The only problem for Obama and Romney: Ron Paul already is that champion.
It is the middle class that casts the votes but it is the special interests that finance the increasingly expensive election process. Who has more influence, the voters or the narrow agenda driven special interests who finance elections?
In 1970, the average congressional campaign cost about $52,000. In 2010, it was more than 25 times that, $1.3 million. The approval rating of congress is at an all time low just as they are getting ready to spend more money than ever. Is this just going to go on this way or is something about to change?
Ron Paul is now ahead in the polls in Iowa. Ignored by the media and having little money, Paul is about to rewrite the story of the 2012 presidential election. What is that story?
I think it has everything to do with a rebellion against the pay for access politics that has been looting the middle class for years now. Whether it is commercial or ideological, well financed interest groups come first when policy is being made and result of this is evident in the deeply entrenched problems facing America today. Paul's antagonism against the Federal Reserve is also relevant to the crisis we are in now. It was the Fed's policy of backing the financial leverage that created the capital to finance both the internet and housing bubbles which define the historic mistakes made over past 13 years.
At the core of our deficits are out of control basic costs. K-12 education costs a lot more in the US than any other developed country except for Switzerland. Top ranked in spending on education, America is bottom to middle ranked in achievement, American students rank 24th in literacy and below average in math and science. We have a very unproductive education system and a highly politicized one that has been taken over by special interests and is a product of our political system.
Our health care system is also a product of the politicians. It cost about twice as much per person to run as other developed countries and has below average health outcomes. Ballooning health care costs are at the center of our national, state and local budget crises and a big reason that unemployment is so high because employers, small businesses mostly, can't afford it.
Military spending, infrastructure and administration are not run on a shoe string. It costs much much more in America to get things done because interest groups bend every policy to their benefit.
So here we are. Just maybe the guy who is going to be elected in 2012 will be the guy who the middle class believes will put us right. Enabling the middle class means lowering the cost of government and health care. It means expecting a better educated student at a lower cost. It means an America that can be the best once again. It will also mean the end of outsourcing, a rollback in executive compensation at publicly held corporations and a more energy efficient America.
It also means middle class entrepreneurs can proper and employ people. Not many people know that the jobs problem we have this year has much to do with outsourcing. It is small and medium sized business who are creating jobs. Big companies have added very few jobs to the economy. They are still shipping jobs overseas.
At the end of the day, America is about a middle class that is succeeding. The rich will take care of themselves so we shouldn't worry about them. Rather than institutionalized poverty, the poor need a growing middle class they can aspire to become a part of. If the middle class is advantaged, the poor can rise up to it and the productive capacity and spirit of the nation will increase.
Really, what is good for America's middle class is what is good for America. Politicians who adopt that slogan will do well in the next election cycle.
One can hope that Obama and or Romney figure out this message, but in the meantime we have Ron Paul, the spoiler, to shake things up and he is going to do just that. Watch the media deny and discredit Paul until the votes in Iowa and then New Hampshire come in. Then the issues in this election will come closer to addressing what is really bugging Americans.
(This article's intent is to point out how the core issue of the election is enabling the middle class, remove structural impediments like unfair trade with China and cost overruns like health and education, and finally using America's productive capacity to turn things around. I agree with Paul that government needs to downsize if the country is to proper in the future. I am not endorsing any candidate, however.)
Wednesday, December 21, 2011
Saturday, October 15, 2011
Politicians and Vested Interests Block Economic Recovery
Can we fix this broken economy? What needs fixing and what is the prognosis.
In the economic crisis of the 1930's, FDR could put people to work building public infrastructure within just a few months of making the decision. Out of work men were employed at low labor rates building roads, bridges and public spaces. Today, you can't build infrastructure like that. Mandatory high union wages, permitting delays, lawsuits and bloated government stand in the way. Stimulating the economy by financing construction programs have yielded little for the investment. It is the vested interests that pay for political campaigns that are put before the public interest and the economy suffers.
