreign oil and reduce prices at the pump. Now the CEOs don't even have to leave Detroit and they get much more money for almost no return commitment to America, while they outsource jobs and pollute our environment. During discussion on a proposed loan bill to bailout Chrysler in October 1979, Senator William Proxmire (D-WI) who chaired the Senate Banking Committee issued his opposition to Chrysler's request and noted: "We let 7,000 companies fail last year -- we didn't bail them out. Now we are being told that if a company is big enough... we can't let it go under." He went on to call the proposed deal “a terrible precedent.” Raising the government's demand for performance standards, President Carter's Treasury Secretary William Miller told Chrysler officials, “it's going to be so awful, you'll wish you never brought the whole thing up.” Today, we rarely hear such candid opposition to corporate orders shouted at their congressional servants who lack the fortitude to put serious restraints and conditions on mismanaged, reckless big business and their overpaid CEOs seeking tax-payer salvation. As a part of the Chrysler deal in the late Seventies, the government took out preferred stock warrants and after the company turned itself around and repaid its loan seven years early, the government ended up cashing out, receiving $400 million in the appreciated stock. And Congress made clear to Chrysler that it had specific conditions the company had to meet before receiving the loan guarantee. It forced the company to contribute $162,500,000 into an employee stock ownership trust fund geared to benefit at least 90 percent of its employees, design more fuel efficient autos to help reduce consumption of foreign oil, and prohibit wages and benefits from falling below a level set three months before the legislation was passed. Today, congressional actions to grant multi-billion dollar loans to the corporations lack the reciprocity some in Congress demanded 30 years ago. Before Congress irresponsibly dips into the public piggy bank, this time it would be wise to look back at how the government once dealt with Chrysler's dilemma, require clear benchmarks to deliver on the next generation of green collar jobs, improved fuel efficiency and gain a substantial return on its investment, not just in monetary value, but in the longterm viability of the domestic motor vehicle fleet. Congress needs to call on the auto industry to innovate their way out of this morass into which they've engineered themselves into. A sensible strategy would be to issue stock warrants to the government, like in the 70s, which would create an incentive for Congress to keep pressure on the auto industry to improve. Public Congressional hearings are a must. Will Congress echo its actions of 30 years ago when it scrutinized corporate demands, grilled company executives, and imposed conditions to ensure fair compensation and safety for workers? Or will Congress continue down the road of corporate servitude, refusing to stand up for workers, consumers, taxpayers and the environment in its session-ending stampede and flight away from auto industry accountabilities?

In short hold their feet to the fire. In return for the money, the auto industry should be restructured. This would preserve present jobs and maybe add a few more. It would serve the interest of preventing global warming, reducing oil consumption and reducing the trade deficit. The industry could indeed be restructured as the core industry of the US building personal automobles as well as being the core of the mass transit industry.

And while they're at it, they can announce that a new universal health plan will take $2000. off the cost of each car thereby making American cars more price competitive with foreign ones. It can be one unified package. And they might take a look at foreign automakers to see if they impose tariffs opn American cars in their markets or otherwise subsidize their automakers. If so maybe we could take a page out of their book and subsidize our own automakers to create a level playing field. The goal is not to prevent foreign autos from coming into the American market, but to create the conditions that  would allow American autos to compete effectively in our own market. Market share for American autos will probably never again be what it was 50 years ago, but American automakers can still be profitable even with a diminished market share.

Finally, since Chrysler is privately held by a private equity firm, Cerberus, which won't reveal its financial stats, no money should be loaned to it under any conditions until Congress has an opportunity to audit its finances. And there are smaller automotive companies like Tesla and Fisker that already have plug-in hybrid and all electric vehicles on the road. Why not give some of the money to them?

Looking Forward to 2012: "Carribou Barbie" Palin and "Joe the Plumber" Wurzelbacher VS Barack "No Drama" Obama and Joe "Get Up Champ" Biden

Like many of you political junkies out there, I'm looking forward to the 2012 political campaign. I know the recent one is barely over, but my adrenalin rush has waned and I can't wait for the next one. After all Carribou Barbie has already started campaigning. And what about that multi-million dollar book deal? Sweet! As a true Republican she's wasting no time in cashing in on her celebrity. Who said there was a liquidity crisis? And have you heard about the sweet deal she pulled off with Mattel? They're going to make a million Carribou Barbie dolls. As Sarah said,"Well, I know they'll be made in China, but they've promised me they won't use lead based paint, and I'll be making 10% of everything also. You can't beat that. Cashing in is the American way. It's what freedom is all about. It's patriotic not like paying taxes like Joe Biden said. Ugh"

Word has it that Todd Palin will be opening up a number of franchised Sarah Palin Mooseburger Emporiums. "Why not?" said Todd Palin. "Ray Kroc made billions off of MacDonald's. We don't have enough fast food in Alaska, and from here we'll expand into the deep south where Sarah's base is. I'm sure all those Kentucky Colonel fried chicken lovers will go for a Sarah Palin Mooseburger once in a while. It's a no-brainer just like her."

As for "Joe the Plumber" Wurzel- bacher, he has managed to stretch his 15 minutes of fame into an hour and a half! Pretty good for a guy whose name is not actually Joe and  who's not even a licensed plumber. He's going for that million dollar book deal too so, unfortunately, Obama will be raising his taxes after all. And what a sweet deal that was when Mattel bagged him for the "Joe the Plumber" action figure. He'll make even more off of that. You see it pays to get an agent when you get your 15 minutes of fame. You need to capitalize immediately. Carpe diem! And all that crap you heard about the Wurzelbachers being on welfare and Joe (I mean Sam) not paying his taxes ... that was all a bunch of crap. Joe is a fine upstanding citizen. And in addition to the "Joe the Plumber" action figure, Mattel plans to introduce - just in time for Christmas - the GI Joe "the Plumber." You see the storyline goes that Joe the Plumber had joined the National Guard and got the call to go to Iraq so he had to hang up his plumber's helper and join his unit bound for the Middle East. GI Joe "the Plumber" comes with a miniature AK-47 and a HumVee, uparmored, of course. 

Others have been thinking along the same lines:

"In four years, Palin will be the ideal candidate," another RNC leader effused.  "Just think about it.  Bristol will be happily married with several children.  Track will be a war hero.  Even Trig will be old enough to walk by himself, though the governor may still want to carry him around to show her undying love and devotion.  Even  Palin's husband, Todd, will have won a few more races, which can only increase the image of the Palins as a model first family.  We mustn't forget family values." Joe the Plumber presents more of a problem for the RNC.  "But we've got an angle on that, too," Mary Matalin has also said off-the-record.  "Think about him—he's a gift dropped right into our laps.  We've already started ghostwriting a series of plumbing manuals for him.  Not ‘Plumbing for Dummies.’  That's too obvious, but manuals designed for specific consistuencies.  'Plumbing for Christians,' for example, in the tradition of something like Thoreau's "Walden," inspirational ways to help one's self and better the economy at the same time. The plumbing metaphor will be in everything the GOP will do in the next few years."

