Sunday, November 30, 2008

Silver Bullet

The President needs to shoot a silver bullet into this economy now!

Since the start of the current economic crisis, I've been yelling at the TV, the radio, my PC, and anyone within hearing range that the primary toxin has not been the "toxic assets" per se, but the device that turned them into that, namely "mark to market " write-downs that have been required by the S.E.C.

Despite all the capital and all the jawboning that the Feds have been laying on the Financial Market, nothing has worked because those methods haven't addressed the major root cause of the questionable assets toxicity....the requirement to mark any suspect asset down to it's current market value, which in today's market is zero, hence the violent cascade of most of the financial and insurance institutions asset valuations down to zero, and their subsequent collapse.

The NY Post's open letter to Pres. Bush to require Sec. Cox to end this regulatory insanity should quickly become a chant by all news media and citizens.

With the economy in free fall since the Lehman Brothers bankruptcy froze credit markets, Washington can't afford a long post-Thanksgiving nap.
President Bush needs to tackle more problems before he rides out of town, and one of the most urgent issues - breaking the downward equity spiral hammering financial companies - can be fixed without putting another penny of taxpayer funds at risk.
The president should immediately instruct SEC Commissioner Chris Cox to challenge the applicability of CDS pricing and other volatile mark-to-market methodologies for rating agencies and capital regulators.
Pension funding uses a smoothing process so that crashing markets don't trap companies in irrational responses. In contrast, the regulatory-capital process is forcing financial companies to sell equity into a falling market, a recipe for volatility and overshoot.
Bond-rating agencies are using the mark-to-market writedowns, questionable CDS prices and lower stock prices as a negative signal on a company's creditworthiness. The result is a self-fulfilling equity spiral pushing companies into bankruptcy, as artificial CDS prices trigger capital calls and bond-rating downgrades that force endless equity declines.
As the economy sinks, a targeted strike against the contrived spiral in financial stocks would go a long way to helping save companies, and taxpayers, billions of dollars.

Sunday, November 23, 2008

Charlie Rangell Is A Criminal.... Update Dec. 4th, 2008

Charlie Rangell is a criminal in all but a verdict 
by a jury....Time to throw the bum out!

He's defrauded the taxpayer's, his fellow citizens, and his landlord by his fraudulent use of more than one rent-controlled apartment in NY City, as detailed by this New York Post article: 

In 1988, he began renting three rent-stabilized apartments in the Lenox Terrace building on 135th Street in Harlem, which he combined into one 2,500-square-foot home. Later, Rangel rented a fourth unit - a studio apartment that he used as an office.

He was forced to relinquish the office last month as the House of Representatives' Committee on Standards and Official Conduct voted to conduct a probe of his personal finances.

The investigation, which Rangel requested, was announced shortly after The Post revealed that he had failed to report income on the rental of a beachfront villa he owns in the Dominican Republic. He later admitted that he failed to report $75,000 in income from the villa over a 20-year period and owed $9,500 in taxes.

At first, Rangel blamed the accounting mishaps on sloppy bookkeeping and his wife, who he said was in charge of the family's finances. He also said he did not receive regular financial reports from the Punta Cana Resort and did not understand the paperwork because it was in Spanish.

Amid calls for him to give up his position as chairman of the Ways and Means Committee, Rangel promised in September to hire a forensic accountant to scour his tax returns and financial disclosures and to present the results to the Ethics Committee. After The Post reported on Nov. 2 that he had not yet hired a CPA, a spokesman for Rangel announced that he finally did so on Nov. 9. 

We now find out that Rangell has been cheating in several other ways on his taxes:

Harlem Rep. Charles Rangel took a "homestead" tax break on a Washington, DC, house for years while simultaneously occupying multiple rent-stabilized apartments in New York City, possibly violating laws and regulations in both cases.

The situation raises a number of potential problems for the congressman, including:

* New York City law requires that tenants use rent-stabilized apartments as their primary residence.

* DC's real Property Homestead Deduction Act also requires that a property receiving the benefit be a primary residence.

* Tax lawyers told The Post that a property owner cannot have two primary residences - or take advantages provided to primary residences at two different addresses simultaneously.

* DC's law also requires that the owner of a property benefiting from the tax break be a personal-income taxpayer in DC. District law exempts members of Congress from paying personal DC income tax, but they must pay property tax.

The DC rules state that "by maintaining a residence in his home state and actively voting there, [a member of Congress] is demonstrating that he continues to be a part of the body politic of his home state . . . The Member is a domiciliary of his home state. Because he is not domiciled in the District, the Member cannot claim the District's homestead deduction." 
Update:Dec. 1st, 2008
Step Aside, Rep. Rangel
The chairman of Ways and Means becomes an unnecessary distraction.
Saturday, November 29, 2008; A14