You can't export your way out of this mess because trade negotiators have caved to China's strategy of conquering global markets systematically. Whether it is their willingness to exploit their people, ruin their environment or steal patents and designs or subsidize industries to enable them to overwhelm foreign competition. China also won't trade fair. Foreign companies are not allowed free access to Chinese markets. China is dead set to take markets from developed countries. Washington is impotent in the face of such a determined effort to take our hard earned advantages away.
You can't increase employment if large companies in the US continue to replace workers here with workers in Asia. There has been virtually zero increase in hiring by large companies this year. The entire gain in jobs can be attributed to mid and small size companies. Washington will say nothing about this. Big companies are their sponsors.
An economy that pays too much for health care is going to go bankrupt and isn't globally competitive. The US pays twice as much as other developed countries and has worse health statistics. You can't change that when politicians obfuscate the issues in favor of the interests that finance their election campaigns. The trial attorneys, the for profit practitioners, the drug companies that get their highest profit margins in the US and the unions get first consideration in policy making and are among the biggest campaign contributors in America. Health care costs are sapping government budgets and hurting employment. This is probably the most under appreciated economic issue in the country.
The Democratic Party's largest contributors are the Teachers' unions. With the policy makers on the hook to the teachers, is it any wonder we have the most expensive public education system in the world and the one that provides the very worst performance for dollars spent? Employers are complaining, graduates are not well prepared to work and don't have the necessary skills. Despite spending vast sums, drop out rates are outrageous. Outcomes don't matter to policy makers or the unions, but the market place does care and the US is suffering as a result.
The US can't isolate itself from the political problems of the world. So when you consider that foreign military ventures are "Diplomacy by other means", you realize that we are blowing an awful lot of money. We should ask ourselves, can't we be achieving more by improving our spies on the ground, our diplomatic skills and capabilities and cheap soft dollar endeavors economic development projects like health and education assistance abroad. One single F-16 squadron on operations for 2 -3 months will cost more than a whole year of soft diplomacy for an entire developing country. Which is smarter? Which creates the most good will? Which can we afford? Our military entanglements have been mismanaged by the politicians. The goals have been off the mark and the stories peddled to the American public have been disingenuous about the real costs of war.
In the economic crisis of the 1930's, FDR could put people to work building public infrastructure within just a few months of making the decision. Out of work men were employed at low labor rates building roads, bridges and public spaces. Today, you can't build infrastructure like that. Mandatory high union wages, permitting delays, lawsuits and bloated government stand in the way. Stimulating the economy by financing construction programs have yielded little for the investment. It is the vested interests that pay for political campaigns that are put before the public interest and the economy suffers.
You can't export your way out of this mess because trade negotiators have caved to China's strategy of conquering global markets systematically. Whether it is their willingness to exploit their people, ruin their environment or steal patents and designs or subsidize industries to enable them to overwhelm foreign competition. China also won't trade fair. Foreign companies are not allowed free access to Chinese markets. China is dead set to take markets from developed countries. Washington is impotent in the face of such a determined effort to take our hard earned advantages away.
You can't increase employment if large companies in the US continue to replace workers here with workers in Asia. There has been virtually zero increase in hiring by large companies this year. The entire gain in jobs can be attributed to mid and small size companies. Washington will say nothing about this. Big companies are their sponsors.
An economy that pays too much for health care is going to go bankrupt and isn't globally competitive. The US pays twice as much as other developed countries and has worse health statistics. You can't change that when politicians obfuscate the issues in favor of the interests that finance their election campaigns. The trial attorneys, the for profit practitioners, the drug companies that get their highest profit margins in the US and the unions get first consideration in policy making and are among the biggest campaign contributors in America. Health care costs are sapping government budgets and hurting employment. This is probably the most under appreciated economic issue in the country.
The Democratic Party's largest contributors are the Teachers' unions. With the policy makers on the hook to the teachers, is it any wonder we have the most expensive public education system in the world and the one that provides the very worst performance for dollars spent? Employers are complaining, graduates are not well prepared to work and don't have the necessary skills. Despite spending vast sums, drop out rates are outrageous. Outcomes don't matter to policy makers or the unions, but the market place does care and the US is suffering as a result.
