February 28, 2010

Say No To Takers

From Dr. Mark Goulston:

Where do you find takers? Takers cross all socioeconomic, age, gender, ethnic, personal, occupational, and familial boundaries. There are taker husbands and taker wives; taker parents and taker children; taker brothers and taker sisters; taker friends and taker foes; taker neighbors and taker strangers; taker bosses and taker employees; taker young and taker old; taker Caucasians and taker African Americans; taker Asians and taker Europeans; taker New Yorkers and taker Californians; taker intellectuals and taker anti-intellectuals and taker writers and taker readers. (Fortunately, givers also cross all these boundaries, but more about that later).

What are some of the qualities present in most takers?

25 Warning Signals That You’re Dealing With a TAKER
  1. They act entitled to whatever they’re taking from you.
  2. They treat you as an extension of themselves.
  3. When they hurt or disappoint you they don’t experience guilt, shame or remorse.
  4. They won’t apologize to you, but will expect you to apologize to them.
  5. Their wish is your command, and if you don’t comply, you don’t love them.
  6. They believe their problems are someone else’s fault.
  7. They believe that you and everyone else are in this world to make them happy.
  8. When you give to them, they don’t feel compelled to say thank you or be grateful.
  9. If they feel taken from by you, they become outraged and entitled to become enraged.
  10. They don’t regret taking from you, but they regret not taking even more from you.
  11. They need to have the last word in conversations.
  12. They don’t take turns well.
  13. They are impatient and hate to wait.
  14. They interrupt or butt into conversations.
  15. They act as if they are always right.
  16. They act as if they are never wrong.
  17. When they’re frustrated, they feel justified in doing anything to make themselves feel better.
  18. They won’t tell you specifically what you are doing wrong or ask you directly for what they need— they expect you to read their minds.
  19. They are stubborn and you may confuse their stubbornness for strength and be attracted to them because of it.
  20. They aren’t motivated to know, care or do anything unless it gets them something.
  21. They are quick to ridicule or laugh at others, but have little ability to laugh at themselves or tolerate being laughed at.
  22. They either cannot or will not put themselves in another person’s shoes.
  23. They hold everyone else accountable, but evade being held accountable.
  24. They talk much more than they listen.
  25. They’ll expect a second, third and fourth chance from you when they hurt you; but they won’t give you a second chance when you hurt them.

February 27, 2010

Other People's Money Is So Much Fun

From a recent WSJ article:

To bring down costs, we need to change the incentives that govern spending. Right now, $5 out of every $6 of health-care spending is paid for by someone other than the person receiving care—insurance companies, employers, or the government. Individuals are insulated from the reality of what their decisions cost. This breeds overutilization of low-value health care and runaway spending.


If this type of big brother, unconstitutional regulation doesn't scare the heck out of you, then you scare the heck out of me:

The Obama administration on Friday proposed new regulations aimed at protecting workers' retirement savings from unethical financial advisers.

The safeguards would protect workers from conflicts of interest on the part of advisers who manage their 401(k)s and individual retirement accounts. The administration estimates that the protections would affect 15 million workers.

The proposed regulations would require retirement investment advisers and money managers to either base their investment advice on objective computer models certified by independent experts, or refrain from steering workers into funds they are affiliated with or from which they are receiving a commission.

I don't know how this country survived before Uncle Joe Biden and Uncle Barry Obama showed up to save us all from ourselves and from all of the dangers in the world. Since they seem to always know best, I guess it just makes sense for them to make all of our decisions for us and "protect" us from all of the evil money managers, lenders, insurers, bankers, and fill-in-the-blank.

For me, this goes so far beyond Democrat and Republican or Liberal and Conservative. It comes down to whether your believe in freedom and individual liberty and responsibility or you believe in having others "protect" you and decide for you what is best, what is safe, what is ethical, what is bad, what is good, what is expense, what is cheap, etc., etc..

February 26, 2010

Senator (and Dr.) Tom Coburn on Cost Containment at Yesterday's Health Care Summit

Coburn: Well, Mr. President, thanks for having us do this. I think today's going to be enlightening.