WHEN WE last wrote about Rep. Charles B. Rangel (D-N.Y.), chairman of the House Ways and Means Committee, we urged that the House ethics committee be allowed to investigate before anyone drew final conclusions. But the latest revelation of Mr. Rangel's ethical tin ear is the most galling yet. While he remains innocent until proven otherwise, he should step aside as chairman while the ethics committee expands its inquiry.
The New York Times reported on Tuesday that Mr. Rangel helped preserve a valuable tax loophole for an oil and gas drilling company while the company's chief executive, Eugene M. Isenberg, was pledging $1 million to the Charles B. Rangel School of Public Service at City College of New York. Mr. Rangel insists that the mutual favors were entirely coincidental. And quite a coincidence it seems to have been. On Feb. 12, 2007, the Times reported, the day the tax legislation was being considered in his committee, Mr. Rangel met in New York City with Mr. Isenberg to discuss the businessman's support of the Rangel School. Then Mr. Isenberg escorted Mr. Rangel across the room to his lobbyist, Kenneth J. Kies, who wanted to make sure Mr. Rangel would not close the loophole.
The revelation is the latest in a litany that has come to light since the summer. It was disclosed that Mr. Rangel was paying below-market rents on four Harlem apartments. One, which he has since given up, was illegally used as a campaign office. He owed taxes on at least $75,000 in rental income on a vacation home in the Dominican Republic. (He has since paid $10,800 to the IRS and New York State for three tax years and has hired a forensic accountant to determine how much he owes for the remaining 17 years.) Mr. Rangel underreported the value of a condominium he and his wife owned in Florida. He neglected to fully account on House travel disclosure forms for some privately sponsored trips. And he used his official stationary to ask for meetings to discuss his eponymous school of public service with titans of business and philanthropy.
At a time when President-elect Barack Obama is holding frequent news conferences to reassure the markets and the American people that he is ready to lead the nation to economic recovery, the last thing he will need is a chairman of Ways and Means caught up in a swirl of serious allegations.

Update December 4th, 2008:
From the folks at the New York Observer:
Why Charlie Rangel Is Still Smiling 
 The 78-year-old Harlem Democrat, a fixture on Capitol Hill since 1971, has been the subject of a stream of revelations about potential financial and ethical improprieties, the sort of never-ending scandal that would pose a serious threat to his electability if he represented a marginally competitive district. But New York's 15th District is tailor-made for an entrenched Democratic incumbent to stay in office as long as he wants, so Rangel need not fear the wrath of the voters.
The only real threat to a congressional lifer like Rangel is internal, from within the ranks of his fellow Democrats in the U.S. House. If they want to strip him of his powerful Ways and Means gavel, they can. And, technically, that is what they are now mulling, with the House Committee on Standards of Official Conduct - otherwise known as the Ethics Committee - set to report back on his supposed misdeeds just before the new Congress convenes in early January. But don't hold your breath waiting for any drama.
Even if Speaker Nancy Pelosi and a majority of the Democratic caucus were inclined to remove Rangel from his post - and, as of now, it doesn't seem that they are - numerous obstacles, including the obstinate chairman and his allies and some recent history within the Democratic caucus, would make it a trying experience for them.
Start with the ethics committee itself. It's no accident that Rangel is the one who actually requested that the panel review his case, or that he declared this week, "Am I confident? You're damn right. I'm the one who asked for it."
The House ethics committee has a richly-earned reputation for giving its colleagues the benefit of the doubt. Rangel has found the perfect body to hear out his various denials and explanations. Very likely, the panel will either clear Rangel or, at worst, declare him guilty of a slight, venial infraction or two. It will be a surprise if the report includes any real ammunition for those hoping to push him out.Given the historic opportunity that waits Democrats on January, when a president willing to sign their legislation will take office, it probably won't make sense for Pelosi to embark on a protracted and highly public chairmanship fight that would pit members of her own caucus against one another. It's also worth noting that she decided last year to maintain the three-term committee chairmanship limit imposed by Republicans in 1995. That means she'll be rid of Rangel by 2012, if he hangs on now.
The most likely outcome of this fiasco, then, is that Republicans will spend the early weeks of the new Congress shouting to the heavens about Rangel's ethics, offering resolutions to strip him of his chairmanship, and challenging Democrats to join them. As theater, it won't be bad. But Democrats will probably decide that they'd rather take the heat from the G.O.P. than go to war with themselves.

Education's Rhee Of Hope

"In the middle of difficulty lies opportunity"....Albert Einstein

With all the apocalyptic visions that the politicians have been spinning about our country and our society, and all the calamitous events roiling our faith in our economic markets, there has really been only one issue that I haven't been optimistic about - our public school system.  I believe that the major issues that are currently causing us anxiety and fear will be resolved in the near term, but the issue of our failing schools is one that doesn't really involve money....if it did, it would have been solved already, but requires a fundamental and radical change in structure and approach.  

The fundamental change required, however, has become so politicized by the teacher's unions and Democrats, that my perspective on when, or if, it could happen has been primarily one of "not in my life-time".

But, there are two elements that mightpotentially change that.  One is the election of Barack Obama to the Presidency, and the other is Michelle Rhee, the Chancellor of the Washington, D.C. school system and a Democrat, who has recently been quoted as saying "Tenure is the holy grail of teacher unions, but it has no educational value for kids; it only benefits adults."  

Her stance on this issue is a seismic event, and it's happening in the epicenter of the problem - Washington, D.C., the lowest-performing school district in the nation. Only 12% of D.C. eighth graders are proficient readers, 8% in math. A mere 60% of high schoolers finish in four years with a diploma. And, once again, the problem can't be money; Washington's per-pupil spending is the third-highest in the nation, $13,000 per pupil.