The US can't isolate itself from the political problems of the world. So when you consider that foreign military ventures are "Diplomacy by other means", you realize that we are blowing an awful lot of money. We should ask ourselves, can't we be achieving more by improving our spies on the ground, our diplomatic skills and capabilities and cheap soft dollar endeavors economic development projects like health and education assistance abroad. One single F-16 squadron on operations for 2 -3 months will cost more than a whole year of soft diplomacy for an entire developing country. Which is smarter? Which creates the most good will? Which can we afford? Our military entanglements have been mismanaged by the politicians. The goals have been off the mark and the stories peddled to the American public have been disingenuous about the real costs of war.
Wednesday, September 21, 2011
Fed Adds More Stimulus. Why This Matters to You
QE1 and QE2 may have been great ships, but it will be written of this economic crisis that those terms referred to Federal Reserve policies that created cheap money in unprecedented ways. QE2 ended this past June with mixed reviews, but now headlines abroad and confidence eroding measures mostly created by politicians here have contributed to a softening in the economy. The Fed has observed that no other branch of government seems able to make a positive contribution to the economy's dilemma at this time, and felt they had to follow on with a new program.
The Fed announced today a program to push down long term interest rates even further than the near record lows they are today. Look forward to a chance to refinance your mortgage and maybe other debts once again in the future.
Reason I it is important to you:
Are 2.5% 15 year mortgages a possibility? In this era of amazing events and unheard of numbers, probably.
Reason II:
America and Its Political Leaders Have to Fix the Economy From Here
This really marks about the limit of the Fed's abilities to substantially help the economy. The President and Congress control spending, taxes and policies that govern the economy. It is time to expect them to understand the problem and fix it.
Unfortunately, partisan slogans don't add up to substance and that is what is needed. This is going to take a while and in the meantime the USA is going to be held hostage, so to speak, by the political class who have shown themselves adept at only one thing. Getting Elected.
The Political Debate about Spending or Not Spending is Wasting Time.
Six Issues Only Congress and the President Can Fix.
-Health Care Costs in the US are about $1 Trillion higher than they should be killing job growth and public sector budgets.
-China has conspired and largely succeeded in stealing our industrial base and accumulating our wealth through unfair trade. Thanks for the incompetence Federal trade regulators and Congress.
- Tax policies have to be simplified and streamlined, closing loopholes, while tax breaks for the very wealthy have to be justified in terms of the national interest or closed now.
-Stock and Capital market activities have to be regulated so they benefit the small investor first the formation of capital for productive investment. Amazing how influence money has warped this issue.
- Public education in the US is the most highly funded in the world. The outcomes for that investment is pretty miserable with kids leaving high school with inadequate skills to find a job outside of retail services. Trade schools, discipline, expectations, behavior contracts, school uniforms, teacher merit evaluations and most of all parent accountability are going to have to be put in place.
- A new energy infrastructure will lower our fuel consumption, increase domestic production, create jobs and lower imports. Extremists and political cronies of the left and right, should be shown the door from policy making.
The US can do these things and would thrive if it did. Bernanke can't do it for us though, we have to demand it of our political leadership.
The Fed announced today a program to push down long term interest rates even further than the near record lows they are today. Look forward to a chance to refinance your mortgage and maybe other debts once again in the future.
Reason I it is important to you:
Are 2.5% 15 year mortgages a possibility? In this era of amazing events and unheard of numbers, probably.
Reason II:
America and Its Political Leaders Have to Fix the Economy From Here
This really marks about the limit of the Fed's abilities to substantially help the economy. The President and Congress control spending, taxes and policies that govern the economy. It is time to expect them to understand the problem and fix it.
Unfortunately, partisan slogans don't add up to substance and that is what is needed. This is going to take a while and in the meantime the USA is going to be held hostage, so to speak, by the political class who have shown themselves adept at only one thing. Getting Elected.
The Political Debate about Spending or Not Spending is Wasting Time.
Six Issues Only Congress and the President Can Fix.
-Health Care Costs in the US are about $1 Trillion higher than they should be killing job growth and public sector budgets.
-China has conspired and largely succeeded in stealing our industrial base and accumulating our wealth through unfair trade. Thanks for the incompetence Federal trade regulators and Congress.