The first thing I would do is put out a caution to us because what I see the Congress doing and what I saw this last year is us actually performing bad medicine. And that is that we get stuck in the idea of treating the symptom rather than treating the disease.

And whether you go to Harvard or whether you go to Thomson Reuters, here's -- there are some facts we know about health care in America. And the facts we know is one out of every three dollars that gets spent doesn't help anybody get well and doesn't prevent anybody from getting sick.

The second thing we know is, from the Congressional Research Service, that most of the mal-drivers (ph) today in health care come from government rules and regulations. The government now directs over 60 percent of the health care in this country. And if throwing money at it and creating new government programs could solve it, we wouldn't be sitting here today because we've done all that. It hadn't worked. So what I thought we ought to do is maybe talk about why does it cost so much, because the thing that keeps people from getting access to care in our country is cost.

......So when you break down the costs, what we know is 33 percent of the costs in health care shouldn't be there.

And how do we go about doing that? And what are the components of that cost? And when you look at, when it's studied, if you look at what Malcolm Sparrow from Harvard says, he says 20 percent of the cost of federal government health care is fraud. That's his number.

If you look at Thomson Reuters, when they look at all of this, they say at least 15 percent of government-run health care is fraud.

Well, when you look at the total amount of health care that's government run, you know, you're talking $150 billion a year.

So tomorrow, if we got together and fixed fraud, we could cut health care 7.5 percent tomorrow for people in this country.

So what we ought to do is do the Willie Sutton thing. We ought to go for where the money is.

What's the other area? What we do know -- and I'm guilty of this, Dr. Barrasso's guilty of it, Dr. Boustany is guilty of it -- is a large portion of the tests we order every day aren't for patients. They're for doctors. And the reason they're there is because we are risk averse to the tort system and extortion system that's out there today in health care.

And there are a lot of ways to fix that. But I just went through last night, if you add up what Thomson Reuters, which looked at all the studies that have been done and combined them in, they say between $625 billion and $850 billion a year of health care dollars are wasted.

So it seems to me if cost is the number one thing that's keeping people from getting care, then the efforts of us, as we go after cost, ought to be to go to those areas where the cost is wasted.

And there's a philosophical difference in how we do that. One wants more government-centered approach to that. I would personally prefer a more patient-centered, market-orient approach to that. But nevertheless, there's where we can come together, just on those two areas, where we could cut costs 15 percent tomorrow. And that's for everybody in the country.

What would -- what would happen to access in this country if tomorrow everybody's health care costs went down 15 percent? Access would markedly increase.

So what I would hope we would do is that we would go back and concentrate on the areas that have the biggest pot of gold for us. And the biggest pot of gold is, is we don't incentivize prevention. We don't pay rewards for great management of chronic disease. We have a system throughout the country where we're encouraging lawsuits that aren't productive for the country, and what they actually do is cause the cost of health care to go through the roof.

We also know there's some other real things that we ought to address. There are conflict of interests within the medical field. There's nothing wrong with addressing those and taking those off (ph).

We know that we do not -- we absolutely do not incentivize prevention. And I'm not talking about creating walking paths. I'm talking about paying people who actually do a good job to do prevention.

Talking about changing the school lunch programs where it meets the needs, nutritional needs of Americans. Changing the food stamp program where it incentivize people to eat the right things, not the wrong things. We actually create more diabetes through the food stamp program and the school lunch program than probably any other thing, because we're not feeding a -- offering and incentivizing a great response.

You know, when you compare the private sector fraud rates, it's 1 percent compared to Medicare and Medicaid. You know, there's estimates that there's $15 billion worth of fraud in Medicaid a year in New York City alone.

......So we haven't attacked that. We haven't gone where the money is. And my hope would be that we would look at where the money is. And if truly it's accurate -- and I don't know many people that will disagree that $1 in $3 doesn't help somebody get well and doesn't prevent it, then we ought to be going for that $1 in $3.

February 25, 2010

David Ogilvy - We Sell or Else

I am a huge fan of the late and great advertising legend David Ogilvy.

If you have any interest in advertising or communication, take a few minutes to watch the video below:

Just a Little More Paul Ryan - I Just Couldn't Resist

Congressman Paul Ryan from today's health care summit:

Look, we agree on the problem here. And the problem is health inflation is driving us off of a fiscal cliff.