Ms. Rhee has:

  • offered a new teacher contract proposal with two options. Teachers could choose a plan under which their pay would rise spectacularly -- nearly doubling by 2010 -- in exchange for giving up tenure. Or they could opt for a smaller pay bump and still lose some seniority rights.
  • announcing the district would seek to dismiss tenured teachers who are ineffective. 
  • hinted she'll go around the union by creating more nonunionized charter schools
  • getting the federal government to deem her district in a "state of emergency."
  • closed 23 failing schools and restructured 27 more. 
  • fired nearly one-third of the district's principals and reduced a bloated bureaucracy.
  • dismissed as "complete crap" the argument that students can't learn because of disadvantaged backgrounds.
Why is tenure a causal element in school failure? Unqualified teachers  are at the basis of non-learning children (parents are another issue, but not the subject here), but unqualified teachers have lifetime job security unless they commit rape or murder.  Although most cities contracts provide ways to fire incompetent teacher's, the unions make the process so burdensome, that it's almost immposible. In New York City, it costs an average of $250,000 to fire a teacher; the city last year dismissed 10 out of 55,000. New Jersey fired precisely 47 (of 100,000) in the 10 years ending in 2005.  

Compare those numbers to any other industry, where employee effectiveness is rated at least annually, and ineffective employees are justifiably terminated, and you can understand how this culture of incompetence has robbed our children of the foundational birth-right that we intended to provide them with.

Ms. Rhee's proposal would use financial incentives to raise the salaries of effective teachers, and attract even better ones.  Teachers willing to be judged on effectiveness could earn up to $130,000 a year, based on merit.

The WTU has refused to allow a vote, claiming it's members reject the plan, despite the fact that similar experiments across the country have worked and been supported by the participating teachers. The  American Federation of Teachers, is petrified that Ms. Rhee's plan will set a national precedent. 

OK, where's the "Hope" in all of this?  Well, just as it took a Republican, Nixon, to create the door opening to China, and a Democrat, Clinton, to sign Welfare Reform, it may be that another Democrat, Obama, could be the change-agent that will be able to initiate true, and positive, reform on this most fundamental element of our society.  During the Presidential debates, her situation was discussed by McCain and Obama, so the ball has been passed by Ms. Rhee, the question now is can the new President Obama, drive in and dunk it?  

Friday, November 21, 2008

Obama's Tips - UPDATED

Obama campaigned on building the economy from the bottom up.... "as we've alway's done it".
I must have missed that economics class, and I sure as hell have missed seeing it anecdotally in my 60+ year life. I can't figure out how anyone could even think that. In every downturn economy that I've witnessed, the fact that the "Have's" have less,  always meant that the "Don't Have's" had even less.  
Tax luxury yachts.....they don't get sold, and people who make them lose jobs; downturn on Wall St., the waiters , busboys, food wholesalers all get less income....or no income; McMansion's not being built, no carpenters, plumbers, day laborers have income; "Fat Cat's" from AIG don't hold their U.S. Distributor's sales conference in a high-end resort, no waiters, airlines, car-rental companies, 401K's, IRA's and Union pension plans all lose out.
The Class Warfare that the Democrats have engaged in has not only poisoned the political debate in the country, it has created a degree of economic ignorance that's hard to believe, and has seemingly doomed us to a fate of being a third-world country.
The Democrats have railed against "Trickle-Down" Economics, but I've yet to see a case made for Obama's "trickle-up" theory.  
When 911 happened, my wife and I owned a specialty food distribution business that supplied products to the resort areas of North-East Florida, and South-East Georgia.  As soon as the flights carrying business executives to meeting at the seaside resorts stopped, our business dropped 75%.  The resorts laid off 50% or more of their staff, and the trickle down theory made itself abundantly clear.  The stores that those workers shopped in, either laid people off, or closed down; the trucker's that hauled my products down from NYC lost revenue; I laid off our driver.  This is simple stuff, and Obama understands it.  That means he lied in order to demagogue the issue....shame on him.
In today's news from NYC, we're seeing the clear example of "Trickle Down" at work, or at least the absence of it:
New Yorkers Cut Costs by Tipping Less
The economic downturn is trickling down to servers’ tips. “I think people are being a little more exacting in terms of their money,” says Erica Harrison, co-owner of 88 Orchard, a Lower East Side cafĂ©. It’s hitting restaurants, coffee shops, even bars. “If someone orders a thirteen-dollar cocktail at the bar, normally they’d leave a two-dollar tip, but now they’re taking that extra dollar back,” says Peter Kane, owner of Stanton Social. Last month Tim and Nina Zagat wrote that customers are skipping appetizers, and New York restaurant workers agree. “They’re just going straight to the main course,” says Mehdi Jamil, general manager of Pound & Pence, a restaurant in the financial district. "If you buy less, you tip less." Some restaurateurs complain that the foreign customers propping up New York's economy are taking advantage of the weak dollar without compensating the waitstaff. “Our regulars are tipping about the same,” says Harold Wedick, manager of the Corner Bistro. “But it’s skewed by the influx of Europeans, who think that 50 cents is a big tip and pretend not to know the customs of the country.”
It seems that in addition to normal business practice, the drubbing that the "Big Three" Auto Exec's received yesterday regarding their flights to D.C. on corporate airplanes, has caused them to cancel some of their leases .  There go the salaries of the mechanics who maintained them, the hangar fees where they were berthed, the taxes that they paid for their declared compensation for flying on them for personal use (CEO Mulally's compensation included $752,203 in 2007 for personal use of company aircraft- let's say he was at 30% tax base that makes $225K in taxes the Fed's won't get now), the insurance that's now canceled, and all the commissions that won't be paid , and the dancing lessons that those commissions would have payed for......getting the picture?

