The Government Accountability Office (GAO), a non-partisan agency of the United States Congress, has a reputation for honesty and integrity. Regrettably, the Congress frequently imposes rules on the GAO's analysis and reporting such that its conclusions are frequently misleading and, all too often, indistinguishable from outright lies.
Since the media rarely take the trouble to report more than the superficial story, the result is that our government lies to us but is only infrequently challenged.
The most recent disgrace is the report on the budget impact of the recently enacted Health Care Reform Act. The headline reports claim that the budget savings will be $138 billion.
Barely reported is the qualifier 'over the next TEN years'.
So the annual savings will be $13.8 billion which, compared to a projected deficit of $1.3 TRILLION for FY 2011, can accurately be described as useful but trivial. Worse, the projected savings include $500 billion of cuts in Medicare Reimbursement to doctors and hospitals. Anyone who believes that these cuts will actually happen may wish to enter into negotiations to buy a certain bridge over the East River!
There is another good reason why the the reported savings are mythical. The GAO is only permitted to consider the ten year period from the time the law takes effect. A cursory review of the legislation shows ten years of taxes and fees but only six years of benefits beginning in 2014.
No wonder that there are a few billions for deficit reduction. If the impact on the deficit was recalculated to show only Years 5 - 10, the answer would be distressingly negative but at least it would be honest.
Adolf Hitler introduced the theory of the 'Big Lie' in his autobiography Mein Kampf. He described it as a lie so "colossal" that no one would believe that someone "could have the impudence to distort the truth so infamously". We are not there, yet, but we are walking down the road that leads there.
The corruption of language, including numbers and statistics, continues apace while the rate at which George Orwell is spinning in his grave increases at an ever more rapid pace.
Enough said!
Tuesday, March 30, 2010
Sunday, March 28, 2010
Head Scratcher (4)
On Friday, former Alaska Governor Sarah Palin resurfaced in Arizona for a rally supporting Senator John McCain's re-election bid. Then she traveled to a "Tea Party" rally to oppose the re-election of Democratic Senate Majority Leader Harry Reid.
So far, so good.
It is hard, however, when listening to the sound bites on television and radio, to overlook Governor Palin's really unattractive style of speaking. In fact, her speaking style is so abysmal that her message, if there is one, is entirely lost. She speaks too quickly and her attempts to project her voice result only in rapid fire screeches and shrieks. In this, she strongly resembles then Senator Hilary Clinton during her campaign for the Democratic Party's Presidential nomination.
Former Governor Palin shares a problem common to almost all modern politicians: shouting at us rather than speaking to us. As a result, we become irritated and ignore the message. Even President Obama has taken to yelling although, during his Presidential campaign, he most successfully communicated his message when he seemed to be having a civilized adult conversation with his audience.
There is another problem that afflicts female speakers. That is, the tuning of most microphones and amplifiers (note the 'bass boost' button on many low range stereos and mid-range clock radios) favors the deeper male voice. The resulting echoes, screeches, and preferential amplification of the higher tones, are unflattering to women speakers. Doubly so when they shout at us.
The art of public speaking is, after blackmail, the second most important political tool available to any politician. President Lyndon Johnson knew where the bodies were buried and was a master practitioner of the first: Prime Minister Winston Churchill together with Presidents Roosevelt (FDR), Kennedy and Reagan understood the essential strategy that a message, while necessary, is not sufficient unless it is communicated effectively.
Assuming that the politician has a high quality speech writer, there are two simple solutions. First, all politicians should attend a basic elocution course and, second, the advance staff for all female politicians should insist on microphones and amplifiers that are properly tuned for the female voice.
It is a true head scratcher that any politician should neglect such a critical tool as his or her speaking voice.
Perhaps the reason is that they are just incompetent!
So far, so good.
It is hard, however, when listening to the sound bites on television and radio, to overlook Governor Palin's really unattractive style of speaking. In fact, her speaking style is so abysmal that her message, if there is one, is entirely lost. She speaks too quickly and her attempts to project her voice result only in rapid fire screeches and shrieks. In this, she strongly resembles then Senator Hilary Clinton during her campaign for the Democratic Party's Presidential nomination.
Former Governor Palin shares a problem common to almost all modern politicians: shouting at us rather than speaking to us. As a result, we become irritated and ignore the message. Even President Obama has taken to yelling although, during his Presidential campaign, he most successfully communicated his message when he seemed to be having a civilized adult conversation with his audience.
There is another problem that afflicts female speakers. That is, the tuning of most microphones and amplifiers (note the 'bass boost' button on many low range stereos and mid-range clock radios) favors the deeper male voice. The resulting echoes, screeches, and preferential amplification of the higher tones, are unflattering to women speakers. Doubly so when they shout at us.
The art of public speaking is, after blackmail, the second most important political tool available to any politician. President Lyndon Johnson knew where the bodies were buried and was a master practitioner of the first: Prime Minister Winston Churchill together with Presidents Roosevelt (FDR), Kennedy and Reagan understood the essential strategy that a message, while necessary, is not sufficient unless it is communicated effectively.