I can't wait for the family friendly 2012 Republican convention. There on the stage will be the Palin family: Trig, Trak, Trump, Piper and Pepper along with her running mate, Joe the Plumber, and the whole Wurzelbacher family: Plug, Plack, Prig, Prug and Dick. There has been a leak from the Palin campaign that the main plank of her platform will be anti-gay marriage. Mattel plans to introduce an anti-gay Carribou Barbie in 2011 just in time for the political campaign. When asked about the planks in her proposed platform, Palin said, "I'm running against gay marriage. I mean if gays can get married what does that say about my own marriage? What am I supposed to say to Todd when any old Tom, Dick and Harry can get married? It makes marriage meaningless."

  

Joe the Plumber aka Sam Wurzelbacher, the author, has vowed to take back all the beautiful old songs that contain the word "gay" in the lyrics. "They've ruined all those songs," Joe (Sam) said. What right do they have to appropriate all those old love songs and turn them into gay anthems?" and then he started singing ...

"Love is tearful, or it's gay,
It's a problem, or it's play.
It's a heartache either way,
But beautiful..."

"That used to be one of my favorite songs until the gays got ahold of it and made a travesty out of it."

Well, there you have it folks. Two redblooded Americans, "Carribou Barbie" and Joe (Sam I am) the Plumber (who don't plumb) together again holding up each other's hand at a campaign rally running on a platform that marriage should only be between a man and a woman.

Troubled Asset Relief Program (TARP) Turns Into Troubled Wealthy Investor Relief Program (TWIRP)

The cat is out of the bag. Paulson's TARP is now the TWIRP. He hasn't bailed out one toxic asset, and it's obvious now that his only intention is to protect wealthy investors, not mortgage holders who are underwater. What Paulson is trying to do is to keep the income streams flowing to securitized bond holders of asset backed securities because, if they were to become disenchanted, they might not invest in the bond market any more. When the mortgages were first turned into collateralized debt obligations (CDOs), and then sliced and diced into tranches, securitized (that means they were blessed by a ratings agency like Standard and Poors) and sold off to investors, those investors were expecting a revenue stream coming from the payments made by mortgagees. Now if the mortgages were to be rejiggered to make them more affordable, that means that the revenue streams flowing from them to investors would be less than what the investors expected. Then the investors might be upset and unwilling to invest in any more mortgage backed debt. So what? Let the banks go back to holding the mortages like they used to. Problem solved.

Unfortunately, while Paulson waffles, the White House dawdles, and Congress dithers, the economy continues to burn.

On the housing front, another 84,868 homes were lost to foreclosure in October; there have been 936,439 home foreclosures since August 2007. And the housing future continues to look bleak: in October, 279,561 borrowers received at least one foreclosure-related notice, including default notices, notices of auction sales and bank repossessions, according to RealtyTrac. One in every 452 housing units received one of these. Nevada, Arizona, and Florida had the country's top three foreclosure rates. Despite the carnage in the housing market, the White House continues to offer what the New York Times labeled "pathetic responses" and inadequate "half measures." And much-discussed legislation allowing bankrupt homeowners to rework their mortgages in court remains in a holding pattern, awaiting action from the lame duck Congress. I wouldn't hold my breath. January 20th cannot arrive fast enough for the American people.

It's obvious that Paulson's role in this TWIRP is to protect the interests of investors, not average American mortgagees. Therefore, he doesn't want to convert any adjustable rate mortgages (ARMs) to 30 year fixed for which the mortgagee can afford to pay the extra $1000. or $2000. per month after the mortgage resets to a higher interest rate. They want to hold on to every mortgage that anyone is willing and able to pay. But the problem is that, if some mortgages are converted to more favorable terms, then anyone holding a similar mortgage will feel that they have not been treated fairly even though they can afford to pay the higher rate. How come one person gets to convert a mortgage to a 30 year fixed at a reasonable interest rate and they are stuck with a resetting ARM at a punitive interest rate? It's understandable that they feel this way.

What Congress needs to do is to order a mandatory conversion of all outstanding ARMs, not just ones that are in trouble now, not just ones that may be in trouble in the future. That's the only way to solve the economic crisis and be fair to everyone. As long as there are ARMs out there which will reset in the next five years, there will continue to be delinquencies, defaults and foreclosures. To solve the crisis once and for all now and not five years from now, all these ARMs need to be converted now not just ones for which the mortgagees are financially distressed. Then and only then will the housing market stabilize and start to regain some of its former value. Only then will banks and investors regain confidence that there are no more shoes yet to drop. Sure some mortgage holders will still default even with converted mortgages due to loss of income or job loss or for various other reasons. But the rate of foreclosures should drop to a number which was considered normal before the recent crisis began.

There is a comprehensive solution to the housing crisis but it's one that is trickle up instead of trickle down. Instead of protecting investors, average Americans trying to stay in their homes should be protected. Investors will still be getting a return on their investment - not just as great a return as they were expecting - and the housing situation will return to normal. Then maybe the economy as a whole can return to normal, at least the housing sector portion of it. But Paulson and his TWIRP will do piecemeal solutions trying to retain every smidgeon of wealth for investors. Their anal retentiveness will prevent a comprehensive solution that would allow all home owners and mortgage holders to breathe a sigh of relief.

Tax Cuts: The B.S. and the Facts

That tax cuts stimulate the economy is taken as a matter of faith, but the brute facts suggest otherwise.

The following article is by Larry Beinhart posted November 11, 2008 on Alternet:

The Myth

Do tax cuts stimulate the economy?

Yes. Tax cuts allow people to keep more of their own money. Therefore, they have more to invest and spend into the economy, and they have more money to start business and create jobs, therefore also helping to stimulate the economy. -- Yahoo Answers

I think when people take a look back at this moment in our economic history, they'll recognize tax cuts work. They have made a difference. -- George W. Bush

The Realities

The brute facts are these:

• Large income tax cuts are followed by a bubble and then a crash.

• High income taxes correlate with economic growth.

• Income tax increases are followed by economic growth.

• Moderate income tax cuts are followed by a flat economy.

• All of this is especially true as applied to the top tax rates, the amount paid on income that exceeds the highest bracket.

The Three Great Tax Cuts: Boom, Bubble, Crash

1. Hoover

During World War I, the top marginal tax rate went up to 73 percent -- not the highest ever, but pretty high.

In 1922, a series of rate cuts began. Down to 56 percent, 46 percent, and finally, in 1925, it went down to 25 percent.

The stock market took off. There was a boom. But the boom was a bubble.

It was followed by the Great Crash of 1929.

There were bank failures and the Great Depression.

2. Reagan

From Franklin Roosevelt's second term all the way through to Jimmy Carter -- from 1936 until 1982 -- the top rate was in the 70 to 92 percent range.

Then along came Reagan in 1981. In 1982, he cut that down to 50 percent.

The economy went into "the worst recession since the Great Depression."

His supporters argued that it was all Carter's fault and that the new policies would take time to work. The tax cuts stayed in place. In 1987, there was another round of tax cuts. They took the top rate down to 38.5 percent. It would stimulate the economy!

There was a boom. But it was a bubble.

Then, in October 1987, there was a crash -- the worst since '29. It was called Black Monday.

Much of the bubble money had gone into -- ohmigod! -- real estate.

Suddenly there were bank failures! More than during the Great Depression. There was a Savings & Loan crisis! There had to be a bailout.

3. Bush II

George Bush came into office with the healthiest, post powerful economy in American history.