Mr. President, you said health care reform is budget reform. You're right. We agree with that. Medicare, right now, has a $38 trillion unfunded liability. That's $38 trillion in empty promises to my parents' generation, our generation, our kids' generation. Medicaid's growing at 21 percent each year. It's suffocating states' budgets. It's adding trillions in obligations that we have no means to pay for it.

.......Since the Congressional Budget Office can't score your bill, because it doesn't have sufficient detail, but it tracks very similar to the Senate bill, I want to unpack the Senate score a little bit.

And if you take a look at the CBO analysis, analysis from your chief actuary, I think it's very revealing. This bill does not control costs. This bill does not reduce deficits. Instead, this bill adds a new health care entitlement at a time when we have no idea how to pay for the entitlements we already have.

Now, let me go through why I say that. The majority leader said the bill scores as reducing the deficit $131 billion over the next 10 years. First, a little bit about CBO. I work with them every single day -- very good people, great professionals. They do their jobs well. But their job is to score what is placed in front of them. And what has been placed in front of them is a bill that is full of gimmicks and smoke-and-mirrors. Now, what do I mean when I say that?

Well, first off, the bill has 10 years of tax increases, about half a trillion dollars, with 10 years of Medicare cuts, about half a trillion dollars, to pay for six years of spending.

Now, what's the true 10-year cost of this bill in 10 years? That's $2.3 trillion.

It does couple of other things. It takes $52 billion in higher Social Security tax revenues and counts them as offsets. But that's really reserved for Social Security. So either we're double-counting them or we don't intend on paying those Social Security benefits.

It takes $72 billion and claims money from the CLASS Act. That's the long-term care insurance program. It takes the money from premiums that are designed for that benefit and instead counts them as offsets.

The Senate Budget Committee chairman said that this is a Ponzi scheme that would make Bernie Madoff proud.

Now, when you take a look at the Medicare cuts, what this bill essentially does -- it treats Medicare like a piggy bank. It raids a half a trillion dollars out of Medicare, not to shore up Medicare solvency, but to spend on this new government program.

Now, when you take a look at what this does, is, according to the chief actuary of Medicare, he's saying as much as 20 percent of Medicare's providers will either go out of business or will have to stop seeing Medicare beneficiaries. Millions of seniors who are on -- who have chosen Medicare Advantage will lose the coverage that they now enjoy.

You can't say that you're using this money to either extend Medicare solvency and also offset the cost of this new program. That's double counting.

And so when you take a look at all of this; when you strip out the double-counting and what I would call these gimmicks, the full 10- year cost of the bill has a $460 billion deficit. The second 10-year cost of this bill has a $1.4 trillion deficit.

And I think, probably, the most cynical gimmick in this bill is something that we all probably agree on. We don't think we should cut doctors 21 percent next year. We've stopped those cuts from occurring every year for the last seven years.

We all call this, here in Washington, the doc fix. Well, the doc fix, according to your numbers, costs $371 billion. It was in the first iteration of all of these bills, but because it was a big price tag and it made the score look bad, made it look like a deficit, that bill was -- that provision was taken out, and it's been going on in stand-alone legislation. But ignoring these costs does not remove them from the backs of taxpayers. Hiding spending does not reduce spending. And so when you take a look at all of this, it just doesn't add up.

And so let's just -- I'll finish with the cost curve. Are we bending the cost curve down or are we bending the cost curve up?

Well, if you look at your own chief actuary at Medicare, we're bending it up. He's claiming that we're going up $222 billion, adding more to the unsustainable fiscal situation we have.

And so, when you take a look at this, it's really deeper than the deficits or the budget gimmicks or the actuarial analysis. There really is a difference between us.

And we've been talking about how much we agree on different issues, but there really is a difference between us. And it's basically this. We don't think the government should be in control of all of this. We want people to be in control. And that, at the end of the day, is the big difference.

Now, we've offered lots of ideas all last year, all this year. Because we agree the status quo is unsustainable. It's got to get fixed. It's bankrupting families. It's bankrupting our government. It's hurting families with pre-existing conditions. We all want to fix this.