Assuming that the politician has a high quality speech writer, there are two simple solutions. First, all politicians should attend a basic elocution course and, second, the advance staff for all female politicians should insist on microphones and amplifiers that are properly tuned for the female voice.
It is a true head scratcher that any politician should neglect such a critical tool as his or her speaking voice.
Perhaps the reason is that they are just incompetent!
Thursday, March 25, 2010
The Financial Crisis
Politicians and the media have much in common with respect to the financial crisis: one characteristic is a never ending search for scapegoats. High on the list of such undesirables are short sellers - as much because they profit from the adversity experienced by others as for any other reason.
Short sellers borrow, usually paying a small fee, shares and other financial instruments. Their plan, after the price has dropped, is to buy back and return the stocks. Their profit is the difference between the higher sale price and the lower repurchase cost.
That sounds simple but, in reality, it is a very risky way to make money. In general, the prices of shares, which are the most commonly shorted instruments, rise so a short seller is betting against the market trend. Further, the profit is limited by the fact that a share's price cannot fall below zero while the potential loss is infinite.
The underlying reason for the risk is aptly described in this aphorism:
“He who sells what isn’t his’n, must buy it back or go to prison.”
The origin of the saying is unknown, but it is generally attributed to American financier Daniel Drew (1797-1879).
When short sellers have wrongly analyzed the situation - or when the market refuses to see what is in front of its nose - the requirement to 'buy it back or go to prison' imposes, on the short seller, the necessity of paying far more to buy back the shares than the earlier revenue received. That can be a really large loss.
Your corespondent knew a speculator who understood, correctly, that the Australian nickel mining stock boom of 1969 - 1970 was really a bubble. His mistake was to start his short selling program too early. His target was Poseidon Nickel and, when the stock price reached 10 British Pounds (about $24), he began a program of short selling.
As the price of Poseidon stock continued to rise, he sold more shares short - even at prices as high as 30 British Pounds. After that, he sold no more but refrained from realizing his losses by buying back all that wasn't hisn. Not until the price reached 50 British Pounds, and under great pressure from his broker to post additional collateral to prove that he could afford to buy back what wasn't hisn, did he concede, buy in the stock and accept losses ranging from 20 - 40 pounds per share. His losses were not just ugly, they were really ugly! Had he waited to begin his short selling until the price came close to its peak (over 100 British Pounds or $250) before it dropped like the proverbial stone, he would have been a very, very, rich man.
A good short seller's life, when he is on top of his game, consists of many small losses, a few small gains, and the occasional blockbuster profit. It is the blockbuster profit that earns him the enmity - if not hatred - of politicians and the commentariat because, they say, he conspires to blacken the reputations of companies that little deserve such treatment. The problem with such accusations, is that spectacular profits are available because there really was something badly wrong that few others in the market understood.
So do short sellers perform a useful function?
Markets, in spite of common wisdom, are not efficient and short sellers provide information not otherwise easily available. Since the information unearthed is usually unflattering to the target company, the first wave of dislike comes from its executives. Such an attitude, however, is only rational when there is negative information that is being withheld from the market or when the executives have failed to understand the real situation.
Markets operate best when there is open information flow and clear price signals. In a bubble, by contrast, irrational exuberance rules and prices rise uncontrollably, without regard to reality, until the bubble bursts.
Short sellers, then, are far from the best available scapegoats so, perhaps, politicians and the media should turn their attention to real problems. Protecting Wall Street from its own stupidity, herd mentality, and self deception, without adding to moral hazard or penalizing the long suffering taxpayer, would be a small start.
Short sellers borrow, usually paying a small fee, shares and other financial instruments. Their plan, after the price has dropped, is to buy back and return the stocks. Their profit is the difference between the higher sale price and the lower repurchase cost.
That sounds simple but, in reality, it is a very risky way to make money. In general, the prices of shares, which are the most commonly shorted instruments, rise so a short seller is betting against the market trend. Further, the profit is limited by the fact that a share's price cannot fall below zero while the potential loss is infinite.
The underlying reason for the risk is aptly described in this aphorism:
“He who sells what isn’t his’n, must buy it back or go to prison.”
The origin of the saying is unknown, but it is generally attributed to American financier Daniel Drew (1797-1879).
When short sellers have wrongly analyzed the situation - or when the market refuses to see what is in front of its nose - the requirement to 'buy it back or go to prison' imposes, on the short seller, the necessity of paying far more to buy back the shares than the earlier revenue received. That can be a really large loss.
Your corespondent knew a speculator who understood, correctly, that the Australian nickel mining stock boom of 1969 - 1970 was really a bubble. His mistake was to start his short selling program too early. His target was Poseidon Nickel and, when the stock price reached 10 British Pounds (about $24), he began a program of short selling.
As the price of Poseidon stock continued to rise, he sold more shares short - even at prices as high as 30 British Pounds. After that, he sold no more but refrained from realizing his losses by buying back all that wasn't hisn. Not until the price reached 50 British Pounds, and under great pressure from his broker to post additional collateral to prove that he could afford to buy back what wasn't hisn, did he concede, buy in the stock and accept losses ranging from 20 - 40 pounds per share. His losses were not just ugly, they were really ugly! Had he waited to begin his short selling until the price came close to its peak (over 100 British Pounds or $250) before it dropped like the proverbial stone, he would have been a very, very, rich man.