He immediately cut taxes. The top marginal rate went down from 39 percent to 35 percent. He also cut capital gains taxes and inheritance taxes. A recession immediately ensued. But he persisted.

Eventually, the economy began to grow.

Employment didn't grow very much. Median income went down. The stock market was pretty flat. But the financial sector -- and only the sector -- grew.

Which should have made it obvious to someone, that it was … a bubble.

There was a crash.

Bank failures. A bailout.

The three worst economic disasters in American history follow the exact same pattern: tax cuts, boom, bubble, crash.

High Taxes Correlate with Strong Economic Growth

The four periods of greatest economic growth in American history, by pretty much any measure, are:

• World War II (1941-45): top tax rate varied from 88 to 94 percent

• Post-war under Truman and Eisenhower: top rate bounced around from 81 to 92 percent

• Clinton years: Clinton raised Bush's top rate of 31 percent to 37 percent and then to 39 percent

• First two Roosevelt administrations (1933-40). When Roosevelt came into office, Hoover had already raised the tax rate in 1932 from 25 percent to 63 percent. Roosevelt raised it again in 1936 to 79 percent.

A lot of ink, sweat and ranting have gone into proving that the New Deal did not end the Great Depression. Nonetheless, the economy grew 58 percent from the time Roosevelt came into office and when the United States entered the war.

Some of that anti-New Deal rhetoric also claims that the recovery began under Hoover. Perhaps, but to say so is also to say that it began with tax hikes.

Likewise, many right-wing critics insist that the Clinton boom actually started under Bush the First. It is necessary to remember that Bush the First also raised taxes (from 28 percent to 31 percent) and was soundly thrashed by the conservatives for doing so. Stephen Moore of the Cato Institute called it "The Crime of the Century" and explained at length how it had brought ruin to America.

Tax Increases Are Followed by Economic Growth

Three of the four high-growth periods cited above followed significant tax hikes.

The fourth, the Truman-Eisenhower years, began with a top tax rate of 91 percent -- it couldn't get much higher.

Moderate Tax Increases Are Followed by Flat Growth

John F. Kennedy is generally credited with starting the tax cut craze.

He proposed it, but, as with all his ideas, it was Lyndon Johnson who actually got it enacted. The top rate was cut from 91 percent to 77 percent, then to 70 percent, on all income over $200,000 for a single person and over $400,000 for a married couple.

That's where it stayed, through Nixon, Ford and Carter.

The Dow Jones average was pretty much the same when that period ended as when it began. Median personal income stayed roughly the same.

These are the brute facts.

I call them that because there doesn't appear to be any theory to explain them.

A noted conservative (a sane one, not William Kristol) recently wrote to me in a private e-mail exchange on this subject:

"I am unaware of any (or many) respectable economists (maybe I've missed some) who have suggested that higher taxes have proved to be a formula for better economic growth."

Actually, I am too.

Even now, in the midst of the Bush disaster, I constantly see and hear tax cuts, particularly at the top, described as "pro-growth." So I went and looked at the numbers -- tax rates, tax cuts and tax hikes -- and placed them alongside job growth, the Dow Jones, growth in the GDP and median income.

The brute facts say the opposite of the myth.

The belief in tax cuts is a subset of the belief in Free Markets, with a capital F & M, which is a theological belief.

How do we distinguish a theological idea from a scientific (or rational) one?

According to Karl Popper, the great thinkers in the philosophy of science, a scientific idea has to be capable of being refuted. There has to be some theoretical test that could come out the wrong way, which would then say the theory is wrong.

On that basis, Popper rejected Marxism and Freudianism, along with religious theology, because no matter how many times they didn't work, there was always some explanation that said that the theory was right and if you just looked at the facts in some other way; you could make up some story that said your theory was still right.

The quintessence of theological thinking goes like this. The preacher says, "The world will end next Saturday night! The Bible says it must be so." Everyone in the congregation wakes up safe and sound on Sunday morning. They head off to church and believe whatever he says in that sermon, too.

In science, we come up with a hypothesis. Then we set up an experiment. We see what happens.

Economics is complex. It takes place in the real world where many factors are at play and we can't control for them all. Still, none of the major tax cuts since 1913 have led to significant, sustained growth. Two them were followed by instant recessions (Reagan and Bush), and three of them, when they were sustained, were followed by bubbles which were then followed by the three worst crashes and sets of bank failures in modern times.

It's time to throw out the theory, accept the facts, and come up with new ideas.

Coming: Part II: Why High Taxes Create a Healthier Economy and Low Taxes Don't

The Financial Avalanche Yet to Come

 

The following comments appeared on Robert Reich's blog:

John Lawrence said ...

It seems like Paulson's flailing around has not accomplished anything that he set out to do. Banks are hoarding the bailout money or using it for everything but new loans and helping out mortgagees. Possibly the banks know something we don't know - that there are other shoes to drop like a lot of ARMs resetting over the next few years which will produce even more foreclosures. Also there are a lot of credit default swaps (CDSs)that will trigger due to events still to happen such as people defaulting on the ARMs which have yet to reset.

I would think that the Treasury Department would try to get a handle on all these future events - both resetting ARMs and event triggering CDSs. Until then we will all be just at the mercy of events that have been set in stone but are yet to happen.

They don't want to help mortgagees because they want to preserve as many mortgages on favorable terms for investors as possible on which the mortgagees are still likely to pay. Helping some mortgagees and not others creates resentment among those not helped and causes them to head for the exits in terms of paying on their mortgages so that they too can take advantage of government help. That's the dilemma Paulson is in.

A better solution might be to convert all exotic mortgages to 30 year fixed at a reasonable interest rate. That way no one feels left out or unfairly treated. Investors would not get their expected rate of return, but they would get at least the same rate of return as banks used to get when most mortgages were 30 year fixed.

At the same time cancel all CDSs which could be a bottomless pit requiring trillions of dollars in bailouts. Investors would have to take a hit here too but too bad. They were purchased with incredible leverage so the hits would be correspondingly diminished.

The problem with new loans now is that applicants need to have gold plated credit ratings in order to qualify so of necessity fewer loans will be made. But that's not necessarily a bad thing. Living within our means is something the American consumers need to learn how to do, and that means taking out fewer loans not more.

From that point of view we needn't be so concerned about whether huge amounts of money are being loaned out. We need be concerned in a trickle up economy that the people at the bottom have money to buy what they need and that means job creation, extended unemployment benefits and restructured mortgages. And they should be saving not borrowing more money.

Tuesday, 18 November, 2008

 

Frank Thomas said...

 

Dr. Reich, cc: John Lawrence

Huge risk problems remain with the more than $1.5 trillion in loans bundled into pools of securities. These securitizations are very difficult to restructure and include Subprime and ARM loans.

At least 25% of these loans are already delinquent as reported by the Securities Industry and Financial Markets Association.

Furthemore, loan terms on $1 trillion of these securitized mortgages that are not delinquent now will be reset at onerous interest rates in 2009, 2010 and beyond ... so here lies a ticking financial time bomb (in addition to CDSs) threatening millions more of borrowers with foreclosures in near future.

The over $50 trillion of CDSs that have been sold as insurance against mortgage defaults and even against commercial loan defaults are another ticking financial time bomb.