But we don't think that this is the answer to the solution. And all of the analysis we get proves that point.

Now, I'll just simply say this. And I respectfully disagree with the vice president about what the American people are or are not saying or whether we're qualified to speak on their behalf. So...... we are all representatives of the American people. We all do town hall meetings. We all talk to our constituents. And I've got to tell you, the American people are engaged. And if you think they want a government takeover of health care, I would respectfully submit you're not listening to them.

So what we simply want to do is start over, work on a clean- sheeted paper, move through these issues, step by step, and fix them, and bring down health care costs and not raise them. And that's basically the point.

Real Estate is Cyclical but The American Dream is Not

In his latest "Chairman's Corner" essay, real estate billionaire Tom Barrack tells the story of his grandfather Joe Barak. In 1892 when he was just 8 years old, Joe immigrated to the United States from a village called Zahle in Lebanon. He didn't exactly arrive during one of America's best decades. In fact:

During the 1890s, over 15,000 companies and 500 banks collapsed nationwide. Unemployment skyrocketed in one year from one million in 1893 to three million in 1894. The population at the time was about 60 million. The huge spike in unemployment combined with the loss of people's savings by failed banks meant that mortgage obligations couldn't be met. In desperation, people walked away from newly built homes.

Barrack's entire essay is worth reading, but I want you to pay particular attention to how he ends the piece:

Joe's story is not just the story of my family. It is the story of America. It is the story of all of our fathers, grandfathers and great-grandfathers. It is the story of Irish, Italians, Jews, Muslims, Buddhists, Koreans, Vietnamese, Polish, Russians and Chinese. There was no social security, no medical insurance, no welfare and no public schools. No one would give you anything except an opportunity to make something for yourself and no one was "entitled." The US was a creditor nation, set the gold standard, and was the largest manufacturer and exporter in the world; however, Joe found opportunity at a moment in which the US was being threatened and flailing in distress. It was at this moment that Joe and the millions of immigrants found the greatest of opportunities and never stopped dreaming. The American hero was the entrepreneur, the business owner, the employee who bought a house for his family - the capitalist. The government and the economy in 1893 were in as bad shape as we are now! The answer then was to work twice as hard, expect nothing, ask for nothing, give 200% and dream the dream. Crisis was the norm for these men and women, and there was no expectation that anyone other than themselves was going to make things better for them.

Today, the dream has turned into a nightmare and our children and our children's children will inherit tens of trillions of dollars in debt. We are not concerned with dreaming the dream and working to get there -- we are concerned with "living the life" and making sure someone gives it to us. We are in the midst of a populist revolution, which is shifting incentive from opportunity to entitlement. We are having a hard time separating heroes from villains. Yet through it all, the underlying foundation stone of everyone's dream - be it opportunity or entitlement - revolves around the dream or hope of prosperity, self-fulfillment and ownership. Real estate has always been an inherent part of the American Dream - the dream to own a home, a house, a gas station, a bakery, an office, a store. Through good times or bad times, the pureness of the desire has remained steadfast. Only the belief and conviction in how to get it and preserve it has faltered.

There is no doubt that real estate is a cyclical industry and I promise in future Chairman's Corners we will deal with our specific points of view in this regard. However, the American Dream should not be cyclical. This is our real ability and power as individuals. The enormity of the economic and political woes across our country weigh heavily on our shoulders and the solutions vanish in the horizon. Residential foreclosures are an epidemic, household wealth has diminished, household debt is overwhelming, and meteoric unemployment, lack of availability of credit, and a confusing political situation have dampened our enthusiasm and dimmed our dream. The real solution is for us to embrace, embellish and replenish the dream.

One individual can make a difference, can defy the odds, can work harder, imagine more, and create more. There is no need for bailouts, subsidies, supports and more entitlement programs. Our children already owe $53 trillion for our own debts, social security and healthcare. We adults will limp along, having had the benefit of the good times. However, our children's dreams will be put to sunder unless we all embrace individual responsibility to "make it happen" ourselves.

