Economic Factoid Watch

Gas Price Ripoff

2010-12-29T18:28:00.000-08:00

The Real Reason You Were Robbed At The Pump

Many factors can determine the ascent of gas prices, and this is where confusion arises in today’s market, and propaganda begins to take root. In 2008, the historic march of oil costs was blamed primarily on “speculators”, commodity investors who buy up petroleum with no intention of actually using it, thereby creating a false sense of scarcity in the market and driving up prices artificially. This was, for the most part, what really happened.

Another cause of oil increases is the natural reduction of global supply in the face of rising demand. An American economy running on all cylinders would necessitate greater supply and a higher price if that supply is insufficient.

Essentially both triggers are dependent on the fact of scarcity, engineered or legitimate, in order to cause price spikes. Neither trigger is applicable in today’s market, where currency weakness is the central determinant, yet these are the arguments we are hearing and will hear more of as we are fleeced at the pump through dollar devaluation.

From: Oil Juggernaut Unleashed

Start a New Economic Engine

2010-09-29T17:57:00.000-07:00

Is the prosperity motor idling, anticipating some double clutching to shift back into gear, or have the pistons seized requiring us to undertake a massive overhaul of our economic engine?

On the one hand the markets are rallying, companies are earning record profits while sitting on nearly two trillion dollars in cash. Ninety percent of people who want to work have a job. Nearly eighty-six percent of Americans live above the poverty line. Eighty-three percent of Americans are covered by health insurance. Household income is up seven percent amongst our oldest citizens - those over 65 years of age. The top one percent of earners are accumulating wealth at unprecedented rates, amassing fortunes the likes of which have not been seen since the blossoming of the industrial age.

Looked at this way, the evidence suggests the economy is on the rebound - the economic engine is rumbling to life. However, there is another perspective.

Household income is falling for every age group, except those over 65 - the median annual household income is hovering below $50,000.00 and has not increased in inflation adjusted dollars in decades. The number of Americans without health insurance has reached an all-time high of over fifty million men, women and children. Over forty-three million mothers, fathers, sons and daughters live in poverty. Tens of millions are unemployed, while millions more have given up looking for gainful employment altogether. Families are struggling with record levels of personal debt while corporations and state and federal governments plumb new depths - borrowing from foreign powers to sustain untenable entitlement growth, fuel a culture of consumption and finance foreign wars.

It seems from this latter perspective our economy still remains stalled.

We have had lots of tinkering under the hood - financial bailouts, corporate bailouts, a massive stimulus package and the loosest monetary policy possible. The master mechanics cannot seem to clearly diagnose the problem nor can they determine a viable way to reignite the engine. Though the motor may not have completely seized, the reality is - the economic engine is idle. We are broken down at a crossroads.

The choices before us are to repair the motor as best we can and attempt to squeeze every last gasp of performance out of the dated design, or we can begin anew and rethink and retool the engine that drives prosperity - rebuild the economy from the ground up.

A new design is needed for America to return to prosperity. It is time to reengineer our economic engine to perform better - to produce results for more people with greater efficiency and increased effectiveness. Oil, consumerism, and finance are spent fuels. We need to realign our priorities and slow down. We must envision a new future - dream a grander dream. We must test and challenge ourselves to achieve greatness. Success is not a spectator sport. Do your part, contribute to the redesign - start your engine.
About the Author

Scott F. Paradis, author of "Promise and Potential: A Life of Wisdom, Courage, Strength and Will" http://www.promiseandpotential.com publishes "Insights" and a free weekly ezine, "Money, Power and the True Path to Prosperity". Subscribe now at http://www.c-achieve.com

Who Wrecked The Economy?

2010-07-02T20:32:00.001-07:00

The Future of Credit Rating Agencies

2010-06-24T19:26:00.000-07:00

By: BPP Business School (Edward Bace)

The big global credit rating agencies (or CRAs, ie S&P, Moody's,
Fitch) originated in America a century ago to help investors
evaluate creditworthiness of bonds, issued by entities from
railways to governments to industrial firms. Over time CRAs grew
internationally, now assessing all kinds of debt. They have
enhanced transparency around a broad credit spectrum. Their
contribution to market discipline has been positive overall,
giving basis to sound credit pricing using default statistics
dating back decades.