As John Lawrence is recommending, ways must be found soon to close out these securitizations and CDSs
which pose ominously destructive and giant bailout risks. Ideas must be found to eliminate these existing pools of securitizations and exotic CDSs and spread the losses among investors and financial institutions in a way that is far less costly then just waiting for them to explode in our nation's face ... delivering the final Coup d'état to our hopes of avoiding a Depression.

Wednesday, 19 November, 2008

Frank Thomas on the Proposed Auto Industry Bailout

I just read Paul Krugman's and David Brook's article in the Inter- national Herald Tribune this morning (Saturday). In general, they are expressing points I've been making all along. Agree with Brooks that Obama's "Car Csar" idea may not be achievable or workable, but wouldn't right away give up on it necessarily. All depends on how the restructuring of the industry takes place, i.e., scale of government involvement vs. market forces and the UAW. Note that Brooks mentions a $50 billion added bailout infusion is in the offering to the Big Three in addition to a $25 billion loan already put foreward.

As I have been saying this open-ended funding with scarce taxpayer funds is just the top of the iceberg. A precedent is being established with this GM bailout strategy that cannot not ignore Chrysler and Ford and the possibility of others wanting similar treatment. We should be up front about the approximate full auto maker bailout bill which I feel will shock us back to the reality we can't afford the full taxpayer hit without seriously undermining investments needed in new enterprises and social infrastructure. I don't have disagreements here on the scope and substance of the dilemma ... perhaps only in how to deal with the initial vs. ultimate costs of a rescue strategy.

These gross rescue underestimates (maybe done intentionally to calm the public) are occuring everywhere with AIG, Fannie Mae and Freddie Mac where experts believe the $100 billion will be far exceeded, etc. And we haven't heard the last yet about the lingering unknown write-off exposures to Credit Default Swaps affecting corporations as well as packaged home mortgages.

If all these bailouts and overruns added to 2009 budget Deficit of $500 billion cause the Deficit to reach $1.1 trillion (or 7.7% of GDP) BEFORE commiting Constructive Investments of $600 billion(Krugman´s proposal) for reinvigorating our economy, then we will be seeing a Deficit level in 2010 of at least $1.5 trillion ... or ±10.0% of GDP which matches the worse year level (10.6%) of Sweden's financial collapse in early 90s. In addition, the National Debt will climb to at least $12.0 trillion by 2010 or ±85% of GDP ... in line with Sweden´s worse year level in its recovery phase (81%) but (happily) much lower than Japan´s worst year level (174%).

Yes, a lot of innocents are going to be hurt whatever form the reconstruction and financing of the auto industry takes. Obviously, the streamlining process and possible merger or failure of one of the Big Three will cause significant job losses ... but my overall $350 billion ultimate cost estimate (funded publically and privately) includes substantial funds to help those workers affected in the turnaround process. Delaying the process by piecemeal solutions increases the public and private costs dramatically as Japan´s experience has clearly revealed.

Frank Thomas
Saturday, 15 November, 2008

Instead of Bailing Out GM, We Should Invest in Emerging Electric Car Industry

Instead of bailing out GM, the government might better put its money into smaller car firms like Tesla  Motors which are already building plug-in electrics. All these firms lack is the capital base in order to become major firms in the US. Why prop up dying car companies who have screwed us for years? The auto workers could find jobs with the emerging auto makers.

The Big 3 have been in cahoots with the oil companies via interlocking boards of directors for years. GM had a perfectly good electric car, the EV1, in 1997 which it leased to individuals in California because California law at the time required a certain percentage of sales to be emission free. But instead of pursuing R&D and sales of the electric vehicle, they lobbied to get the law changed so that there was no mandate for emission free vehicles.

After a successful lobbying effort, GM called back all the EV1s. They had never sold them to the public - only leased them, and they would not let any of the lessees buy their vehicles outright so you know their intentions from the start were to get those cars off the road as soon as their lobbyists were successful in changing CA law.

In 2005 they crushed all the EV1s as if they wanted to blot them out of existence. Can you think of any other reason they would not at least sell them to the lessees or let them continue to exist? They were popular cars and many of the lessees begged GM to let them keep them. GM had no mercy. They were determined to force gas guzzlers on the American people because that's where their profits were.

So I say let GM die! They had no mercy for the electric car industry three years ago. Now they're the beggars, and they want the American people to rescue them when they had no sympathy for the American people just an eyeblink ago. Now they're crying crocodile tears and saying how much they love electric cars! Tesla Motors and other startups have done the R&D and due diligence for the next generation of electric vehicles. Taxpayer money should go to supporting them. They're the wave of the future not GM, Ford and Chrysler. Jobs can be transitioned from the Big 3 to Tesla Motors and other successful startups so it's not a question of saving jobs. Can government get off its ass, do something constructive and provide a transitioning process including extended unemployment benefits with a pathway to a new job in the electric car industry? It's not rocket science, folks.

Don't rescue smokestack industries but provide a path to the future for workers.

Also posted on Robert Reich's blog.

The Fed Just Printed $2 Trillion and Won't Even Tell Us Where It's Going!

In addition to the $700 billion bailout that Congress voted, an amount that will be added to the deficit and the national debt, the Federal Reserve's approach to bailouts is just printing money - $2 trillion worth. The beauty of this approach is that it just gets added to the money supply without creating taxpayer liability. It's a free lunch, so to speak. The US is already absorbing most of the world's savings to pay for its budget deficits. (Americans don't have any savings and they don't want to pay taxes so the money has to come from foreigners.) The Fed, unlike the Congress, can just print money, but it doesn't want us to know that so it keeps its operations secret. I don't believe they've loaned out taxpayer money. I don't see how the taxpayers are liable for anything the Fed does since its a private corporation unaccountable to the public. Ultimately though, all Americans depend on the success or failure of the US economic system.

This is from Bloomberg news:

