Scheduled Automatic Congressional Pay Raise

Any member of Congress that accepts the January pay raise of $4700 that Congress has built into our national law lacks a moral compass and is shameless. They failed to stop the financial crisis that has occurred and so far have failed to stop it. Their approval rating is in the toilet. Citizens wonder who is representing them while watching Corporations reap the rewards of our labor. Lives of whole families are being destroyed. Retirements are shattered. And these so called "Leaders" get a pay raise instead of the cuts they want to see from the inept auto executives. Shameless gall.


Joe

The Last Christmas

2008 was the year of the great meltdown of the world’s financial systems. In the United States, the media named the housing situation as the main culprit. In reality, the real problem is the 400 trillion dollars in debt the world has produced while establishing the global market.
2009 will be the year of the complete collapse of the financial system. Starting in February, people will realize more stores closing as well as many malls having from one quarter to a half of the stores boarded up. By the time summer rolls around unemployment will be 25%. There will be food riots, a worthless dollar and higher taxes.
The media says a lower dollar will help the United States sell more products overseas. How can this possibly happen when the United States does not produce anything?
Higher taxes may compel people to revolt against the present system and demand change. The best Christmas gift to give this year would be liquor to help drown some of these problems and guns to protect what assets you have left.
As for the stock market, I predict it to drop to 5,000. The best investment will be put options (Put options are short term investments predicting the price will drop) in the commercial real estate market and retail industry.
The way out of this financial crisis is to develop new energy sources or other new technologies to create job growth and reduce/eliminate national debt.

Nick

Goldman Sachs Paying Bonuses from Bailout Money

Goldman Sachs has been reported as paying bonuses out of the bailout money they got from the government (taxpayers. They supposedly didn't have the exact figures but stated that they had to pay the money to retain high producing individuals.

Oh Really! I wonder just where they would go since all brokerages and investment and insurance companies are cutting back on personnel. Do we really believe they will say change fields since they can't go to another company? Or will they just suffer along like the rest of us until times get better. These blatant corporate lies that insult our intelligence really make me steam and want to just say let them go under in bankruptcy because those of us who are suffering think they should too.

Joe

Congressional Approval Rating

It is interesting that some members of Congress are demanding that Auto workers and executives should take large paycuts due to their need for bailout after failing to build cars that can be sold profitably in the United States.

Apparently, the same rule should apply to members of Congress who currently have approval ratings below 20% because of failure to regulate the financial world, solve the high cost of healthcare, end the war in Iraq, and fix social security and medicare funding among many other things.

Funny how you can always judge the other guy and ignore your own failings.

Joe

Solution to the Financial Crisis

Government spending will not get us out of the current financial crisis, only growth in our economy will do that effectively. Deficit spending raises the risk of inflation long term, growth in Gross domestic products can increase revenues but that takes jobs and spending. Our economy is 67% driven by consumers, but our income distribution is too slanted to the upper income families or tax units.

According to the Tax Foundation in 2006, the top 10% of Tax filers controlled 46% of the 8 Trillion dollars of income reported, that is some 3.8 Trillion dollars. The top 10% of filers consisted of some 13.6 million taxpayers.

Considering the studies that show the average American's compensation has been stagnant since the middle 1970's, trickle down does not work. The movement of the wealthy out of the stock market and into commodities, and hedge funds during the last decade also lead to the curtailment of venture capital into small businesses.

The well off and conservatives fear that our leaders will move to Socialism but I think of it more like fishing. The more lines in the water: the more chance of catching something. You have to get consumers spending if you want growth when the economy is driven by consumers.

Joe

The 700 Billion dollar Bailout and Executive Compensation

One of the hooks in the Government bailout program was to control executive compensation, but at the last minute the Bush administration changed the terms by inserting one sentence in the Congressional agreement. The change stipulated that the penalty clause in the agreement would be invoked only to those firms who received bailout funds by selling troubled assets to the government in an auction, which is the way that the Treasury department has said that it planned to use to disburse the money. This created a massive loophole because to date none of the money disbursed has gone through the auction markets at all.

Once again the taxpaying population has been sold down the river because over half the money has been disbursed so far and the government has no real means of monitering executive compensation at the firms who have benefited.


Joe

With the massive Government spending is Skyrocketing Inflation Next?

I read that the government has increased the money supply by 76% in the last year. Traditionally, when you increase the money supply it creates inflation because their is more money chasing the same products.

This time I am not sure that will happen because over 1.2 million jobs have been lost this year and the government is seeking huge pay and benefit cuts from the auto industry to save them from going out of business. This can only lead to slower consumer spending which usually causes prices to drop. In addition, our exports and impoorts are both down. Tourism is down. Travel is down.