A good short seller's life, when he is on top of his game, consists of many small losses, a few small gains, and the occasional blockbuster profit. It is the blockbuster profit that earns him the enmity - if not hatred - of politicians and the commentariat because, they say, he conspires to blacken the reputations of companies that little deserve such treatment. The problem with such accusations, is that spectacular profits are available because there really was something badly wrong that few others in the market understood.
So do short sellers perform a useful function?
Markets, in spite of common wisdom, are not efficient and short sellers provide information not otherwise easily available. Since the information unearthed is usually unflattering to the target company, the first wave of dislike comes from its executives. Such an attitude, however, is only rational when there is negative information that is being withheld from the market or when the executives have failed to understand the real situation.
Markets operate best when there is open information flow and clear price signals. In a bubble, by contrast, irrational exuberance rules and prices rise uncontrollably, without regard to reality, until the bubble bursts.
Short sellers, then, are far from the best available scapegoats so, perhaps, politicians and the media should turn their attention to real problems. Protecting Wall Street from its own stupidity, herd mentality, and self deception, without adding to moral hazard or penalizing the long suffering taxpayer, would be a small start.
Tuesday, March 23, 2010
Easter Recess
The Congress of the United States is planning a two week recess - beginning at the end of this week - for the laughably named 'Easter District Work Period'. The good news is that they will not be in session to cause more problems.
In practice, the Congress takes a vacation (District Work Period for those who can keep a straight face) for all of the major Christian Holidays and some of the Jewish ones. Give the wording of the First Amendment 'Congress shall make no law respecting the establishment of religion', it would be appropriate if the Congress were to refrain from discrimination against other religions commonly practiced in the United States - Hinduism, Buddhism, Taoism, Islam etc. - and recess for all of their major Holidays.
If they would act in such a manner, one of our nation's great problems, so aptly summarized by Mark Twain, would be much reduced:
"No man's life, liberty or property is safe while the legislature is in session."
It would also be fun to observe these overfed and self indulgent politicians trying to make it through the dawn to dusk fast required during Ramadan.
Enough said!
In practice, the Congress takes a vacation (District Work Period for those who can keep a straight face) for all of the major Christian Holidays and some of the Jewish ones. Give the wording of the First Amendment 'Congress shall make no law respecting the establishment of religion', it would be appropriate if the Congress were to refrain from discrimination against other religions commonly practiced in the United States - Hinduism, Buddhism, Taoism, Islam etc. - and recess for all of their major Holidays.
If they would act in such a manner, one of our nation's great problems, so aptly summarized by Mark Twain, would be much reduced:
"No man's life, liberty or property is safe while the legislature is in session."
It would also be fun to observe these overfed and self indulgent politicians trying to make it through the dawn to dusk fast required during Ramadan.
Enough said!
Saturday, March 20, 2010
Head Scratcher (3)
The media are full of reports about unintended sudden acceleration on the part of Toyota vehicles.
There is much speculation, but little information, about the cause but one thing is obvious: aside from a single report on National Public Radio www.npr.org, your correspondent has neither heard nor read of any discussion of what is euphemistically referred to a 'pedal misapplication'.
That means the driver stomped on the accelerator instead of the brake. An even simpler, and to the point, description is DRIVER ERROR. That was the finding of the National Highway Transportation Safety Administration, in the late 1980s, when similar reports about automobiles manufactured and sold by Audi were rampant.
Regardless of the cause, the real issue is what to do if a case of sudden acceleration occurs so, yesterday, your correspondent conducted a modest experiment with his own, admittedly not a Toyota, vehicle:
There is much speculation, but little information, about the cause but one thing is obvious: aside from a single report on National Public Radio www.npr.org, your correspondent has neither heard nor read of any discussion of what is euphemistically referred to a 'pedal misapplication'.
That means the driver stomped on the accelerator instead of the brake. An even simpler, and to the point, description is DRIVER ERROR. That was the finding of the National Highway Transportation Safety Administration, in the late 1980s, when similar reports about automobiles manufactured and sold by Audi were rampant.
Regardless of the cause, the real issue is what to do if a case of sudden acceleration occurs so, yesterday, your correspondent conducted a modest experiment with his own, admittedly not a Toyota, vehicle:
- First, finding a near deserted piece of road, he accelerated normally to twenty five miles per hour.
- Then, he placed a heavy foot on the throttle and accelerated to over 50 miles per hour.
- With the throttle still fully depressed, and the vehicle accelerating at maximum rate, he shifted into neutral - without any difficulty. The engine did race in an ugly manner, which does not improve it, but crashing is a less desirable option.
- The next step was to turn the ignition key to off. Since the transmission was in Neutral, rather than Park, the steering wheel lock did not engage. The engine stopped and while power steering - a convenience rather than a necessity - was lost, there was little danger.
- Applying the brakes brought the the vehicle to a safe stop.