Nov. 13 (Bloomberg) -- Members of Congress, taxpayers and investors urged the Federal Reserve to provide details of almost $2 trillion in emergency loans and the collateral it has accepted to protect against losses. At least five Republican members of Congress yesterday called for the Fed to disclose which financial institutions are borrowing taxpayer money and what troubled assets the central bank is accepting as collateral. More than 300 more investors and taxpayers also pressed for more disclosure in e-mails and interviews with Bloomberg News. ``There cannot be accountability in government and in our financial institutions without transparency,'' Texas Senator John Cornyn said in a statement. ``Many of the financial problems we are facing today are the direct result of too much secrecy and too little accountability.'' House Republican leader John Boehner and Republican Representatives Jeb Hensarling of Texas, Scott Garrett of New Jersey and Walter Jones of North Carolina also are pressing Fed Chairman Ben S. Bernanke to elaborate on the Fed's emergency lending. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in the separate $700 billion bailout of the banking system that was approved by Congress last month. Bloomberg News has sought records of the Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit Nov. 7 seeking to force disclosure. `Full and Fair Disclosure' The Fed ``should comply with this Freedom of Information Act request, and in the interest of full and fair disclosure, they must begin providing lawmakers and taxpayers all information about how they are using federal tax dollars,'' Boehner said in a statement. In a separate FOIA request, Bloomberg asked for details of the collateral the Fed accepted against a $29 billion loan to facilitate the merger between JPMorgan Chase & Co. and Bear Stearns Cos. to prevent the investment bank's collapse. The bank rejected that request in a letter dated Nov. 7. ``I have confirmed that the information you seek is confidential commercial information,'' Federal Reserve Governor Kevin Warsh said in the letter. ``The information at issue contains confidential commercial business information regarding securities pledged as collateral in connection with JPMCs acquisition of Bear Stearns.'' European Central Bank President Jean-Claude Trichet today urged greater disclosure to help strengthen the global financial system. Complex Financial Products ``Despite all regulatory advances and progress in information technology, the financial system has been characterized by a lack of transparency about the ultimate allocation of risks,'' Trichet wrote in today's Financial Times. He cited as examples ``the sheer complexity of structured financial products, which even sophisticated investors are not able to assess properly, and the lack of regulation of certain financial institutions.'' Separately, lawmakers are also pressing Bernanke and Paulson to better explain how the Treasury is implementing the $700 billion emergency rescue. In a letter to the Fed chairman and Treasury secretary yesterday, Senator Charles Grassley demanded details about how Treasury has chosen which banks got about $250 billion in cash infusions, what they are doing with that money and any contracts the department has signed to help implement the law. ``I am a strong believer that sunlight is the best disinfectant and think it is important that the process of implementing the Act be as transparent as possible, especially when taxpayer money is being used,'' Grassley said in the letter. Fed Lending Total Fed lending topped $2 trillion for the first time last week and had risen by 140 percent, or $1.172 trillion, in the seven weeks since Fed governors relaxed the collateral standards on Sept. 14. The difference includes a $788 billion increase in loans to banks through the Fed and $474 billion in other lending, mostly through the central bank's purchase of Fannie Mae and Freddie Mac bonds. Before Sept. 14, the Fed accepted mostly top-rated government and asset-backed securities as collateral. After that date, the central bank relaxed standards to accept other kinds of securities including those with lower ratings. The Fed collects interest on all its loans. Since then, U.S. government debt per capita has risen $3,000 to almost $35,000. Federal Reserve spokeswoman Michelle Smith didn't respond to calls or an e-mail seeking comment.

A particularly astute analysis of the situation is found here. The Fed can just loan out money on whatever terms it dreams up. Evidently, it has taken on some toxic assets as collateral. So what? Those assets are probably worth nothing but they don't want us to know that. Then they can keep a fig leaf over their money printing operation. The US is already absorbing 70% of the world's savings. With the recent runup in debt to bail out the financial sector, we would have to triple our borrowing from the rest of the world and you can't squeeze blood out of a turnip. So the obvious answer is that the Fed is simply printing the money which will eventually lead to inflation and interest rates going through the roof in order to attract more foreign money. This could be catastrophic for the US since, although there is a strengthening of the dollar now amid the current crisis, the value of the dollar could evaporate once the crisis resolves, and the rest of the world figures out what the Fed is doing. Since American consumption of foreign products is diminishing, the rest of the world will lose their incentive for loaning us money in order to keep us consuming their products.

This whole scenario points out the fact that the Federal Reserve should be converted into a US central bank accountable to the public and the Congress. It should be part of the Treasury Department. And here's the real reason why this would be beneficial to the economy: it would allow the US Central Bank to invest in revenue producing situations like renewable energy and infrastructure development. Right now you can't tell the Fed what to do. Congress could direct a real central bank in its operations. Right now the Fed will only do what it thinks is right for the financial sector. Congress could direct a central bank to invest in the industrial sector thus creating jobs. A central bank could alleviate the need for the Federal government to finance every program and initiative with Federal debt and change US insolvency into solvency.

Obama Shouldn't Get Bogged Down in Quagmire in Afghanistan

Obama has said he's going to "end the war in Iraq responsibly." This is all well and good. He's talked about repatriating the $10 billion being spent there each month. That would be wonderful for our ailing economy. But wait a minute. He wants to transfer the troops now fighting in Iraq to Afghanistan. Does that mean that then he's going to be spending the $10 billion, now being spent in Iraq, in Afghanistan? If so he will be trading one quagmire for another one with no financial benefit to the US let alone a benefit to the troops that will have to go on being redeployed indefinitely. Don't be suckered into fighting another Bush war while you end the first one!

Let's think this through. What exactly do we hope to accomplish in Afghanistan? To capture bin Laden? That's the only objective I've heard Obama mention. If this is the goal, do we really need a whole army to accomplish it? And what if he's dead or somewhere else altogether? Wouldn't it be better to locate bin Laden first and then take appropriate action to eliminate him? Having a whole army there is accomplishing nothing. They're just thrashing around and getting themselves killed. Bin Laden could be located by the CIA in a covert operation and then taken out by special forces. This does not require a $10 billion a month army. And it certainly does not require bombing and killing a bunch of civilians in the hopes of killing one al Quaeda. This is just a horrible policy that is only generating more enemies for the US. Targeted assasination is one thing; killing a bunch of civilians to get one al Quaeda is another. The former is reasonable; the latter is reprehensible.

I think Obama had to show that he was militarily tough during the campaign by saying he was going to beef up the war effort in Afghanistan as a way of balancing out his phasing out the war in Iraq. See he wants as much war as McCain ... just in a different place so, therefore, he's just as tough as a Republican. He's just as much of a hawk; he's just as strong and tough. Well it's one thing to campaign; unfortunately, this is what you have to do to appeal to the American people: look tough. But I think once in office he should reconsider. I think it's a big mistake to sink into the quicksand, and Afghanistan will just be an albatross hung around Obama's neck like Iraq was for Bush. Should we really be spending this much money and killing this many people or having our own troops getting killed just to get bin Laden? I think the answer is obvious. It's not worth it. Instead a covert CIA operation is the appropriate tool for the job. You don't need a brickbat to kill a flea.

And let's take a look at the war on terrorism from a strategic point of view. It's really a defensive not an offensive war, isn't it?. Whether or not we have a military in Afghanistan, whether or not we kill bin Laden, this has nothing to do with whether some terrorist can smuggle weapons and/or personnel into the US and wreak havoc. Do you really think we have them "pinned down" in Afghanistan? No, they could launch another terrorist attack within the US at any time especially since the US government has done little if anything in terms of border and port protection. The border is still a sieve! If bin Laden wants to bleed us dry financially, he's certainly accomplishing his goal. And Obama would be foolish to follow in Bush's footsteps in letting him accomplish it. Instead, the important thing is to recognize that protecting the American people from a terrorist attack is primarily a defensive - not  an offensive - operation. Controlling the border is the key, and intelligence both human and otherwise, the failure of which led to 9/11, is also of extreme importance. Border control should be thought more in terms of an electronic rather than a physical wall, sopisticated surveillance using satellites and drones and quick response by our military (rather than the ineffective Border Patrol) from bases along the border. Research and Development money should be going to border protection and not the programs the US is wasting money on now.