I am sure that the corporations who have facilities overseas will find ways to keep money out of the the United States to avoid taxes but all in all, I haven't been able to see any way the prices can go up in the short term.

Of course, we all remember how prices shot up when investors switched to the commodity markets and oil instead of stocks. Businesses couldn't add surcharges and fees nor increase prices fast enough to cover their increased raw material costs. And we all know how fast they recinded those when the price of oil fell from $147 a barrel to the present $40+ range, don't we? What you didn't? Maybe, because the famed "The markets will take care of things" principle is another thing that no longer seems valid because of government interventions.

Joe

Cost of Medicine

It is common knowledge that you can get American made medicine cheaper in Mexico and Canada but I just read in the Economist magazine that Europe is enjoying the same benefit.

Merck apparently is worried about possible drug-price controls and that "They are completely opposed to such European-style rationing of care". The article goes on to say that the industry makes much of its profit in the unfettered American market and price controls would threaten that flow of cash. Then Merck says that would curtail investing in research and that everyone would suffer, since the rest of the world free-rides on American spending.

The article mentions that if the government were to demand a 20% cut in the drug prices paid by Medicare that it would shave profits at the biggest drug firms by a mere 5%. I, for one, would like to see them recover that loss by discontinuing the annoying ads for Viagra and all those other sex assistance medications.

Think about that all of you who have to reduce or eliminate your own medications because you can no longer afford to pay for them.

Joe

Unemployment in the United States and Reporting

According to Bureau of Labor department, our national unemployment rate has hit 6.7% of our total labor force; however, that doesn't count the unemployed who want to work but have given up looking. According to The Economist magazine the real rate is 12.5%. The official count of unemployed is 10.3 million workers per the Labor department, so 12.5% is really 19.3 million out of work.

Another figure of the Labor department is 80.2 million not in the work force, but the population of the United States is over 305 million people. Granted some are children or retired but since 70 million people are not accounted for over an above the 80.2 million, I wonder how many are not working who don't want to work. As I recall the part timers are counted in the employment figures.

I just wish the newspapers and the media would spend more time reporting things that effect our economy than 80% of the stuff that they do print. Newspapers can't compete with the Internet, Television, and our cell phones so they should spend time doing investigative reporting that could do the search most of us don't have the time to do.


Joe

AMERICA All

According to two studies that I have been looking at, the majority of Americans have been victimized in a shameful manner.

A University of California at Berkeley study indicates that the average taxpaying unit claimed income of arount $40,000 in 1974 versus over $52,000 in 1984 which averages out to less than 1% per year. Both figures are adjusted for inflation thru 2006.

Meanwhile at Inflation.com website, the historical CPI using Bureau of Labor statistics and based on a 1982 baseline of 100 indicates that costs have risen by 110% for the same period of time with an average of 7.01% per year. Between 1984 and 2004, the CPI rose another 76%.

All that means is that if you earned a dollar in 1974 according to the Berkeley study you would have been making $1.12 and something that cost you a dollar in 1974 would cost $2.11 in 1984. So if you wonder why you can't control your spending it is because your income is stagnant and inflation is not.

I wonder how our leaders expect a consumer driven economy to survive with income falling so far below costs? Something must change.

Try getting a raise or a new job in the current economy if you are the average American.

I Thoght Nobody Listens to You Anymore

Recent episodes with sales people led me to believe that nobody really listens anymore, especially in fast food service. Three mix-ups in orders in the same day left me feeling pretty bad about service.
c
While it is true, that many working in service for $8 to 10 dollars an hour in jobs that have no real future, some people still do listen to you.

Today I was in Dunkin Donuts standing in line hoping to order four powered sugar cake donuts and watching the supply rapidly dwindle. I had heard one of the wait people in one of the two serving lines say that they were out of one kind of donut.
When it got to be my turn,there was only three of my donuts left when I heard the guy in the next line ask for two powered sugar donuts before I got to speak.

I asked the wait person "How many powered sugar donuts were left?". She replied that there was only one but she would check to see if any were in the back. There were none

Meanwhile, the guy next to me overheard the exchange and said that he would give up his order since I had come specifically for those and he didn't really care if he had that kind. I gladly thanked him for his generoisity. Makes for a good Christmas story, doesn't it?

However, don't get to excited. To make up for the shortfall, I asked for a Apple Crisp and got a French Cruller which I didn't notice until I got home because I was looking at the Friendly donut giver-upper when the non-listening error occured.

Merry Christmas.