- Tax policies have to be simplified and streamlined, closing loopholes, while tax breaks for the very wealthy have to be justified in terms of the national interest or closed now.
-Stock and Capital market activities have to be regulated so they benefit the small investor first the formation of capital for productive investment. Amazing how influence money has warped this issue.
- Public education in the US is the most highly funded in the world. The outcomes for that investment is pretty miserable with kids leaving high school with inadequate skills to find a job outside of retail services. Trade schools, discipline, expectations, behavior contracts, school uniforms, teacher merit evaluations and most of all parent accountability are going to have to be put in place.
- A new energy infrastructure will lower our fuel consumption, increase domestic production, create jobs and lower imports. Extremists and political cronies of the left and right, should be shown the door from policy making.
The US can do these things and would thrive if it did. Bernanke can't do it for us though, we have to demand it of our political leadership.
Wednesday, August 31, 2011
What's Making Money This Year and Why
Since May, it is has come to feel like the stock market is a bad place to be, yet it is only down about 3 percent for 2011 as of this writing.
In this environment of malaise and weak confidence, what has made quite a bit of money are investments that benefit from fear and discouragement. Gold is up over 26% this year and long term bonds are up a lot too, as much as 18% or more. Cash levels are also very very high amongst investors and companies as they stand aside waiting and watching.
It feels worse for two reasons. It was down almost 20% at one point from the spring high. That's a big correction and makes it feel worse than it is. The second reason is, you like many other people who are concerned about business, probably feel a little bad. You don't feel as confident about the economy and suspect our leadership doesn't have a handle on it. Even worse, it is reasonable to suspect some might be happy for things to go bad just to gain a political advantage.
There's also a third reason it seems worse than it is. The market isn't trading well. The price moves are very exaggerated and for that we can thank the computer driven trading models that make up more than half the daily turn in stocks and serve to increase the disorder in the market on down days. Yes they are manipulating the markets for their own benefits. I wonder why the regulator, the SEC, has permitted it?
In this environment of malaise and weak confidence, what has made quite a bit of money are investments that benefit from fear and discouragement. Gold is up over 26% this year and long term bonds are up a lot too, as much as 18% or more. Cash levels are also very very high amongst investors and companies as they stand aside waiting and watching.
Real problems, real bad leaders and market manipulators are stalking our portfolios this year. That is the truth of it, but some types of investments have worked and in a properly diversified portfolio have added return.
Thursday, July 28, 2011
Washington's Assault on Confidence Worsens the Economy
Don't Get Too Bearish Though - Everybody Else Already Is
When gas prices hit $4 this spring, it was predictable the economy's rate of growth would soften, but when politicians needlessly pushed our financial system towards the brink of a crash just to get their disfunctional club to the negotiating table, the first casualty is confidence.
There is so much money in this country on the sidelines. Financing is cheap. There is alot of demand building for home upgrades, goods, autos etc. But investment is deferred because it isn't easy to take a risk now. The responsibility for this is our out of touch leadership in Washington; those who know how to win elections, but dont' know how to govern.
We all feel this fading outlook, but the loss of confidence is also showing up in the economic statistics. Consumer confidence took a huge dip 2 weeks ago. Orders for durable goods took a dip this week and business owners I work with, are not seeing the business they would like to see lately. The timing for this Washington contrived crisis is needless and badly timed. If Obama and Boehner would instill confidence and progress towards solving our problems, this economy would be doing well.
What do they know, these politicians? They know how to get elected to and serve the money interests that get them into office. Whether it is an ideological interest or an economic interest group, these Republicans and Democrats will sell out their country's interest to take care of their sponsors first.
What don't they know? They dont' know that America is great when the average person can work hard to better themselves. America isnt' great because of entitlements, or the rich or those who hold elected office and think this is a golden goose.
These politicians don't know that they are responsible to solve problems that are theirs to solve. They have abdicated their responsibility time and time again in the interest of being reelected. Witness our debts, our costly and broken health and education systems, our decaying, expensive and energy intensive infrastructure. Our unfocused unbelievably expensive foreign wars. Idiot, unqualified politicians are behind all of it and they do nothing about it.