We need to restore the American Dream before it becomes a Global Nightmare. That can only be done one dreamer at a time. Joe found opportunity in the midst of the worst financial panic of our country's history to that point. Why?? Because he and your fathers, grandfathers and great-grandfathers took absolute accountability and responsibility for their own actions and held on to the belief that in America, all things are possible if you make it happen. Don't rely and expect, just do! And do it now!!!!!

February 24, 2010

Bank Lending Chart of the Day

Just the Facts from Senator Tom Coburn

  • The federal government now has 2.7 million civilian federal employees.

  • The average annual salary for a full time federal employee is $74,403 (2009).

  • According to a recent news analysis of federal employment data during the current recession, the number of federal employees earning more than $100,000 has risen by 46 percent, the number making more than $150,000 is up by 119 percent, and the number earning more than $170,000 grew 93 percent.

  • From 2001-2007, a comprehensive review of federal employees revealed that 18 federal agencies had logged 19.6 million absent-without-leave (AWOL) employee hours. An estimated 300,000 federal employees were classified as AWOL during this period, with the incidence of AWOL employees growing by 45 percent from 2001 to 2007.

  • For the most recent five-year period examined by Congress, federal agencies spent $1.4 billion attending conferences, oftentimes in hot vacation spots like Las Vegas, Orlando and Hawaii. In one year alone, nearly 21,000 Department of Agriculture employees visited more than 6,700 “conference and training” activities around the world. Between 2005 and 2007, the Department of Homeland Security sent employees to more than 8,000 conferences at a cost of $110 million.

  • Official estimates indicate that $68 million is lost each year as federal employees nearing retirement use up sick leave time.

  • In its “13 Careers for the Next Decade” feature, Kiplinger’s magazine encourages its readers to pursue federal government management positions, noting it will be “the largest source of new jobs” with an expected 300,000 hires over the next two years alone.

  • In estimating federal employment trends, the non-partisan Bureau of Labor Statistics (BLS) predicts a 19.5 percent increase in the number of tax examiners, collectors, and revenue agents over the next decade.

  • While the BLS forecasts a 1.3 percent drop in the need for economists within the federal government over the next ten years, it expects to see an 8.6 percent rise in the number of lawyers employed by federal agencies.

February 23, 2010

Thomas Sowell on Who's To Blame

The great economist Sowell as usual makes you think a little bit deeper about who's really to blame for our current economic mess:

When government policy is mentioned at all in handing out blame, it is usually blamed for not imposing enough regulation on the private sector. But there is still the question whether any of these explanations can stand up under scrutiny.

Take Wall Street "greed." Is there any evidence that people in Wall Street were any less interested in making money during all the decades and generations when investments in housing were among the safest investments around? If their greed did not bring on an economic disaster before, why would it bring it on now?

......But an increased demand for housing does not automatically mean higher housing prices. In places where supply is free to rise to meet demand, such as Manhattan in the 1950s or Las Vegas in the 1980s, increased demand simply led to more housing units being built, without an increase in real prices-- that is, money prices adjusted for inflation.

What led to a boom in housing prices was increased demand in places where supply was artificially restricted. Coastal California was the largest of these places where severe legal restrictions on building houses led to skyrocketing housing prices. Just between 2000 and 2005, for example, home prices more than doubled in Los Angeles and San Diego, in response to rising demand in places where supply was not allowed to rise to meet it.

.......If the housing boom was so localized, how did this become a national problem? Because the money that financed housing in areas with housing price booms was supplied by financial institutions across the country and even across the ocean.

Mortgages made in California were sold to nationwide financial institutions, including Fannie Mae and Freddie Mac, and to firms in Wall Street which bundled thousands of these mortgages into financial securities that were sold nationally and internationally. The problem was that, not only were these mortgages based on housing prices inflated by the Federal Reserve's low-interest rate policies, many of the home buyers had been granted mortgages under federal government pressures on lenders to lend to people who would not ordinarily qualify, whether because of low income, bad credit history or other factors likely to make them bigger credit risks.

February 22, 2010

Dr.J on Abuse of Power

The following is from a letter Dr. Samuel Johnson sent John Taylor in 1784:

"Empires are broken down when the profits of administration are so great, that ambition is satisfied with obtaining them, and he that aspires to greatness needs do nothing more than talk himself into importance. He has then all the power which danger and conquest used formerly to give; he can raise a family, and reward his followers."