So why, when there appears to be a simple solution to an incident of sudden acceleration, do a significant number of drivers seem to have engaged in something akin to Mr. Toad's wild ride (as described by Kenneth Grahame in the children's classic The Wind in the Willows found here at Amazon http://tinyurl.com/y8lnfhm) without taking the simple actions that could have solved the immediate problem?
A head scratcher indeed!
Thursday, March 18, 2010
Health Care Reform (2)
With respect to health care reform, the definition of success seems to have changed from real reform to the passage of a bill - any bill. The activity on Capitol Hill, as the Democratic leadership desperately tries to round up votes or devise a procedure that doesn't require voting, brings to mind a passage from Lewis Carroll's Through the Looking Glass published in 1871.
Here, Alice and the Red Queen are involved in a conversation that seems to sum up much of modern political activity and, in particular, the debate over the health care bills:
[Alice] “One can't believe impossible things."
"I daresay you haven't had much practice," said the Queen. "When I was your age, I always did it for half-an-hour a day. Why, sometimes I've believed as many as six impossible things before breakfast."
The American health care system is broken and badly needs to be fixed but the present proposals will not, regardless of the claims of their proponents, achieve the desired objective. What is being lost is the fact that expensive change is offered while reform - meaning action to increase coverage and quality while reducing cost - is what is needed.
Those who think that the monstrous proposals being considered will actually improve our health care system are little more than acolytes of the Red Queen: believers in impossible things. They are also calling, from the vasty deep, the spirits that guard the Law of Unintended Consequences.
[GLENDOWER]
"I can call spirits from the vasty deep."
[HOTSPUR]
"Why, so can I, or so can any man;
But will they come when you do call for them?"
William Shakespeare - Henry IV Part I
This time, there is no need for Hotspur's sceptical response. They will indeed come when called.
Better that the current bill[s] are rejected and a new start made. Further, if the drafters of a new bill were to adopt a strict limit on the number of pages, the world might be a slightly better better place
Here, Alice and the Red Queen are involved in a conversation that seems to sum up much of modern political activity and, in particular, the debate over the health care bills:
[Alice] “One can't believe impossible things."
"I daresay you haven't had much practice," said the Queen. "When I was your age, I always did it for half-an-hour a day. Why, sometimes I've believed as many as six impossible things before breakfast."
The American health care system is broken and badly needs to be fixed but the present proposals will not, regardless of the claims of their proponents, achieve the desired objective. What is being lost is the fact that expensive change is offered while reform - meaning action to increase coverage and quality while reducing cost - is what is needed.
Those who think that the monstrous proposals being considered will actually improve our health care system are little more than acolytes of the Red Queen: believers in impossible things. They are also calling, from the vasty deep, the spirits that guard the Law of Unintended Consequences.
[GLENDOWER]
"I can call spirits from the vasty deep."
[HOTSPUR]
"Why, so can I, or so can any man;
But will they come when you do call for them?"
William Shakespeare - Henry IV Part I
This time, there is no need for Hotspur's sceptical response. They will indeed come when called.
Better that the current bill[s] are rejected and a new start made. Further, if the drafters of a new bill were to adopt a strict limit on the number of pages, the world might be a slightly better better place
Tuesday, March 16, 2010
Head Scratcher (2)
The guest today on the second hour of NPR's Diane Rehm show http://thedianerehmshow.org/ was Jonathan Balcombe.
Mr. Balcombe is a vegan who, claiming ethical reasons - in particular, respect for other sentient beings - eats no animal products at all. He did admit, on the show, that he has no problem with pets (he described them as companion animals) and that he has two cats.
This generates today's head scratchers:
Head scratchers indeed!
Or perhaps the answer is just hypocrisy?
Mr. Balcombe is a vegan who, claiming ethical reasons - in particular, respect for other sentient beings - eats no animal products at all. He did admit, on the show, that he has no problem with pets (he described them as companion animals) and that he has two cats.
This generates today's head scratchers:
- Does Mr. Balcombe keep his cats as indoor captives or does he allow them outside to roam and to hunt birds and other small animals as is their nature.
- Cats have evolved in such a way that, to be healthy, they require a high protein, moderately high fat, and very low carbohydrate diet - i.e. meat and other animal products. So, does he feed them meat based cat food or does he deny their real health needs and feed them soy protein or other synthetic foods?
Head scratchers indeed!
Or perhaps the answer is just hypocrisy?
Monday, March 15, 2010
The Corruption of Language (7)
Many politicians, including President Obama, have a bad habit of using the term 'Working Americans'. It is not exactly clear what they mean but the the phrase does seem to include serious overtones of class warfare. That is not only unattractive but also unhelpful.
Your correspondent immigrated from the United Kingdom in 1968. At that time, the UK was riven with class warfare, envy of the rich, and confiscatory taxes. One of the more pleasurable pieces of culture shock resulting from moving to the USA was the lack of economic jealousy. Those with little wealth believed that hard work would be rewarded and, even if they did not become rich, their children and grandchildren would surely have the opportunity.
Is the American Dream dying? Not if we have leaders to provide inspiration rather than division.