When will we take the influence of money out of our elections and policy making and get able and qualified people to govern in the public interest?
In the meantime, this story has been on the radar screen for months and alot of caution is built in. If the politicos get anything positive done, we can recover.
When gas prices hit $4 this spring, it was predictable the economy's rate of growth would soften, but when politicians needlessly pushed our financial system towards the brink of a crash just to get their disfunctional club to the negotiating table, the first casualty is confidence.
There is so much money in this country on the sidelines. Financing is cheap. There is alot of demand building for home upgrades, goods, autos etc. But investment is deferred because it isn't easy to take a risk now. The responsibility for this is our out of touch leadership in Washington; those who know how to win elections, but dont' know how to govern.
We all feel this fading outlook, but the loss of confidence is also showing up in the economic statistics. Consumer confidence took a huge dip 2 weeks ago. Orders for durable goods took a dip this week and business owners I work with, are not seeing the business they would like to see lately. The timing for this Washington contrived crisis is needless and badly timed. If Obama and Boehner would instill confidence and progress towards solving our problems, this economy would be doing well.
What do they know, these politicians? They know how to get elected to and serve the money interests that get them into office. Whether it is an ideological interest or an economic interest group, these Republicans and Democrats will sell out their country's interest to take care of their sponsors first.
What don't they know? They dont' know that America is great when the average person can work hard to better themselves. America isnt' great because of entitlements, or the rich or those who hold elected office and think this is a golden goose.
These politicians don't know that they are responsible to solve problems that are theirs to solve. They have abdicated their responsibility time and time again in the interest of being reelected. Witness our debts, our costly and broken health and education systems, our decaying, expensive and energy intensive infrastructure. Our unfocused unbelievably expensive foreign wars. Idiot, unqualified politicians are behind all of it and they do nothing about it.
When will we take the influence of money out of our elections and policy making and get able and qualified people to govern in the public interest?
In the meantime, this story has been on the radar screen for months and alot of caution is built in. If the politicos get anything positive done, we can recover.
Friday, July 22, 2011
Questions on Record Corporate Profits - Bad Reasons for Good Earnings
We are on track this year to see the most profitable year ever collectively for the largest companies in America.
If that is because they are selling more than ever across the globe, winning market share across the globe or innovating great. That is less thae case than we would like.
Unfortunately there are other reasons at play in this succes story that are not so healthy for them or for us and are going to experience a blowback at some point.
Lowest Tax Rates Ever: This is the result of playing loopholes, pitting one taxing nation against another and just benefiting from the widespread belief that if taxed less, companies will invest and hire more.
Outsourcing US Jobs: If big corporate America is making more and more money by lowering their costs by sending still more jobs overseas, I have to object at this point. Well that is the case. A recent report said small and medium sized companies added 700,000 jobs this year. The biggest, most profitable companies have added only 20,000 jobs. I feel betrayed by this. Do you?
Henry Ford back in the day, paid his men a big wage at the time, $5 a day. He did so because he believed that a mass market for Model T's required a class of people who could afford them.
Today's corporate leaders are less pragmatic or interested in the welfare of their nation.
If that is because they are selling more than ever across the globe, winning market share across the globe or innovating great. That is less thae case than we would like.
Unfortunately there are other reasons at play in this succes story that are not so healthy for them or for us and are going to experience a blowback at some point.
Lowest Tax Rates Ever: This is the result of playing loopholes, pitting one taxing nation against another and just benefiting from the widespread belief that if taxed less, companies will invest and hire more.
Outsourcing US Jobs: If big corporate America is making more and more money by lowering their costs by sending still more jobs overseas, I have to object at this point. Well that is the case. A recent report said small and medium sized companies added 700,000 jobs this year. The biggest, most profitable companies have added only 20,000 jobs. I feel betrayed by this. Do you?
Henry Ford back in the day, paid his men a big wage at the time, $5 a day. He did so because he believed that a mass market for Model T's required a class of people who could afford them.
Today's corporate leaders are less pragmatic or interested in the welfare of their nation.