In addition, it just so happens that all those CEO's are required by their employment contracts to fly on corporate jets for security reasons.  But, it's difficult for a Congressman to avoid a cheap shot and a chance to practice their demagoguery.

Obama's "Change" of Insider's

It's not a surprise, given the Obamamania euphoria sweeping the land, that despite campaigning on "Change" and as an alternative to a "third Clinton Administration", his installation of a basically a "third Clinton Administration" sans Hillary, is being met with huzzahs and hooray's, instead of disappointment and cynicism.  

The cheering and amazement is most prevalent among the Liberal elite, the Main Street Media, and RINO's (Republicans In Name Only).  If we were discussing set theory, the conjunction of these would almost be a union of all sets.  One of the most ardent RINO's, David Brooks - the NY Times and NPR's house Conservative, couldn't contain himself in his Op-Ed column in today's NY Times.  He gushed, figuratively raising his back, swishing his tail and weaving up against Obama's legs like a cat waiting to be scratched, as he praised Obama's selection of candidates who were not only all alumni of the Clinton team, but.....even better for an elitist like Brooks....genuine, mortar-board wearing Ivy-Leaguers!  OMG!

The list, starting withBarack Obama (Columbia, Harvard Law)  and his wife Michelle (Princeton, Harvard Law), goes forward with: perhaps Hillary Clinton (Wellesley, Yale Law), Jim Steinberg (Harvard, Yale Law), Susan Rice (Stanford, Oxford D. Phil.), Jason Furman (Harvard, Harvard Ph.D.), Austan Goolsbee (Yale, M.I.T. Ph.D.), Blair Levin (Yale, Yale Law), Peter Orszag (Princeton, London School of Economics Ph.D.) and, of course, the White House Counsel Greg Craig (Harvard, Yale Law).

Brooks' admiration for the President-Elect is hard to subdue:

One may not agree with them on everything or even most things, but a few things are indisputably true.  First, these are open-minded individuals who are persuadable by evidence.  Second, they are admired professionals. Third, they are not excessively partisan.
Finally, there are many people on this team with practical creativity. Any think tanker can come up with broad doctrines, but it is rare to find people who can give the president a list of concrete steps he can do day by day to advance American interests.
Believe me, I’m trying not to join in the vast, heaving O-phoria now sweeping the coastal haut-bourgeoisie. But the personnel decisions have been superb.   The events of the past two weeks should be reassuring to anybody who feared that Obama would veer to the left or would suffer self-inflicted wounds because of his inexperience. He’s off to a start that nearly justifies the hype.

I'm not sure how Brooks justifies his numbered appraisals, usually they are made based on observed performance.  And, it seems to me that the comments made about then President-Elect Bush's appointments were more in the line of "retreads from his father's team".  Ah, but that was understandable....most of them weren't Ivy Leaguers (some were, including George Bush, but despite that, they were always characterized as rubes).

What does stand out for me, however, is the preponderance of lawyers.  This does not bode well for our nation in a time of when we have to come to grips with many significant short, and long term, economic issues.  I'd prefer to see a few more people who've made their fortunes by building successful businesses.  But that's difficult to pull off....those type of people usually have too much self-respect than to consort with politicians and lawyers.  And, probably didn't attend an Ivy-League school.

Wednesday, November 19, 2008

The Invisible Hand vs Government Gauntlet

The Market continues to cascade in a downward plunge....why?

Markets are driven by and react to perceptions, and perceptions are formed by age old basics....word of mouth....watching what others are doing.  The Democrats spent most of the past few years attempting to talk down the market in their attempt to defeat George Bush.  As they came into 2008, they intensified their rhetoric yelling "recession" at every down-tick in the stock market.  They even resorted to tactics like causing runs on banks and insurance companies a la Chuck Schumer and Harry Reid.  Barack Obama beat the drum mercilessly, with a constant up-tick in his negative rhetoric as November 4th approached.

Well, people listened, and coupled with the economic fatal flaws that the Democrats had legislated and encouraged; Fannie, Freddie sub-prime mortgage encouragement; and mark-to-market legislation, the Democrats finally got their wish....the market tanked, and all the institutional machinery they established kicked in and drove it down further.

Between panicked selling and legal requirements to raise capital to cover ever shrinking assets declines, we're in a "fine mess" as Oliver Hardy used to say.  And like Humpty Dumpty, all the kings horses and all the kings men can't seem to put it back together again.

The big questions have been "what will Obama do", "who will he appoint?", "what taxes will he raise", "what costs will he mandate?"  Uncertainty, on top of uncertainties......the market continues to react, and like a perpetual-motion machine, it feeds on itself, going further and further lower.

Now the news the past few days has been about the "Big Three" U.S. car companies petitioning the government for a loan of $25 Billion in order to get them through to the end of this year (approx. 45 days).

Sides have been drawn, with the Democrats, "Big Three"  Management, and the Auto Unions all on one side, and with many Republicans, and other's on the other.  Much rhetoric is flying around about "economic fairness", "jobs will be lost", "White Collar vs Blue Collar", "looking out for the working guy", "there's been enough Union give-backs", etc....  This situation is yet again the beginning of another chapter in the "How Government Can Screw Up The Economy" manual.  The question is how will it end up?