If the term 'working Americans' means those that work with their hands or live from paycheck to paycheck then, for those us who make an above average living with our brains, and manage to spend less than we earn, the concept that we do not 'work' is both grotesque and offensive. What would some of the richest men in the world, whose wealth is derived from the businesses that they founded and built rather than from speculating at the Wall Street Casino, think of the idea that they are not 'working Americans'?
A small sample would include Warren Buffet (Berkshire Hathaway), Larry Ellison (Oracle Corporation), Bill Gates (Microsoft), Sergei Brin (Google), the late Sam Walton (Wal-Mart), Steve Jobs (Apple), Michael Bloomberg (Bloomberg) and Jeffrey Bezos (Amazon) - to name only a few.
The demons of corrupted language and thought, the subject of George Orwell's most notable books - 1984 and Animal Farm, are alive and well.
Enough said!
Your correspondent immigrated from the United Kingdom in 1968. At that time, the UK was riven with class warfare, envy of the rich, and confiscatory taxes. One of the more pleasurable pieces of culture shock resulting from moving to the USA was the lack of economic jealousy. Those with little wealth believed that hard work would be rewarded and, even if they did not become rich, their children and grandchildren would surely have the opportunity.
Is the American Dream dying? Not if we have leaders to provide inspiration rather than division.
If the term 'working Americans' means those that work with their hands or live from paycheck to paycheck then, for those us who make an above average living with our brains, and manage to spend less than we earn, the concept that we do not 'work' is both grotesque and offensive. What would some of the richest men in the world, whose wealth is derived from the businesses that they founded and built rather than from speculating at the Wall Street Casino, think of the idea that they are not 'working Americans'?
A small sample would include Warren Buffet (Berkshire Hathaway), Larry Ellison (Oracle Corporation), Bill Gates (Microsoft), Sergei Brin (Google), the late Sam Walton (Wal-Mart), Steve Jobs (Apple), Michael Bloomberg (Bloomberg) and Jeffrey Bezos (Amazon) - to name only a few.
The demons of corrupted language and thought, the subject of George Orwell's most notable books - 1984 and Animal Farm, are alive and well.
Enough said!
Saturday, March 13, 2010
The Fanaticism of Politicians and Activists
One of today's conundrums is whether to compare politicians and political activists to Winston Churchill's definition of a fanatic or to Talleyrand's description of the French Bourbons after the restoration of of the monarchy in 1814.
Churchill said:
"A fanatic is one who can't change his mind and won't change the subject."
Talleyrand's description of the Bourbons was:
"They have learned nothing and forgotten nothing."
Pick your political party. These statements seem to apply to both of ours!
Churchill said:
"A fanatic is one who can't change his mind and won't change the subject."
Talleyrand's description of the Bourbons was:
"They have learned nothing and forgotten nothing."
Pick your political party. These statements seem to apply to both of ours!
Thursday, March 11, 2010
Investing Strategies (2)
It is often tempting to sink hard earned cash into companies developing new technologies, clean technologies, or whatever the current rage - or bubble - may be. The long and inglorious pantheon of failed companies in new industries - railroads, electricity, automobiles, aviation, computer hardware and software, energy, biotechnology and many others - should be a lesson to us all.
There are many companies with great stories, no earnings, and few prospects. In times, however, when irrational exuberance and self delusion rule, there is no shortage of punters willing to take a chance on the start up or, worse, the overpriced IPO. Most of these gamblers - it is hard to describe them as investors - will lose the greater part of their money. A few, very few, will prosper because the company is one of the small minority of great successes (Microsoft, Google) with a real product or service and a business model that effectively turns its insights and ideas into cash.
A wise old investment banker, known to your correspondent, once listened patiently to a young technology inventor and then got directly to the point: "how are we going to turn this neat idea into boxcar sized piles of cash?' Since there was no good answer, there was, sensibly, no investment.
Those with a gargantuan appetite for risk, and the ability to place many bets, are welcome to try their luck. These are Venture Capitalists and Angel Investors. Overall, if they know what they are doing, they make money but only because there are a few grand successes to make up for the losses on almost everything else.
We hear much about the successes but little of the hundreds of failures. To refrain from venturing into the swamp of new technology is likely, then, to be the wiser course. As 19th century steel man and 'Robber Baron' Andrew Carnegie put it:
"Pioneering don't pay."
Those are three magic words that will preserve much wealth for the average investor.
There are many companies with great stories, no earnings, and few prospects. In times, however, when irrational exuberance and self delusion rule, there is no shortage of punters willing to take a chance on the start up or, worse, the overpriced IPO. Most of these gamblers - it is hard to describe them as investors - will lose the greater part of their money. A few, very few, will prosper because the company is one of the small minority of great successes (Microsoft, Google) with a real product or service and a business model that effectively turns its insights and ideas into cash.
A wise old investment banker, known to your correspondent, once listened patiently to a young technology inventor and then got directly to the point: "how are we going to turn this neat idea into boxcar sized piles of cash?' Since there was no good answer, there was, sensibly, no investment.