February 21, 2010

One More From Congressman Paul Ryan

I promise this is my last Paul Ryan post for a few months. Congressman Ryan has spent most of his adult life studying economics and the federal budget, and it appears that his preparation has led him to the forefront of our fight against fiscal ruin.

His latest piece in Newsweek is essential reading for anyone who cares about what our future is going to look like:

Imagine your family's finances if you spent and borrowed like Washington: you'd owe $60 in credit-card loans for every $100 of income. Every month you'd pay back a little but borrow even more. In 10 years, you'd owe $87 for every $100 you made. At some point you'd hand off the debt to your kids. If they worked until 2035, they'd owe more than $180 for every $100 they earned. In 2050, your grandkids would owe more than $320. By 2080 they'd owe seven times their earnings. Of course, lenders would cut them off well before then, and your family would be ruined. But this is the path your government is on right now.

......Consider just one program: Medicare. Today, this program is short $38 trillion of what it promises to provide your parents, you, and your kids. In five years, the hole will grow to $52 trillion. Your family's share: $458,000. Medicaid will add trillions more in state and federal debt.

......Critics say that any attempt to cut entitlements is tantamount to political suicide. Nonsense. Most Americans see such reforms as common sense. It makes sense to gradually increase the eligibility ages for Social Security and Medicare—Americans are living decades longer than when these programs were first enacted. It also makes sense to tie benefits to income so that those with fewer resources receive more support. Arguing in favor of "means testing" Medicare premiums, House Majority Leader Steny Hoyer, the respected Maryland Democrat, put it well late last year: "We have to buck up our courage and say that if we try to take care of everybody, we won't be able to take care of those who need us most."

One frequent charge against these reforms is, however, correct: the Roadmap does shift power to individuals at the expense of government control. It rejects the merits and sustainability of a cradle-to-grave welfare state, which drains individuals of their self-reliance. The plan unapologetically applies our nation's founding principles—individual liberty, limited government, and free enterprise—to the challenges of today. And the Roadmap does this in a way that honors our historic commitment to strengthening the social safety net for those who need it most.

February 20, 2010

Munger's Basicland Parable

Charlie Munger, Warren Buffett's business partners, has penned a very entertaining, insightful, and even frightful parable about how a "fictional" country named Basicland ruined itself financially.

From Munger's piece:

In the early 1700s, Europeans discovered in the Pacific Ocean a large, unpopulated island with a temperate climate, rich in all nature's bounty except coal, oil, and natural gas. Reflecting its lack of civilization, they named this island "Basicland."

The Europeans rapidly repopulated Basicland, creating a new nation. They installed a system of government like that of the early United States. There was much encouragement of trade, and no internal tariff or other impediment to such trade. Property rights were greatly respected and strongly enforced. The banking system was simple. It adapted to a national ethos that sought to provide a sound currency, efficient trade, and ample loans for credit-worthy businesses while strongly discouraging loans to the incompetent or for ordinary daily purchases.

Moreover, almost no debt was used to purchase or carry securities or other investments, including real estate and tangible personal property. The one exception was the widespread presence of secured, high-down-payment, fully amortizing, fixed-rate loans on sound houses, other real estate, vehicles, and appliances, to be used by industrious persons who lived within their means. Speculation in Basicland's security and commodity markets was always rigorously discouraged and remained small. There was no trading in options on securities or in derivatives other than "plain vanilla" commodity contracts cleared through responsible exchanges under laws that greatly limited use of financial leverage.

In its first 150 years, the government of Basicland spent no more than 7 percent of its gross domestic product in providing its citizens with essential services such as fire protection, water, sewage and garbage removal, some education, defense forces, courts, and immigration control. A strong family-oriented culture emphasizing duty to relatives, plus considerable private charity, provided the only social safety net.

.....As Adam Smith would have expected, GDP per person grew steadily. Indeed, in the modern area it grew in real terms at 3 percent per year, decade after decade, until Basicland led the world in GDP per person. As this happened, taxes on sales, income, property, and payrolls were introduced. Eventually total taxes, matched by total government expenditures, amounted to 35 percent of GDP. The revenue from increased taxes was spent on more government-run education and a substantial government-run social safety net, including medical care and pensions.