The military establishment in this country is out of control both in terms of the money they demand and in terms of their Keystone Kops approach to global military strategy. They don't know what they're doing largely because they've had a bunch of neocon nincompoops at the helm for the last eight years. With Bush, Rumsfeld and Cheney we've had the 3 Musketeers of Idiocy running the country and trying to run the world in a chauvinistic "up yours!" manner. Hopefully, Obama will hesitate a second, take a look around and consider whether or not he really wants to get into another Iraq quagmire in Afghanistan. I would implore him not to because it will be to Obama what Iraq was to Bush: a tremendous waste of blood and treasure. It will be something Obama will not be able to get out of without a huge loss of face; therefore, he will have to continue it ad infinitum or until the next election when another candidate will promise to end the war in Afghanistan. It will be Obama's Waste Waterloo, a tar baby that will stick to him, and he won't be able to let it go out of ego considerations the way Bush wasn't able to let go of the war in Iraq. It will require an open ended military and humanitarian commitment where there is no clearcut definition of winning or losing - just a war of attrition in which the US is the party which is attrited the most. Talk about burning through cash! For every dollar al Quaeda spends, we'll be spending hundreds of thousands, bombing civilians and creating enemies. To think that these rag tag mountain men are a real threat to the mainland of the US is ridiculous. There is enough resentment of the US outside of Afghanistan to fuel another 9/11 so the only real and meaningful response to terrorism is a defensive strategy that foils any attempt to pull something like that again, and diplomacy and creating good will will do more to prevent terrorism than all the military expenditures in the world.

Obama should also put an end to the foolishness of the Bush administration in wanting to put missiles in Poland. Talk about poking the Bear! This is a direct affront and slap in the face to Russia, a country that has tried to establish reasonable relationship with the western world and on which Europe depends for its oil. This is nothing more than an attempt to reignite the Cold War. Obama should put a stop to it on Day 1 as well as shutting down Guantanamo on Day 1. Don't fool around with Bush's insane and idiotic policies. Put an end to them immediately. This sends a message to the rest of the world that we are serious about reestablishing the US as a decent and sane player on the world scene.

Let's get real about protecting the American people. Fighting an unending, meandering war in Afghanistan is not the way to go. The budget for the military-industrial complex can be cut in half with more than enough left over to provide real - as opposed to fantasy - protection for the American people.

How the Banks are Actually Using the Bailout Money

Funding America’s Future Can Make You a Whole Lot Richer …

by Sean Brodrick   11-05-08

By the time you read this, America will have a new President. I hope he’s better with money than the last resident of the White House. Just look at how the Bush gang is spending the $700 billion bailout package for banks — throwing it at financial institutions with few strings attached.

As a result, many Wall Street institutions are using billions and billions of taxpayer dollars to pay for fat cats’ bonuses.

• Goldman Sachs, which is getting $10 billion from the bailout plan, is paying out $6.85 billion in bonuses, according to media reports. That’s $210,000 per employee. And that’s despite a 47% drop in its profit and 53% drop in its share price.

• Morgan Stanley, which is also getting $10 billion from our government, is doling out $6.44 billion in bonuses or $138,700 per employee, even though its profits tumbled 41% and its shares are off by 69%.

• And even the failures at Lehman Brothers are collectively getting over $1 billion in bonuses.

Buffett played his cards right and got a heck of a deal.

Some conservatives have been bemoaning the “nationalization” of America’s big banks. Yet we didn’t nationalize anything — we don’t control those banks. They’re free to spend the bailout money as they please.

And we got hosed.

If Only We Got A Deal
Like Buffett Did …

Just compare the deal Uncle Sam got for Goldman Sachs shares to the deal Warren Buffett made.

Warren Buffett invested $5 billion in Goldman Sachs in return for preferred stock and warrants to purchase common stock in the future. Buffett’s preferred shares pay a sweet 10% dividend.

But Goldman and the other big financial institutions needed more money to cover their bad bets.

So, 20 days later, Treasury Secretary Hank Paulson came along and made an investment for preferred stock and warrants in nine banks. Only the government’s preferred shares pay a measly 5% dividend.

Thanks for looking out for us, Hank!

It gets worse …

United Steelworkers Union president Leo Gerard recently wrote in a letter to Paulson that seems to ooze anger:

“Dollar for dollar, Buffett received at least seven and perhaps up to 14 times more warrants than the Treasury did, and his warrants have more favorable terms.”

Is it relevant that Paulson used to be the head of Goldman Sachs, one of the financials being bailed out?

Heck yeah!

Under his stewardship, Uncle Sam ended up paying $125 billon for what Warren Buffett thought was worth just $62.5 billion.

If the rest of the $700 billion bailout is dispersed using the same math, we’ll be gifting $350 billion to America’s biggest bankers — those bonuses have to come from somewhere — and then overpaying for what the other $350 billion buys us.

One Thing the Banks Are Not Doing With the Money:
Loaning It Out Like They Were Supposed To …

In their defense, the banks are saying that no one is queuing up for loans. Su-u-u-u-re. Just tell that to any auto dealer who can’t get money together to make payroll.

One place where big investment houses and banks did decide to put money to work was in shorting stocks.

A bunch of financial firms lined up to short Volkswagen. It seemed like a smart move, right? Cars sales are tanking. Problem is, at the same time, Porsche was stealthily buying Volkswagen shares until it acquired a controlling interest. Then the short squeeze was on. Those bailed-out firms suddenly had to cover their short positions and lost billions of dollars.

Some of them lost more on the Volkswagen deal than they ever lost on Lehman Brothers imploding!

The banks’ post-bailout behavior — no loans, blowing bailout money on bad investments — irked Barney Frank, chairman of the U.S. House of Representatives Financial Services Committee, one of the people who helped Paulson ram the Emergency Economic Stabilization Act of 2008 (EESA) through Congress.

Frank is supposed to be one of the “smart ones” in Congress. Here’s what he had to say:

“I am deeply disappointed that a number of financial institutions are distorting the legislation that Congress passed at the President’s request to respond to the credit crisis by making funds available for increased lending. Any use of these funds for any purpose other than lending — for bonuses, for severance pay, for dividends, for acquisitions of other institutions, etc. — is a violation of the terms of the Act.”

Nice words. Too bad they’re as hollow as a rotten log.

The language of the bailout does talk about homeowner assistance … limit executive pay … provide for government audits … etc. But it doesn’t dictate serious limits on how the banks can use the money. Barney Frank may have thought he had an understanding with Paulson, Fed Chairman Ben Bernanke and the big banks.

But that’s like having an understanding with Al Capone.

Seriously … If Frank is as smart as everyone says he is, and he’s making a deal with banks that have already shown they’re capable of blowing hundreds of billions of dollars on derivatives, shouldn’t he demand what he expects from them in writing before handing them a big bag of our money?

I guess I shouldn’t single out Congressman Frank. Plenty of others in Congress went along with Paulson’s plan. They say you get the leaders you deserve. But did we really deserve this?

Obama Wins Historic Victory. Now He Must Focus and Deliver!

Dr. Robert Reich is some- what pessimistic about the vested interests and the status quo not giving up just because Obama and the Democrats have swept into office with an impressive and historical win. After all it took an unpopular war, the worst Presidency in history and on top of that the worst financial crisis in 100 years occurring a few weeks before the election and McCain still got 48% of the popular vote! As much as Obama is a consensus builder and wants to "bring us together," there should be no illusions about the forces that are aligned and arrayed against him.