The invisible hand, a metaphor coined by Adam Smith in The Wealth of Nations, symbolizes that, in a free market, an individual pursuing his own self-interest tends to also promote the good of his community as a whole through a principle that he called “the invisible hand”.

The theory of the Invisible Hand states that if each consumer is allowed to choose freely what to buy and each producer is allowed to choose freely what to sell and how to produce it, the market will settle on a product distribution and prices that are beneficial to all the individual members of a community, and hence to the community as a whole. The reason for this is that greed will drive actors to beneficial behavior. Efficient methods of production will be adopted in order to maximize profits. Low prices will be charged in order to undercut competitors. Investors will invest in those industries that are most urgently needed to maximize returns, and withdraw capital from those that are less efficient in creating value. Students will be guided to prepare for the most needed (and therefore most remunerative) careers. And all these effects will take place dynamically and automatically.  

Unfortunately, as we're now witnessing, governments, have a tendency to get involved, and when they do, politics plays a strong part.  

The Democrats have significant markers to pay off with the Unions because of their support in this past election, and the Union's don't want to have the manufacturers forced to operate under bankruptcy law.  A bankruptcy court  would undoubtedly force the unions to give up their existing sweetheart contract provisions.... that just happen to be one of the primary causes of the "Big Three's" distress.  The top management of these companies also want to avoid bankruptcy, as they'd most likely lose their jobs.
And, in this play, as in many other high-tension drama's, there's a third the shadows.  The Environmentalists.....
Look closely and you can see that what's really going on is an attempt to use taxpayer money to remake Detroit in the image of the modern environmental movement. Given a choice between greens and blue-collar workers, Congress puts the greens first.  This political contradiction has come into sharp relief since President Bush offered a significant compromise late last week on the use of taxpayer cash. Earlier this year, Congress had approved $25 billion in loans to the car companies for "green retooling," and the White House said Friday that Detroit could tap that money quickly for more general purposes with a couple of conditions. The companies merely have to present a business plan to the Energy Secretary showing how the cash would keep them "viable," which is to say competitive as profit-making concerns. This could be a proposal to renegotiate labor contracts, or perhaps a merger proposal, or other plan of action. But here's the real catch for Congress: Mr. Bush said Democrats would also have to remove the green strings that they themselves had attached to that $25 billion.
"The Bush Administration's proposal is unacceptable," declared Senate Majority Leader Harry Reid. "The Administration's plan would require additional legislative action in the House and Senate and the President's signature -- but there is no reason to start at square one when Secretary [Henry] Paulson can protect millions of American jobs in one of our most important industries with the stroke of a pen." 
Yet if the problem is so urgent, why keep the green chains on that first $25 billion? GM in particular is saying that it may have to declare bankruptcy by the end of the year without a taxpayer capital injection. Aren't jobs at stake?
 If Congress wants to ease the immediate burden on Detroit, it could also ease the onerous fleet-mileage standards (CAFE rules) that force the companies to make cars domestically that are unprofitable. A mere tweak would help a lot -- for example, simply allow Detroit to meet CAFE standards by counting the cars it makes at home and abroad. This alone might save Chrysler from bankruptcy. But Congress won't budge on that simple change.Once Congress starts investing in its green visions for Detroit, it isn't likely to give up easily or stop at $50 billion. If the Environmental Motor Company's cars don't sell well enough to earn a profit, then something else would have to be done to vindicate the investments. Taxpayer loans and other subsidies would have to float the companies until Americans wise up or Congress forces consumers to buy them. Taxpayers should get ready to own a piece of Detroit for a very long time.
 The more realistic alternative to this utopian green vision is to let GM or Chrysler file for Chapter 11 like any other company that can't pay its bills. The immediate costs would be severe, but at least bankruptcy would provide the political and legal means for them to evolve into smaller, more competitive companies. Taxpayers shouldn't be asked to finance a green industrial policy promoted by lobbyists and Congressmen who know nothing about what it takes to make a car -- much less make a profit.
But, our elected Representatives in Congress not only don't know how to make cars, they don't know how to make loans either.  Barney Frank, who's leading the charge to fund the bottomless pit called the "Big Three" and the Unions, feels comfortable gifting $25 Billion now, without any real sense of being able to get it back, and acknowledging that it might really take another $100Billion!

That $25 to $100 Billion doesn't come out of the air, it comes forcibly out of other citizen's pockets.  It's $100 Billion that could be invested in more productive areas of the economy instead of being forced by the heavy hand of government to prop up non-sustainable labor contracts and ineffective corporate management.

Now, given the strong win of Barack Obama, there's more and more allusion to, FDR-like "New Deal" government schemes.  The schemes all represent a bigger and stronger gauntleted-government hand throttling and squeezing the economy.    

The Market continues to fall....any wonder why?


Can't think of a better candidate.....