Those with a gargantuan appetite for risk, and the ability to place many bets, are welcome to try their luck. These are Venture Capitalists and Angel Investors. Overall, if they know what they are doing, they make money but only because there are a few grand successes to make up for the losses on almost everything else.
We hear much about the successes but little of the hundreds of failures. To refrain from venturing into the swamp of new technology is likely, then, to be the wiser course. As 19th century steel man and 'Robber Baron' Andrew Carnegie put it:
"Pioneering don't pay."
Those are three magic words that will preserve much wealth for the average investor.
Tuesday, March 9, 2010
Honest Politicians
There are honest politicians but they are only rarely successful or in positions of much power. On the infrequent occasions when the average politician actually says something honest about an important issue, the next step is usually a blizzard of quasi-denials that includes such weasel words as 'misquoted', 'clarification', and 'taken out of context'.
Winston Churchill is notable for his honesty. In 1940, following the defeat of the British Expeditionary Force at Dunkirk, he made his first speech in the House of Commons after becoming Prime Minister. In that speech, he trusted the spirit and courage of the people and spoke truth:
"I have nothing to offer but blood, toil, tears, and sweat."
Later, in November 1942, after the victory at El Alamein, Churchill refrained from mindless optimism and spoke truth again:
"Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning."
Jean Claude Juncker, Prime Minister of Luxembourg since 1995, is a lesser figure but this, his greatest remark, deserves to be repeated:
"We all know what to do. We just don't know how to be re-elected once we've done it".
A new and worthy member of this small and exclusive club is George Papaconstantinou, the Greek Minister of Finance. Last month, discussing the current financial crisis in his nation, he said:
"People think we are in a terrible mess. And we are."
As small children, most of us were told, ad nauseam, that honesty is the best policy. Not all are believers but even cynics can appreciate the words of Mark Twain:
"If you tell the truth, you don't have to remember anything."
Sadly, in the current political environment, politicians are almost always punished for venturing into the Territory of Truth. Change is possible but only when we, the voters, are willing to reward those who speak truth.
While outright lies are sometimes, but not always, easy to detect, we must also resolve to challenge those who indulge in mindless optimism, denial, and pandering to our worst instincts.
Enough said!
Winston Churchill is notable for his honesty. In 1940, following the defeat of the British Expeditionary Force at Dunkirk, he made his first speech in the House of Commons after becoming Prime Minister. In that speech, he trusted the spirit and courage of the people and spoke truth:
"I have nothing to offer but blood, toil, tears, and sweat."
Later, in November 1942, after the victory at El Alamein, Churchill refrained from mindless optimism and spoke truth again:
"Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning."
Jean Claude Juncker, Prime Minister of Luxembourg since 1995, is a lesser figure but this, his greatest remark, deserves to be repeated:
"We all know what to do. We just don't know how to be re-elected once we've done it".
A new and worthy member of this small and exclusive club is George Papaconstantinou, the Greek Minister of Finance. Last month, discussing the current financial crisis in his nation, he said:
"People think we are in a terrible mess. And we are."
As small children, most of us were told, ad nauseam, that honesty is the best policy. Not all are believers but even cynics can appreciate the words of Mark Twain:
"If you tell the truth, you don't have to remember anything."
Sadly, in the current political environment, politicians are almost always punished for venturing into the Territory of Truth. Change is possible but only when we, the voters, are willing to reward those who speak truth.
While outright lies are sometimes, but not always, easy to detect, we must also resolve to challenge those who indulge in mindless optimism, denial, and pandering to our worst instincts.
Enough said!
Monday, March 8, 2010
Head Scratcher
Today there was a letter from the Census Bureau in my mailbox.
This is what it said:
Dear Resident:
About one week from now, you will receive a 2010 Census form in the mail.
When you receive your form, please fill it out and mail it in promptly.
Go to 2010Census.gov for help completing your 2010 Census form when it arrives.
It would be nice to know why my tax money if being wasted in this manner. Somebody spent time to write this rubbish and, also, translate it into Spanish, Chinese, Korean, Vietnamese and Russian. Then there is the cost of paper, envelope, and postage to send instructions that are not only idiotically obvious but could perfectly well have been included with the form itself.
The Census Bureau would seem to move in mysterious ways but does not have the excuse of cabin fever - after too many snow days - to occupy itself with such stupid and pointless activities.
Add one more head scratcher to the list!
This is what it said:
Dear Resident:
About one week from now, you will receive a 2010 Census form in the mail.
When you receive your form, please fill it out and mail it in promptly.
Go to 2010Census.gov for help completing your 2010 Census form when it arrives.
It would be nice to know why my tax money if being wasted in this manner. Somebody spent time to write this rubbish and, also, translate it into Spanish, Chinese, Korean, Vietnamese and Russian. Then there is the cost of paper, envelope, and postage to send instructions that are not only idiotically obvious but could perfectly well have been included with the form itself.
The Census Bureau would seem to move in mysterious ways but does not have the excuse of cabin fever - after too many snow days - to occupy itself with such stupid and pointless activities.
Add one more head scratcher to the list!