The Democrats still do not have a filibuster proof Senate and that means that the Republicans can obstruct every single piece of legislation that comes down the pike. If Obama does not have a plan to confront this possibility, he better get one. Otherwise, the Republicans will sit there and turn all his necessary and potentially groundbreaking plans for the transformation of this country into so much dross left on the cutting room floor. Obama needs to shed the naivete he seems at times to be dangerously close to having.

Obama's program as summarized in his last campaign commercial, if accomplished, would in and of itself represent earthshaking change for the US. This should be his primary agenda and he should drill down and go for it right out of the box, not fool around and dither with ancillary issues like Clinton did in his first days in office (gays in the military ... remember?).

1) End the war in Iraq responsibly. Repatriate most of the $10 billion a month we're spending there.

2) Initiate a massive alternative energy, infrastructure rebuilding and job creation program. (maybe with the $10 billion from Iraq.)

3) Reform health care so that everyone is covered at a lesser cost.

4) Give corporations disincentives for offshoring jobs and incentives for creating jobs at home.

5) Tax breaks for the middle class and tax increases for corporations and the wealthy.

These five agenda items spelled out by Obama himself in his campaign commercials and in his platform, if accomplished in his first term, would be a remarkable and revolutionary achievement. But massive forces will be arrayed against him. He shouldn't make Clinton's big mistake and play patsy with the Republican establishment or think he can "triangulate" and be nice to everybody. He shouldn't let them dictate a watering down of the necessary change we need for the preservation of anything resembling a half way decent democracy and a planet worth inhabiting. In short he's going to have to take the forces of the status quo and connservatism head on. To think otherwise would be a naivete we can not afford. Clinton's "triangulation" must be avoided at all costs. Clinton essentially let the Republicans have their way with him, and to avoid a do-nothing Presidency went along with things that in hindsight seem disastrous like deregulation and various free trade agreements.

The Republicans have it in their power to do to Obama what they did to Clinton: threaten him with a Presidency of no consequence. He at least needs a back-up plan to fight and take them on if Plan A for consensus building doesn't work. Don't play nicey-nice with the Republicans. And don't think that just because the American people (at least 52% of them) want change, the status quo gives a damn about them. They still represent 48% of the population and approaching 100% of the corporate big moneyed interests. And they can still filibuster him and the Democratic majority to death!

Green Revolution Promises a Return of Manufacturing Jobs to US

Even before the Presidential election and the hope that not only Obama will win but that he'll spend government money to create millions of jobs in alternative energy and rebuilding infrastructure, some communities are experiencing growth in green industries. In Newton, Iowa workers have been hit hard by the closing of the 100 year old Maytag plant, but a new company that builds wind turbines has moved into town. As new homegrown jobs are created replacing jobs shipped to China and Mexico, America may hope to recover from the offshoring of its industrial base to foreign countries.

But there will have to be an adjustment to the prevailing mindset that the antidote to losing one's job is to get a college degree. In fact most of the new jobs will not require a college degree - only some retraining at the community college level. The notion that a college degree will make someone impervious to job dislocation is a will 'o the wisp. The idea that Americans will be involved as some super intellectuals in college trained jobs while the rest of the world toils away at blue collar jobs is nonsense created as a rationale by corporations attempting to pooh-pooh the loss of manufacturing jobs as they ship them over seas.

Most of the work in alternative energy and infrastructure rebuilding will be in traditional blue collar jobs: assembly, installation, repair, transport. So there is no need for most people to waste their money getting a college education because a college education won't be needed for most jobs. People with an interest in a certain field and appropriate intellectual skills should get a college education but a lot of people have neither, and just having a degree in their hands is no guarantee of job security. They will just be told they're "over-qualified" as an explanation for not being hired. It's a myth created by the education business that everyone needs to go to college and have a college degree or their job prospects will be nill. It's BS. A college degree is not required for most jobs and there will not be enough jobs created that require a college degree. There's just the Zeitgeist that's been created that somehow you're a second class citizen unless you have a college degree. But we're faced with the reality that so many college graduates cannot find jobs so they work as taxi drivers and waiters and waitresses. Increasingly, the person asking "would you like fries with that " is a college graduate.

There is no need to have an inferiority complex because you don't have a college degree. The only people that should have college degrees are those who have a particular interest in a field that requires one and then there will be a lot of competition for a limited number of jobs in that field. So it's best to have a back-up plan. For instance, if you're a licensed architect and jobs are few and far between, you'd best have skills as a carpenter. You can always build spec houses. Basic skills in the long run are just as lucrative and they don't require huge investments in student loans which then you may or may not be able to pay back depending on whether you do or do not have a job and whether you will or will not be laid off. With a basic skill set you are more flexible. Having handyman and food preparation skills will virtually guarantee you a job any time, anywhere. And you will always be better off being in business for yourself than working for somebody else, a little secret they don't want you to know. This country was founded by yeoman, self-reliant small time operators, not employees answerable to an employer and subject to being dismissed at the employer's will. I doubt if Paul Revere would have countenanced such a position. When Patrick Henry said "Give me liberty or give me death" I don't think he was talking about the freedom to be an employee and have a job working for someone else.

This is from the New York Times article by Peter S Goodman, "A Splash of Green for the Rust Belt":

LIKE his uncle, his grandfather and many of their neighbors, Arie Versendaal spent decades working at the Maytag factory here, turning coils of steel into washing machines. When the plant closed last year, taking 1,800 jobs out of this town of 16,000 people, it seemed a familiar story of American industrial decline: another company town brought to its knees by the vagaries of global trade. Except that Mr. Versendaal has a new factory job, at a plant here that makes blades for turbines that turn wind into electricity. Across the road, in the old Maytag factory, another company is building concrete towers to support the massive turbines. Together, the two plants are expected to employ nearly 700 people by early next year. “Life’s not over,” Mr. Versendaal says. “For 35 years, I pounded my body to the ground. Now, I feel like I’m doing something beneficial for mankind and the United States. We’ve got to get used to depending on ourselves instead of something else, and wind is free. The wind is blowing out there for anybody to use.” From the faded steel enclaves of Pennsylvania to the reeling auto towns of Michigan and Ohio, state and local governments are aggressively courting manufacturing companies that supply wind energy farms, solar electricity plants and factories that turn crops into diesel fuel. This courtship has less to do with the loftiest aims of renewable energy proponents — curbing greenhouse gas emissions and lessening American dependence on foreign oil — and more to do with paychecks. In the face of rising unemployment, renewable energy has become a crucial source of good jobs, particularly for laid-off Rust Belt workers. Amid a presidential election campaign now dominated by economic concerns, wind turbines and solar panels seem as ubiquitous in campaign advertisements as the American flag.

An Nguyen Reports on the Water Situation in Singapore

Here is An's report:

Water is a very delicate issue between Singapore and Malaysia. This island country has very limited lakes, rivers and reservoirs to reverse its water shortage. Therefore, they rely heavily on Malaysia for their water supply. Currently, more than 40% of the water is being purchased from Malaysia, and Singapore insists that this country should honor its price from a 100 years old contract. Under this existing contract, Singapore pays Malaysia only three cents (less than 1 cent USD) per 1000 gallons of raw water. After processing, Singapore resells the water at $20 (about $7 USD) for the same amount of water. Their profit exceeds a billion dollars per year.   Malaysian's government feels that they have been taken advantage of by Singapore, and naturally, demands that Singapore pay more for their water. The two countries have engaged in many heated debates with threats exchanged from one to the other.   A few years ago, Singapore's government invested a lot of money in desalination projects and recycled sewage water plants. They are quite sucessful in terms of technology. The new desalination plan, with the price tag of more than USD $2.00 billion, has been built in the west side, while there are many recycling plants being set up in many parts of the island.The last Primeminister has even tried out the New Water (it should be called Eau de Toilet), which is recycled from sewage water, himself. He said that it tastes quite good. However, according to experts, even if these projects are put into full use, they could only supply about 10% of the water demand.   Water scarity is becoming the biggest concern in Singapore. No doubt that this country will face a huge challenge in the future.