Thursday, July 14, 2011
US Policy Makers: Incompetent, Partisan and Compromised by Self Interest; Mishandle the Economy
1- Politicians serve the interests of the economic or ideological groups that finance their election campaigns before the interest or our nation. The result is bad policy, partisan sound bites and unqualified elected leaders. The solution for the economic crisis is at the mercy of this compromised body of leaders.
2-The economy is uncompetitive and mismanaged. The persistent joblessness points to how out of touch policy makers are with the deep problems in our country starting with we don't make stuff anymore.
3- Post WWII economic theories aren't showing us how to get out of this. After trillions dollars in stimulus and 3 years into a recovery interest rates, jobs and tax receipts should be rising and deficits falling. This is not in the range of normal and indicates how dire the situation really is.
4-Big business has every advantage in today's economy but they only created a net of 20,000 jobs this year. They are still outsourcing jobs overseas. Policy makers turn a blind eye. Not acceptable.
5-Health care costs in the US are $1 trillion too high. For profit health businesses milk Medicare and insured patients, trial attorneys exploit the system adding costs in malpractice insurance and forcing MD's to defend their own liability by prescribing excessive diagnostic procedures. Drug companies don't charge any country what they charge us for drugs.
6-Too many regulations or not enough regulation. Bureaucratic class have failed our economy but saved their careers. The mortgage/housing bubble is the showcase for this issue.
7-Short term business leaders. Short term policy makers.
8-China trade has been a disaster. Ross Perot thought Mexico would be the cause of a great big sucking sound as jobs left America. He was wrong. Trade with Mexico is two way. China is the jobs predator and our smug policy makers have turned a blind eye to their theft of our patents, refusal to buy our goods, pricing below cost to put our manufacturers out of business.
9- US big business is China's best ally. They have outsourced jobs and continue to do so to lower costs boost profit margins to record levels even as the real per capita of US households continue its 10 year long decline. Today's big business leader put themselves ahead of their shareholders and even their country. They are under taxed and overpaid.
10-Education spending in the US per student is almost the highest in the world. What a terrible return on our investment we have received. Is it our culture, self serving education professionals or our families that are at fault? It needs to be addressed or expect our future generation to suffer stagnation under the weight of unproductive, unskilled people mired in real poverty.
2-The economy is uncompetitive and mismanaged. The persistent joblessness points to how out of touch policy makers are with the deep problems in our country starting with we don't make stuff anymore.
3- Post WWII economic theories aren't showing us how to get out of this. After trillions dollars in stimulus and 3 years into a recovery interest rates, jobs and tax receipts should be rising and deficits falling. This is not in the range of normal and indicates how dire the situation really is.
4-Big business has every advantage in today's economy but they only created a net of 20,000 jobs this year. They are still outsourcing jobs overseas. Policy makers turn a blind eye. Not acceptable.
5-Health care costs in the US are $1 trillion too high. For profit health businesses milk Medicare and insured patients, trial attorneys exploit the system adding costs in malpractice insurance and forcing MD's to defend their own liability by prescribing excessive diagnostic procedures. Drug companies don't charge any country what they charge us for drugs.
6-Too many regulations or not enough regulation. Bureaucratic class have failed our economy but saved their careers. The mortgage/housing bubble is the showcase for this issue.
7-Short term business leaders. Short term policy makers.
8-China trade has been a disaster. Ross Perot thought Mexico would be the cause of a great big sucking sound as jobs left America. He was wrong. Trade with Mexico is two way. China is the jobs predator and our smug policy makers have turned a blind eye to their theft of our patents, refusal to buy our goods, pricing below cost to put our manufacturers out of business.
9- US big business is China's best ally. They have outsourced jobs and continue to do so to lower costs boost profit margins to record levels even as the real per capita of US households continue its 10 year long decline. Today's big business leader put themselves ahead of their shareholders and even their country. They are under taxed and overpaid.
10-Education spending in the US per student is almost the highest in the world. What a terrible return on our investment we have received. Is it our culture, self serving education professionals or our families that are at fault? It needs to be addressed or expect our future generation to suffer stagnation under the weight of unproductive, unskilled people mired in real poverty.
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