Saturday, March 6, 2010
A Challenge to the Tea Party Movement
Most reasonable people agree that the United States Government is now too large and intrudes too deeply into our lives. Worse, like a shiftless rich kid with a large trust fund, it spends far more than it takes in.
President Obama's budget proposal for 2011 includes spending of over $3.8 trillion and receipts of less than $2.6 trillion leaving a deficit of over $1.2 trillion. The Congress will not change this much. A few tens, maybe even hundreds, of millions, perhaps a billion somewhere, will be cut but it is unlikely that many programs will be eliminated.
The real issue is that outlays for Defense, Veterans Benefits, Social Security, Medicare, Medicaid, other health spending, and Interest on the National Debt will consume more than all of the taxes paid by America's long suffering citizens and companies. Everything else will be paid for by borrowing.
The challenge, then, to the Tea Party Movement is this:
Which programs should be eliminated?
Which others should be cut - and by how much?
If that does not eliminate the deficit, what taxes should be raised?
In considering this challenge, the elimination of waste, fraud and abuse counts but not for much. A really effective program (they are often touted but rarely successful) might save as much as $100 billion, much from Medicare, but no more. Similarly, eliminating the Departments of Energy and Education will not solve the problem: their respective budgets are $31.2 billion and $71.5 billion. The savings from these three items, at $202.7 billion, while useful, pale against the $1.2 trillion deficit.
The time has come for constructive proposals: shouts of 'NO, NO, NO MORE' just aren't good enough.
America needs solutions. If the Tea Party Movement has none, then the words of William Shakespeare will be applicable:
"… a poor player
That struts and frets his hour upon the stage
And then is heard no more: it is a tale
Told by an idiot, full of sound and fury,
Signifying nothing."
(Macbeth Act 5, Scene 5)
Enough said.
President Obama's budget proposal for 2011 includes spending of over $3.8 trillion and receipts of less than $2.6 trillion leaving a deficit of over $1.2 trillion. The Congress will not change this much. A few tens, maybe even hundreds, of millions, perhaps a billion somewhere, will be cut but it is unlikely that many programs will be eliminated.
The real issue is that outlays for Defense, Veterans Benefits, Social Security, Medicare, Medicaid, other health spending, and Interest on the National Debt will consume more than all of the taxes paid by America's long suffering citizens and companies. Everything else will be paid for by borrowing.
The challenge, then, to the Tea Party Movement is this:
Which programs should be eliminated?
Which others should be cut - and by how much?
If that does not eliminate the deficit, what taxes should be raised?
In considering this challenge, the elimination of waste, fraud and abuse counts but not for much. A really effective program (they are often touted but rarely successful) might save as much as $100 billion, much from Medicare, but no more. Similarly, eliminating the Departments of Energy and Education will not solve the problem: their respective budgets are $31.2 billion and $71.5 billion. The savings from these three items, at $202.7 billion, while useful, pale against the $1.2 trillion deficit.
The time has come for constructive proposals: shouts of 'NO, NO, NO MORE' just aren't good enough.
America needs solutions. If the Tea Party Movement has none, then the words of William Shakespeare will be applicable:
"… a poor player
That struts and frets his hour upon the stage
And then is heard no more: it is a tale
Told by an idiot, full of sound and fury,
Signifying nothing."
(Macbeth Act 5, Scene 5)
Enough said.
Friday, March 5, 2010
Exploring
America's national myth (this is not a criticism - every country has one and ours is worthy) is that of the Frontier. Unfortunately, since the space shuttle Challenger exploded and broke apart in 1986, every President and Congress has shied away from the expense and risks of leaving Low Earth Orbit.
President George W. Bush came closest, but not close enough, to returning us to space. He spoke fine words about a pernament station on the Moon, as well as about a mission to Mars, but failed to ask for sufficient funds to get the job properly started, let alone done. Now President Obama has abandoned any idea of serious space exploration for a decade - probably much more.
Speaking to the Winter Meeting of the American Astronomical Society on January 5, 2010 in Washington DC, NASA Administrator Charles Bolden (a former Astronaut) said:
"If you told me back in in 1980 as a young astronaut candidate that we wouldn't be back on the moon today, I would have told you that you were smoking dope. Let me say that again: if you'd told me that we wouldn't be back on the moon today, I would have told you that you were smoking some bad stuff.
I thought I was going up on the shuttle and coming back to train to go to the moon. We became risk averse after the space shuttle Challenger, and we have not recovered from that. We're going to drop satellites into the ocean periodically. Human mistakes are going to happen. we don't want to plan for this: we want to work to avoid this.
But we can't be afraid. We need to take risks to move forward."
Space exploration is a driver of technology, meets our emotional need to explore the frontier, provides good jobs at home and, not coincidentally, inspires the young to take up well paying careers in science and technology.
Let's go to the Moon and to Mars. Starting now!
President George W. Bush came closest, but not close enough, to returning us to space. He spoke fine words about a pernament station on the Moon, as well as about a mission to Mars, but failed to ask for sufficient funds to get the job properly started, let alone done. Now President Obama has abandoned any idea of serious space exploration for a decade - probably much more.