Joe

A Chance for Corporate Executives to Help with the Financial Crisis

A 1974 Law made it possible for Corporate executives to delay taxes on compensation like a gigantic 401 or IRA but without the limitations that us mere mortals are stuck with Now there is an opportunity for them to help with the financial crisis.

Some well known CEO's have deferred income on millions of dollars each year, like one of the most extreme cases, Roberto Go1zueta of Coca Cola in 1992. He was given 1 million shares of Coca Cola worth 81 million dollars at the end of 1991. The compensation was not reported as part of his compensation in the stockholder reports but was buried in a footnote in the report.

Since then executives everywhere have used his case as a model for increasing their wealth. They are allowed to defer as much compensation as they want- unlimited. The money is usually placed in a trust account for them while being kept on the company books as a liability. The company must forgo taking the income tax relief for the expense until it is withdrawn. Many of these deferred incomes draw interest at high levels, as much as twelve percent. Some have the option of taking interest or company stock at a initially fixed price, with an override that if the interest rate is chosen but the stock price moves higher, the executive gets the highest total dollar compensation.

According to David Cay Johnston in his book, "Perfect Legal" - "While these plans were carefully designed to conceal their true costs, that does not change the fact that there is no free lunch. The true price of deferral may be hidden, but it must be paid somehow and by someone. Those someones included millions of people whose careers were ended prematurely by the forced retirements that began sweeping through Corporate America in the late eighties. They included people who were never hired because payrolls shrank. They even extended to people who instead of solid jobs at big companies had to settle for work at discount wages, with few benefits, at firms created to do the work the big companies outsourced. They extended to people who kept their jobs at big companies, but had their health and retirement benefits trimmed and sometimes eliminated."

Congress needs to eliminate this loophole to increase taxes today. Corporations should discontinue giving the deferrals then they would not need to make loans to create new jobs and capital.

I keep trying to finish the above mentioned book but I can usually only read a page or two at a time then I have to take a blood pressure pill to control my wrath.

P.S.- Entertainers and Athletes get the same deferral deal. Please get mad and write to your representatives.

Service

Ours is a service economy and is driven by consumer spending. So it is reasonable to expect that companies would strive to give good service to keep customers but that is a bad assumption. The reality is that most service we get is unsatisfactory.

In a single day, I had four bad experiences with service within a single two hour shopping trip. One bagger failed to give me a tomato that I had purchased with the rest of my groceries. In another grocery store, the deli person gave me Hot wings instead of the fried chicken wings that I had requested. At the drug store, the person at the photo counter only gave me one of the packs of photos I was supposed to receive. It seems you have to double check every thing these days.

Earlier in the day, the service person who came to fix my garage door didn't have the kind of cable he needed to fix my garage door after the old one broke while he was trying to fix it. I am left overnight without access to my garage until he returns tommorrow afternoon.


On a more serious note, my wife's doctor's office failed to make an appointment with a specialist for her which may invalidate a recent blood test resulting in the need for a more recent one which Medicare will not pay for because you are only allowed so many per year.

Employers take note.

Joe

The Real Villains in Our Financial Crisis

You have to love how people are bashing those who took out mortgages they couldn't afford but downplay the fraud, deceit, or negligence of all those who really capitalized before the crash in the marketplace.

The lenders and brokers who allowed people to skirt the time honored lending practices of the past while pulling in huge sums in bonuses and compensation plus the speculators who drove oil, commodities and stocks via hedge funds and credit default swaps are the real villains.

The wealthy who are supposed to generate all those jobs with the "Trickle down philosophy are the high on the list of culprits.

The top 10% of families reporting adjusted gross income on their tax returns control 47 and 1/2 percent of all reported income and they as investors in the hedge funds are responsible for the 50% plunge in the market since the October 2007 high.

Hedge funds (you have to have a million dollars to join) have been forced to sell assets to cover the people wanting to get out of the fund. They have also been forced to sell stocks to cover short positions because most of them leverage about 30dollars of debt to every dollar invested according to reports. As stocks began to fall they had to buy stocks at lower prices to cover short positions. That is how Volkswagen got to be the largest company in America for a short time when it was discovered the Porsche owned a large part of the company, so other investors drove the price sky high on the news.

Hedge funds compounded the problem by buying credit default insurance from dummies like AIG and insurance divisions of Investment brokers meaning they passed along the risk of their highly leveraged gambling to someone else. That's what the 8 1/2 trillion dollars is really all about, taxpayers are paying for that insanity. Incidentally, remember when the sub prime mortgage fallout was only supposed to be 5% of all the mortgages out there. That figure is probably correct but it doesn't explain the massive credit problem does it?

Joe