.......But even a country as cautious, sound, and generous as Basicland could come to ruin if it failed to address the dangers that can be caused by the ordinary accidents of life. These dangers were significant by 2012, when the extreme prosperity of Basicland had created a peculiar outcome: As their affluence and leisure time grew, Basicland's citizens more and more whiled away their time in the excitement of casino gambling. Most casino revenue now came from bets on security prices under a system used in the 1920s in the United States and called "the bucket shop system."

The winnings of the casinos eventually amounted to 25 percent of Basicland's GDP, while 22 percent of all employee earnings in Basicland were paid to persons employed by the casinos (many of whom were engineers needed elsewhere). So much time was spent at casinos that it amounted to an average of five hours per day for every citizen of Basicland, including newborn babies and the comatose elderly. Many of the gamblers were highly talented engineers attracted partly by casino poker but mostly by bets available in the bucket shop systems, with the bets now called "financial derivatives."

Many people, particularly foreigners with savings to invest, regarded this situation as disgraceful. After all, they reasoned, it was just common sense for lenders to avoid gambling addicts. As a result, almost all foreigners avoided holding Basicland's currency or owning its bonds. They feared big trouble if the gambling-addicted citizens of Basicland were suddenly faced with hardship.

.......How was Basicland to adjust to this brutal new reality? This problem so stumped Basicland's politicians that they asked for advice from Benfranklin Leekwanyou Vokker, an old man who was considered so virtuous and wise that he was often called the "Good Father." Such consultations were rare. Politicians usually ignored the Good Father because he made no campaign contributions.

.......The strong faith of these Basicland economists in the beneficence of hypergambling in both securities and financial derivatives stemmed from their utter rejection of the ideas of the great and long-dead economist who had known the most about hyperspeculation, John Maynard Keynes. Keynes had famously said, "When the capital development of a country is the byproduct of the operations of a casino, the job is likely to be ill done." It was easy for these economists to dismiss such a sentence because securities had been so long associated with respectable wealth, and financial derivatives seemed so similar to securities.

Basicland's investment and commercial bankers were hostile to change. Like the objecting economists, the bankers wanted change exactly opposite to change wanted by the Good Father. Such bankers provided constructive services to Basicland. But they had only moderate earnings, which they deeply resented because Basicland's casinos—which provided no such constructive services—reported immoderate earnings from their bucket-shop systems. Moreover, foreign investment bankers had also reported immoderate earnings after building their own bucket-shop systems—and carefully obscuring this fact with ingenious twaddle, including claims that rational risk-management systems were in place, supervised by perfect regulators. Naturally, the ambitious Basicland bankers desired to prosper like the foreign bankers. And so they came to believe that the Good Father lacked any understanding of important and eternal causes of human progress that the bankers were trying to serve by creating more bucket shops in Basicland.

......As it worked out, the politicians ignored the Good Father one more time, and the Basicland banks were allowed to open bucket shops and to finance the purchase and carry of real securities with extreme financial leverage. A couple of economic messes followed, during which every constituency tried to avoid hardship by deflecting it to others. Much counterproductive governmental action was taken, and the country's credit was reduced to tatters. Basicland is now under new management, using a new governmental system. It also has a new nickname: Sorrowland.

February 19, 2010

Why I Love My Wife

Not only is she a great wife and the best mother of all time, but she has a mind like a steel trap and can state a case better than anyone I know.

Here is the text of an email she sent to Congressman Jim Cooper's office regarding the health care debate:

Good morning! Thank you for your email. I appreciate the follow up to my call in January regarding the healthcare legislation and debate. I am gratified to learn of the conference next week and hope it signifies the start of a more collaborative and transparent process.

I'm writing because I'm extremely disheartened by something I read in the The New York Times this morning. This paper is reporting that the White House is crafting health care legislation, which it plans to present to the public before the conference next week. Furthermore, this is legislation that will be attached to the budget bill and passed through Congress on a reconciliation vote. I'm confused. I thought the point of the conference was to open the debate to Republicans and invite the public to be more aware of the issues discussed. Why then is the White House busy drafting legislation now? Why is it insisting on ramming legislation through Congress?? It delegitimizes the entire process, especially the conference.