And this from BBC News:

Water shortages are making waves all over the world, with supplies increasingly seen as an issue of national security. In Singapore, they have boiled it down to economics.

Singapore wants to store more rain

Singapore's water shortages have always posed a major challenge.

"Although we're on the equator and we've got lots of rain, we have nowhere to naturally store water," explains Khoo Teng Chye, chief executive of the city-state's Public Utilities Board, or PUB. "We have no groundwater."

For years, water has been imported through three pipelines from neighbouring Malaysia - an expensive and geopolitically troublesome solution that has long irked the Singaporean government.

The issue is becoming increasingly acute ahead of the expiry of two long-term supply deals that guarantee deliveries of Malaysian water for less than one cent per 1,000 gallons - some until 2011, some until 2061.

"The main Malaysian demand has been for a much higher price of water, which has varied from 15 to 20 times the current price," observes Cecilia Tortajada in her report Water Management in Singapore*.

Technological breakthrough

So Singapore has set out to find alternative ways to provide its 4.4 million people with 1.36 billion litres of clean water a day.

We use the terminology 'used water' rather than sewage to create the understanding that water is a resource Khoo Teng Chye, Public Utilities Board

As a first step, a string of massive reservoirs are being constructed to "harvest as much rain as possible", so that eventually, some two-thirds of the island's land surface will be under water, up from about half today, Mr Khoo explains.

In addition, desalination plants that turn salt water into drinking water provide 10% of Singapore's current needs.

But the real breakthrough has come from what Mr Khoo describes as NEWater, produced in water reclamation plants from so-called "used" water.

"We use the terminology 'used water' rather than sewage to create the understanding that water is a resource," says Mr Khoo with a grin.

The plants use advanced microfiltration or ultrafiltration, reverse osmosis membranes and ultraviolet technology to produce water that is almost as clean as the distilled variety, according to Mr Khoo.

Water for industrial use is transported in a separate pipe from Singapore's drinking water. The rest is mixed in with rainwater in the reservoirs.

"Singapore has successfully managed to find the right balances between water quantity and water quality considerations; water supply and water demand management... [and] strategic national interest and economic efficiency," according to Ms Tortajada.

Cheaper water

Five years ago, it cost up to three Singapore dollars ($2.20; £1.10) to produce a cubic metre of water in the existing desalination systems, Mr Khoo says.

systems, Mr Khoo says.

NEWater is so clean, it is bottled as a drink

Three years ago, the introduction of new technology on a vast scale reduced the cost to under a dollar. NEWater technology pushes costs much lower, so that now the cost of one cubic metre of water has been pushed down to 30 cents, which makes it all much more cost-effective.

Singapore's NEWater is produced in four plants that currently provide 15% of Singapore's needs.

A fifth plant is under construction. In three or four years, when they are all scaled up, they should provide 30% of the water needed in Singapore, Mr Khoo predicts.

Currently, each drop of water is used twice, which Mr Khoo refers to as "50% efficiency", though the target is 70%.

To achieve this, Singapore is using universally available technology, along with a rather big bundle of money.

Some $3.5bn (£1.75bn) has been invested in the last five years, and a further $3.5bn will be invested in the next five years.

"As we've built bigger and bigger plants, the cost per unit has come down dramatically," Mr Khoo says - partly thanks to economies of scale, but also because more clever ways of employing technology have been discovered.

"Our investment in water has created an industry in Singapore," Mr Khoo says. "It's a knowledge industry. We hire people from all over the world."

Global solutions

Last month, Singapore won the Environmental Contribution of the Year prize at the Global Water Awards 2008.

The people of Singapore are discovering new joys as the dams spread

"Singapore has led the world in water re-use," according to Christopher Gasson, publisher of the journal Global Water Intelligence.

"Other countries will surely follow its footprints."

"Water re-use and desalination are two key solutions for cities looking to manage their water supply in a sustainable way," observes Nobel Peace Prize winner Muhammad Yunus, praising Singapore's efforts.

Next month, Singapore International Water Week aims to bring together water industry officials and policymakers to make the search for solutions a global effort.

"We have solved our problems," insists Mr Khoo.

"Now we want to create a platform where people from all over the world can share the solutions."

* Water Management in Singapore, International Journal of Water Resources Development, June 2006.

Getting the Biggest Bang for the Buck

President Obama, if hopefully elected in a few days, would stimulate the economy by creating jobs in the alternative energy production industries and in rebuilding infrastructure.

This is from msnbc:

Democrat Barack Obama said Wednesday that as president he would spend $210 billion to create jobs in construction and environmental industries, as he tried to win over economically struggling voters. Obama's investment would be over 10 years as part of two programs. The larger is $150 billion to create 5 million so-called "green collar" jobs to develop more environmentally friendly energy sources. Sixty billion would go to a National Infrastructure Reinvestment Bank to rebuild highways, bridges, airports and other public projects. Obama estimated that could generate nearly 2 million jobs, many of them in the construction industry that's been hit by the housing crisis.

The question is exactly how does Obama plan to spend the $15 billion per year. I suggest that he get the biggest bang for the buck possible. One of the ideas is to use it in conjunction with a public-private partnership in such a way as to attract as much private capital with as little public capital as possible. New industries may have to be created from scratch because there would be more flexibility than there would be trying to deal with old industries. In this way a massive effort could be undertaken to provide solar, wind and other alternative energy. This would also have the effect of jump starting the economy creating millions of jobs.

Another area that needs immediate attention is fresh water production through desalination.

Other countries have successfully used public-private partnerships. They are necessary now for the US since, if private enterprise was all that was necessary, why haven't the solar and wind industries already have been provided. Where is the high speed rail? Europe and Japan have these things precisely because of government involvement. But let's be smart and fiscally conservative in the ways we use taxpayer money. Cost plus contracts should definitely be eliminated.

Let's explore innovative ways to get the most bang for the buck while keeping deficits to a minimum. With an equity stake, government can hope to pay back some day whatever deficits were created. It's a time honored principle to pay a toll when going over a bridge. This helps pay off the bonds that were issued to pay for the bridge. Let's extend this principle so that all monies spent by government are not merely outgo. There should also be a return to government. Using principles such as these, we could even hope some day to eliminate deficits and pay down the national debt.

Rather than outright own these enterprises or grant contracts to existing corporations that too often have proven to be boondoggles, perhaps government could provide "venture capital" and then take an equity stake in which a department of government has a say in how the project proceeds. That's why I have suggested creating a cabinet level Department of Trade and Industry similar to Japan's MITI.

In this way the deficit can hopefully be kept down while a massive undertaking can proceed without a massive investment.