Photograph by Lucian Read

When General David Petraeus arrived in Iraq, it was a disaster. Now he’s leaving, and it’s something else entirely. Lisa DePaulo travels to Baghdad on the eve of his departure to find out how he did it (“You’ve gotta live with the people to protect the people”) and who the hell he is (for starters, he likes Phil Collins)

Read Lisa DePaulo's article here ;

Tuesday, November 18, 2008

President-Elect Obama, Meet Cory The Well Driller

This letter to Mr. Obama seems to have been circulating since late October, but I just became aware of it today. Owning my own businesses for the past ten years, has developed an ear that is very sympathetic to Mr. Miller's comments.  As a result, I've published his letter in order to help him reach a larger audience with his message. 

I ask that you'll read his story and reflect on whether, or not, this is the type of behavior that we in the United States should applaud, support and encourage.  If you agree, then start making your voice heard by the people that represent your interests in Congress.......

C. Miller Drilling

Mr. Obama, 

Given the uproar about the simple question asked you by Joe the plumber, and the persecution that has been heaped on him because he dared to question you, I find myself motivated to say a few things to you myself. While Joe aspires to start a business someday, I already have started not one, but 4 businesses. But first, let me introduce myself. You can call me “Cory the well driller”. I am a 54-year-old high school graduate. I didn’t go to college like you, I was too ready to go “conquer the world” when I finished high school. 25 years ago at age 29, I started my own water well drilling business at a time when the economy here in East Texas was in a tailspin from the crash of the early 80’s oil boom. I didn’t get any help from the government, nor did I look for any. I borrowed what I could from my sister, my uncle, and even the pawnshop and managed to scrape together a homemade drill rig and a few tools to do my first job. My businesses did not start not a result of privilege. It is the result of my personal drive, personal ambition, self-discipline, self reliance, and a determination to treat my customers fairly. From the very start my business provided one other (than myself) East Texan a full time job. I couldn’t afford a backhoe the first few years (something every well drilling business had), so I and my helper had to dig the mud pits that are necessary for each and every job with hand shovels. I had to use my 10-year-old, ½-ton pickup truck for my water tank truck (normally a job for at least a 2 ton truck).

A year and a half after I started the business, I scraped together a 20% down payment to get a modest bank loan and bought a (28 year) old, worn out, slightly bigger drilling rig to allow me to drill the deeper water wells in my area. I spent the next few years drilling wells with the rig while simultaneously rebuilding it between jobs. Through these years I never knew from one month to the next if I would have any work or be able to pay the bills. I got behind on my income taxes one year, and spent the next two years paying that back (with penalty and interest) while keeping up with ongoing taxes. I got behind on my water well supply bill 2 different years (way behind the second time… $80,000.00), and spent over a year paying it back (each time) while continuing to pay for ongoing supplies C.O.D. Of course, the personal stress endured through these experiences and years is hard to measure. I do have a stent in my heart now to memorialize it all.

I spent the next 10 years developing the reputation for being the most competent and most honest water well driller in East Texas. 2 years along the way, I hired another full time employee for the drilling business so that we could provide full time water well pump service as well as the well drilling. Also, 3 years along the path, I bought a water well screen service machine from a friend, starting business # 2. 5 years later I made a business loan for $100,000.00 to build a new, higher production, computer controlled screen service machine. I had designed the machine myself, and it didn’t work out for 3 years so I had to make the loan payments without the benefit of any added income from the new machine. No government program was there to help me with the payments, or to help me sleep at night, as I lay awake wondering how I would solve my machine problems or pay my bills. Finally, after 3 years, I got the screen machine working properly, and that provided another full time job for an East Texan in the screen service business.

2 years after that, I made another business loan, this time for $250,000.00, to buy another used drilling rig and all the support equipment needed to run another, larger, drill rig. This provided another 2 full time jobs for East Texans. Again, I spent a couple of years not knowing if I had made a smart move, or a move that would bankrupt me. For the third time in 13 years, I had placed everything I owned on the line, risking everything, in order to build a business.
A couple of years into this, I came up with a bright idea for a new kind of mud pump, a fundamentally necessary pump used on water well drill rigs. I spent my entire life savings to date (just $30,000.00), building a prototype of the pump and took it to the national water well convention to show it off. Customers immediately started coming out of the woodworks to buy the pumps, but there was a problem. I had depleted my assets making the prototype, and nobody would make me a business loan to start production of the new pumps. With several deposits for pump orders in hand, and nowhere to go, I finally started applying for as many credit card as I could find and took cash withdrawals on these cards to the tune of over $150,000.00 (including modest loans from my dear sister and brother), to get this 3rd business going.

Yes, once again, I had everything hanging over the line in an effort to start another business. I had never manufactured anything, and I had to design and bring into production a complex hydraulic machine from an untested prototype to a reliable production model (in six months). How many nights I lay awake wondering if I had just made the paramount mistake of my life I cannot tell you, but there were plenty. I managed to get the pumps into production, which immediately created another 2 full time jobs in East Texas. Some of the models in the first year suffered from quality issues due to the poor workmanship of one of my key suppliers, so an employee and I (another East Texan employed) had to drive across the country to repair customers’ pumps, practically from coast to coast. I stood behind the product, and made payments to all the credit cards that had financed me (and my brother and sister). I spent the next 5 years improving and refining the product, building a reputation for the pump and the company, working to get the pump into drill rig manufacturers’ product lines, and paying back credit cards. During all this time I continued to manage a growing water well business that was now operating 3 drill rig crews, and 2 well service crews. Also, the screen service business continued to grow. No government programs were there to help me, Mr. Obama, but that’s ok, I didn’t expect any, nor did I want any. I was too busy fighting to make success happen to sit around waiting for the government to help me.