Speaking to the Winter Meeting of the American Astronomical Society on January 5, 2010 in Washington DC, NASA Administrator Charles Bolden (a former Astronaut) said:
"If you told me back in in 1980 as a young astronaut candidate that we wouldn't be back on the moon today, I would have told you that you were smoking dope. Let me say that again: if you'd told me that we wouldn't be back on the moon today, I would have told you that you were smoking some bad stuff.
I thought I was going up on the shuttle and coming back to train to go to the moon. We became risk averse after the space shuttle Challenger, and we have not recovered from that. We're going to drop satellites into the ocean periodically. Human mistakes are going to happen. we don't want to plan for this: we want to work to avoid this.
But we can't be afraid. We need to take risks to move forward."
Space exploration is a driver of technology, meets our emotional need to explore the frontier, provides good jobs at home and, not coincidentally, inspires the young to take up well paying careers in science and technology.
Let's go to the Moon and to Mars. Starting now!
Wednesday, March 3, 2010
Civil Service Pay
Given the current state of the US economy, most employees in the private sector, excepting most investment bankers, consider themselves lucky if they still have their jobs. Pay increases and bonuses are rare, freezes are common, and outright cuts - sometimes just (just?) unpaid furloughs - are more frequent than anyone cares to think about.
The USA's financial situation is serious - really serious. On September 30, 2010, at the end of FY 2010, the Federal Government will have spent more than it has taken in during all but six of the past fifty three years. The exceptions are 1960, 1969 and, under the stewardship of [the wicked] President Bill Clinton, pushed by a Republican Congress, 1998 - 2001.
Unfortunately, neither the President nor the Congress appears to be taking the situation seriously.
Compare this to both Ireland and, under extreme pressure from Germany and many other members of the Euro zone, even Greece. Their governments have dared to cut entitlements including old age pensions, other normally sacrosanct government spending and, most significantly, Civil Service pay. There have been strikes but these governments appear willing to resist.
The British are in the midst of an election campaign so nothing will happen until after election day. No one, however, doubts that tax increases and swingeing cuts in public spending - including civil service pay - will take place after the new government takes office.
What is happening here? The answer is not much and, in the Federal Government, the most heavily unionized sector of the economy, the idea of cutting pay is considered laughable. Even when, for lack of an Appropriations Bill during the Clinton years, the government was shut down, no one lost a dime of pay even though no work was done.
We could, more or less, afford such an indulgence then but no more. Now, the idea that civil servants (servants?) should enjoy an annual cost of living increase plus scheduled step increases every two or three years, plus so-called performance bonuses (for refraining, perhaps, from catching what used to be called a 'social disease'?) is laughable.
So if, as in other countries, Federal employee pay were to be cut and if civil servants were to engage in an illegal strike, the actions of President Ronald Reagan in 1981, faced with a strike by air traffic controllers, are instructive. The President simply said: "you have forty eight hours to return to work. If you do not, your resignation has been accepted."
There is an old joke that goes like this:
Two businessmen were walking past a large government office building. One turned to the other and said: "I wonder how many people work in that building?"
The second looked at the building and responded: "about half."
The world would hardly come to an end if half of all Federal employees were no longer preying on taxpayers' wallets.
The USA's financial situation is serious - really serious. On September 30, 2010, at the end of FY 2010, the Federal Government will have spent more than it has taken in during all but six of the past fifty three years. The exceptions are 1960, 1969 and, under the stewardship of [the wicked] President Bill Clinton, pushed by a Republican Congress, 1998 - 2001.
Unfortunately, neither the President nor the Congress appears to be taking the situation seriously.
Compare this to both Ireland and, under extreme pressure from Germany and many other members of the Euro zone, even Greece. Their governments have dared to cut entitlements including old age pensions, other normally sacrosanct government spending and, most significantly, Civil Service pay. There have been strikes but these governments appear willing to resist.
The British are in the midst of an election campaign so nothing will happen until after election day. No one, however, doubts that tax increases and swingeing cuts in public spending - including civil service pay - will take place after the new government takes office.
What is happening here? The answer is not much and, in the Federal Government, the most heavily unionized sector of the economy, the idea of cutting pay is considered laughable. Even when, for lack of an Appropriations Bill during the Clinton years, the government was shut down, no one lost a dime of pay even though no work was done.
We could, more or less, afford such an indulgence then but no more. Now, the idea that civil servants (servants?) should enjoy an annual cost of living increase plus scheduled step increases every two or three years, plus so-called performance bonuses (for refraining, perhaps, from catching what used to be called a 'social disease'?) is laughable.
So if, as in other countries, Federal employee pay were to be cut and if civil servants were to engage in an illegal strike, the actions of President Ronald Reagan in 1981, faced with a strike by air traffic controllers, are instructive. The President simply said: "you have forty eight hours to return to work. If you do not, your resignation has been accepted."
There is an old joke that goes like this:
Two businessmen were walking past a large government office building. One turned to the other and said: "I wonder how many people work in that building?"
The second looked at the building and responded: "about half."
The world would hardly come to an end if half of all Federal employees were no longer preying on taxpayers' wallets.
Subscribe to:
Posts (Atom)
Posts