Furthermore, while the WH drafting legislation is not without precedent, it shows a blatant disregard and disrespect for the Constitution and Congress. Congress is the legislative arm of our government, not the White House. The president does not represent every constituent in this country, but Congress does. That's why Congress, and only Congress, has the responsibility and privilege to draft legislation. It's no excuse that the president says the legislation will combine provisions already in the House and Senate bills. This is a new piece of legislation. And, not only is the president now writing the health care legislation himself, but he's doing so without the assistance of anyone in Congress. The New York Times reported that only Nancy Pelosi and Harry Reid have been informed of what might be in this bill. I'm appalled! And so should be every single member of Congress, Democrat and Republican alike. Where's the democracy in this?? Where's the legitimacy in this?? Where's the "for the people, of the people, by the people" in this??

Here's what shocks me: America (myself included) has made is clear that we are dissatisfied and even anxious about sweeping healthcare legislation and the process it's gone through for the past year. We voted for a Republican in MA. Democrat Senators are choosing to not run for reelection in the Fall for fear of voter retribution. Formerly "safe" Congressional seats are now close races. 78 percent of Americans disapprove of the job Congress is doing and fewer than half approve of the job the president is doing. There have been angry editorials, town hall meetings, and protests across this country. It couldn't be any clearer where America stands on this issue. And yet, the president decides it's a good idea to embark upon an even less transparent, more closed-door, less collaborative process to ram through legislation fewer than 1 in 10 Americans even care about and support?

I hope Congressman Cooper will speak out against this outrage. I hope he'll state his disappointment in this new turn of events. I hope he won't support any healthcare legislation that hasn't been a product of Congress with the approval of Americans that is passed through Congress in the only legitimate manner (not a reconciliation vote). If Congress doesn't get this message now, they will come November.

I would be grateful if you would pass my outrage and hopes along to the Congressman. Thank you.

February 17, 2010

Who Shall Dwell in His Tent

I am always amazed at how so few words from the Bible can encompass so much about life and about living:

A Psalm of David.

15:1 O Lord, who shall sojourn in your tent?

Who shall dwell on your holy hill?

2 He who walks blamelessly and does what is right

and speaks truth in his heart;

3 who does not slander with his tongue

and does no evil to his neighbor,

nor takes up a reproach against his friend;

4 in whose eyes a vile person is despised,

but who honors those who fear the Lord; who swears to his own hurt and does not change;

5 who does not put out his money at interest

and does not take a bribe against the innocent.

He who does these things shall never be moved.

Pile It On

From the website Bankruptingamerica.org:

The average American worked 111 days to pay off their share of the federal government. This is one month longer than it took a decade ago.

The government is growing fast. Outlays (i.e. spending) increased 18 percent, or $535 billion, from the year before. Over the last four years outlays have grown 42 percent, or more than $1 trillion.

The government is growing faster than the U.S. population. Since 1960 the U.S. population has grown by 70 percent while federal spending has grown by over 500 percent.

Federal spending represents more and more of the economy. As a percentage of the nation’s economy, outlays grew from 20.7 percent in 2008 to 24.7 percent in 2009.

Total revenues cost each citizen $6,500 on average, or $2.1 trillion total. The public paid $915 billion in income taxes.

Taxes and debt burdened America’s families. According to the Tax Foundation, Americans worked five months (until May 29) to pay off the total burden of federal, state, and local taxes and the national debt.

Lastly, here’s the breakdown of how the money was doled out:

About 60 percent of the budget was spent on mandatory spending. Nearly $678 was spent on Social Security programs. $425 billion on Medicare. $251 billion on Medicaid. $607 billion on “Other” mandatory spending programs.

About five percent was spent on paying interest on the national debt. The Department of the Treasury spent $187 billion paying the national debt’s interest.

Departments spent a lot. The Defense Department spent $637 billion. The Agriculture Department spent $114 billion. The Transportation Department spent $73 billion. The Department of Housing and Urban Development spent $61 billion. The Education Department spent $53 billion. The Department of Homeland Security spent $52 billion.