Now, we have been manufacturing the mud pumps for 7 years, my combined businesses employ 32 full time employees, and distribute $5,000,000.00 annually through the local economy. Now, just 4 months ago I borrowed $1,254,000.00, purchasing computer controlled machining equipment to start my 4th business, a production machine shop. The machine shop will serve the mud pump company so that we can better manufacture our pumps that are being shipped worldwide. Of course, the machine shop will also do work for outside companies as well. This has already produced 2 more full time jobs, and 2 more should develop out of it in the next few months. This should work out, but if it doesn’t it will be because you, and the other professional politicians like yourself, will have destroyed our country’s’ (and the world) economy with your meddling with mortgage loan programs through your liberal manipulation and intimidation of loaning institutions to make sure that unqualified borrowers could get mortgages. You see, at the very time when I couldn’t get a business loan to get my mud pumps into production, you were working with Acorn and the Community Reinvestment Act programs to make sure that unqualified borrowers could buy homes with no down payment, and even no credit or worse yet, bad credit. Even the infamous, liberal, Ninja loans (No Income, No Job or Assets). While these unqualified borrowers were enjoying unrealistically low interest rates, I was paying 22% to 24% interest on the credit cards that I had used to provide me the funds for the mud pump business that has created jobs for more East Texans. It’s funny, because after 25 years of turning almost every dime of extra money back into my businesses to grow them, it has been only in the last two years that I have finally made enough money to be able to put a little away for retirement, and now the value of that has dropped 40% because of the policies you and your ilk have perpetrated on our country.

You see, Mr. Obama, I’m the guy you intend to raise taxes on. I’m the guy who has spent 25 years toiling and sweating, fretting and fighting, stressing and risking, to build a business and get ahead. I’m the guy who has been on the very edge of bankruptcy more than a dozen times over the last 25 years, and all the while creating more and more jobs for East Texans who didn’t want to take a risk, and wouldn’t demand from themselves what I have demanded from myself. I’m the guy you characterize as “the Americans who can afford it the most” that you believe should be taxed more to provide income redistribution “to spread the wealth” to those who have never toiled, sweated, fretted, fought, stressed, or risked anything. You want to characterize me as someone who has enjoyed a life of privilege and who needs to pay a higher percentage of my income than those who have bought into your entitlement culture. I resent you, Mr. Obama, as I resent all who want to use class warfare as a tool to advance their political career. What’s worse, each year more Americans buy into your liberal entitlement culture, and turn to the government for their hope of a better life instead of themselves. Liberals are succeeding through more than 40 years of collaborative effort between the predominant liberal media, and liberal indoctrination programs in the public school systems across our land.

What is so terribly sad about this is this. America was made great by people who embraced the one-time American culture of self-reliance, self-motivation, self-determination, self-discipline, personal betterment, and hard work, risk taking. A culture built around the concept that success was in reach on every able bodied American who would strive for it. Each year that less Americans embrace that culture, we all descend together. We descend down the socialist path that has brought country after country ultimately to bitter and unremarkable states. If you and your liberal comrades in the media and school systems would spend half as much effort cultivating a culture of can-do across America as you do cultivating your entitlement culture, we could see Americans at large embracing the conviction that they can elevate themselves through personal betterment, personal achievement, and self reliance. You see, when people embrace such ideals, they act on them. When people act on such ideals, they succeed. All of America could find herself elevating instead of deteriorating. But that would eliminate the need for liberal politicians, wouldn’t it, Mr. Obama? The country would not need you if the country was convinced that problem solving was best left with individuals instead of the government. You and all your liberal comrades have got a vested interested in creating a dependent class in our country. It is the very business of liberals to create an ever-expanding dependence on government. What’s remarkable is that you, who have never produced a job in your life, are going to tax me to take more of my money and give it to people who wouldn’t need my money if they would get off their entitlement mentality asses and apply themselves at work, demand more from themselves, and quit looking to liberal politicians to raise their station in life.
You see, I know because I’ve had them work for me before. Hundreds of them over these 25 years. People who simply will not show up to work on time. People who just will not work 5 days in a week, much less, 6 days. People always looking for a way to put less effort out. People who actually tell me that they would do more if I just would first pay them more. People who take off work to sit in government offices to apply to get free government handouts (gee, I wonder how things would have turned out for them if they had spent that time earning money and pleasing their employer?). You see, all of this comes from your entitlement mentality culture.

Oh, I know you will say I am uncompassionate. Sorry, Mr. Obama, wrong again. You see, I’ve seen what the average percentage of your income has been given to charities over the years of 2000 to 2004 (ignoring the years you started running for office - can you pronounce “politically motivated”); you averaged of less than 1% annually. And your running mate, Joe Biden, averaged less than ¼% of his annual income in charitable contributions over the last 10 years. Like so many liberals, the two of you want to give to the needy, just as long as it is someone else’s money you are giving to them. I won’t say what I have given to charities over the last 25 years, but the percentage is several times more than you or Joe Biden (don’t you just hate goggle?). Tell me again how you feel my pain.

In short, Mr. Obama, your political philosophies represent everything that is wrong with our country. You represent the culture of government dependence instead of self-reliance; Entitlement mentality instead of personal achievement; Penalization of the successful to reward the unmotivated; Political correctness instead of open mindedness and open debate. If you are successful, you may preside over the final transformation of America from being the greatest and most self-reliant culture on earth, to just another country of whiners and wimps, who sit around looking to the government to solve their problems. Like all of western Europe. All countries on the decline. All countries that, because of liberal socialistic mentalities, have a little less to offer mankind every year.

God help us…

Cory Miller
just a ordinary, extraordinary American, the way a lot of Americans used to be.

P.S. Yes, Mr. Obama, I am a real American…

Watch Video on Fox News

Monday, November 17, 2008


Europe, Japan Face $46 Billion Global-Warming Penalty 

I must have missed what Al Gore has said about this probably did too.
Twenty nations including Japan, Italy and Australia failed to rein in carbon-dioxide output enough to meet their pledges signed in 1997 in Kyoto, Japan. The potential penalty is 36 billion euros ($46 billion).
Kyoto's binding targets are a cornerstone in the international effort to limit global warming. The U.S. is the only developed nation not to ratify the pact.  Under the treaty, countries that are unable to meet targets must buy permits from nations that have a surplus. The government must pay the bill, and some such as Italy and Spain are requiring industry to share in the costs.
Can you imagine what the United State's penalty would be today, if we had blindly followed the sheep?
The UN Framework Convention on Climate Change, which guided the Kyoto talks, aims to negotiate a new treaty for the post- 2012 period at a meeting next year in Copenhagen. Failure by countries to meet their Kyoto targets suggests there's no point in agreeing to a new deal, said Lomborg.
``It questions the whole idea of getting together in Copenhagen next year and making even more ambitious promises when we haven't even been able to fulfill our promises so far,'' said Lomborg, an economist and director of the Copenhagen Consensus Center, an economic advisory body.

It's become so much more obvious now that the UN sponsored Kyoto protocols were, and are, just an attempt to redistribute wealth from richer nations to poor.  
Thank you George Bush for not signing us to this cross of carbon.

Story ....
In other news....
The world has never seen such freezing heat 
 Across the world there were reports of unseasonal snow and plummeting temperatures last month, from the American Great Plains to China, and from the Alps to New Zealand. China's official news agency reported that Tibet had suffered its "worst snowstorm ever". In the US, the National Oceanic and Atmospheric Administration registered 63 local snowfall records and 115 lowest-ever temperatures for the month, and ranked it as only the 70th-warmest October in 114 years.......satellite images were showing Arctic sea-ice recovering so fast from its summer melt that three weeks ago it was 30 per cent more extensive than at the same time last year....... and the hottest decade of the 20th century was not the 1990s, but the 1930s.

Friday, November 14, 2008

Alchemy @ $.20 a Share

That's right....Alchemy is apparently being effectively practiced in Santa Barbera, CA

Alchemy was known as the spagyric art after Greek words meaning to separate and to join together.   And that's exactly what the folks at Carbon Sciences Inc. appear to be doing; making gasoline out of CO2 and H2O. 

You'd have thought that such a significant transformational announcement would have been met with instant media fixation and uproar back on October 20th when this was announced, but, I guess that Colin Powell's endorsement of Barack Obama sucked all the oxygen out of this bit of news.  

Carbon Sciences Inc . (CABN:, the developer of a breakthrough technology to transform carbon dioxide (CO2) emissions into gasoline and other fuels, today commented on the source of hydrogen and energy efficiency of its unique CO2-to-Fuel technology.
Dr. Naveed Aslam, inventor of the technology and the company's chief technology advisor, commented: "Unlike other CO2 to fuel approaches, Carbon Sciences' technology does not use molecular hydrogen (H2) because the creation and reaction of H2 is very energy intensive. Rather, the company's approach is based on a low energy biocatalytic hydrolysis process where water molecules (H2O) are split into hydrogen atoms (H) and hydroxide ions (OH) using a biocatalyst. The hydrogen atoms (H) are immediately used in the production of hydrocarbons and the free electrons in OH are used to power the various biocatalytic processes."
"Our technology is not based on photosynthetic plants where sun light is used to drive biofuel production reactions, such as in algae. Instead, it is based on natural organic chemistry processes that occur in all living organisms where carbon atoms, extracted from CO2, and hydrogen atoms extracted from H2O, are combined to create hydrocarbon molecules using biocatalysts and small amounts of energy. Our innovative technology allows this process to occur on a very large industrial scale through advance nano-engineering of the biocatalysts and highly efficient process design," concluded Dr. Aslam.
Derek McLeish, CEO of Carbon Sciences added: "We are very excited about our novel process to transform CO2 into fuel. Since announcing this technology, we have been inundated by inquiries of interest from academia and industry. Because many aspects of our technology are trade secrets, we are not free to discuss all the details. However, based on our research to date, we believe that we will be able to demonstrate our technology within the next several months with a prototype that can convert a stream of CO2 into an immediately flammable liquid fuel."

Not being either an engineer or scientist, I can't comment on the relative merit, or value, of the claim by the wonderful people of Carbon Sciences, but wouldn't it be just amazing to be able to clear up the so-called "Carbon Problem" and at the same time put the folks in the Middle East out of business.  Wonder if this was the type of public reaction when Edison, the "Wizzard of Menlo Park", announced his "incandescent" light bulb?

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