With proliferating exotic instruments, securitizations and
manifold debt classes, CRAs have continued investor education.
Yet in recent years they've been swept up with investors in new
product momentum (and generous rating fees). In assigning top
ratings to structured products, particularly in US residential
mortgages, critical analysis was lacking; many deals originally
accorded highest creditworthiness fell drastically, to the
credit spectrum's bottom. A March Moody's study shows that 41%
of structured deals rated Aaa in 2007, and 39% in 2006, fell to
Caa by end-2009 (12 notch drop!). Before 2005, this figure was
1%. Moody's corporates experienced 2-notch average downgrades
over the last decade, versus 7.3 for structured in 2009.1 The
credit crisis should have affected all rating classes similarly;
CRAs seek consistency across sectors. This clearly shows flaws
in structured ratings, provoking international outcry during the
crisis.

Criticism also stems from profits oligopolistic CRAs enjoy,
enhanced by increased debt issuance volume. Moody's 2007 ratings
profit margin (ebitda before restructuring) was 59%. Close to
half that year's revenue came from structured products.

CRAs first responded with self-regulation, appointing dedicated
compliance personnel, enhancing transparency, and rotating
analysts. In 2004, after failures of Enron and Parmalat
(carrying investment grade ratings - implying low default risk -
just before they went bust), CRAs began conforming to IOSCO's
Code, a voluntary regime built around International Organization
of Securities Commissions standards. This hasn't precluded
tighter regulation, in America and Europe. Last year the EU
approved European Regulation on Credit Rating Agencies, to set
CRA standards, improve transparency and governance, and
introduce regulation and supervision.2 America's financial
reform bill includes a new rating board, regulating CRA
interaction with rating clients.3

This legislation is not a cure-all. CRAs don't have to conduct
diligence on complex securitizations they rate, in contrast to
rating corporates. Since the US bill does require structured
methodology disclosure, which lacked transparency, this should
reduce CRAs' reliance on mathematical models (largely developed
by intermediaries). Excessive confidence in statistical analysis
accompanied insufficient acknowledgement of its limitations.
Direct contact of credit analysts with issuers in structuring
products also represented a conflict.

A fundamental anomaly remains: CRAs earn most of their income
from rated borrowers, not investors. CRAs' market share
ambitions result in incentives for issuers and intermediaries to
"shop" for high ratings. In my investment banking experience,
one public rating usually sufficed for an issue, which naturally
was the highest.

The debate has become more political, as sovereign downgrades
(eg, Greece) have led policy-makers to question CRA power,
including more calls for regulation and a "European" rating
agency. Value of the latter could be dubious, based on Japan's
experience, where JCR, a domestic agency, consistently awards
high ratings to domestic borrowers that global CRAs rate much
lower. For example, JCR rates Bridgestone AA, which Moody's
rates A3, 4 notches lower. JCR's extensive corporate ratings
list reveals just 2 sub-investment-grade firms, aside from
defaulted issuers (like JAL).4

Following are proposals to limit potential negative CRA
influences:

Regulated and sophisticated investors should rely more on own
analysis.5

Market participants should reduce ratings reliance in investment
decisions.

CRAs should make available further information free to access.

Effective self-regulation is preferable to government
regulation, offering greater flexibility, expertise, acceptance,
higher standards, and more competition.

Above all, investors' interests should come first.

Footnotes:

1. Tung, J. and Weill, N. (2010), "Structured Finance Rating
Transitions: 1983-2009," Moody's Investors Service: 9. 2.
Parker, E. and Bake, M. (2009), "Regulation of Credit Rating
Agencies in Europe," Butterworths Journal of International
Banking and Financial Law: 401-403. 3. Dodd, C., Chairman
(2010), "Summary: Restoring American Financial Stability,"
Senate Committee on Banking, Housing and Urban Affairs: 8. 4.
JCR.co.jp website. 5. Pizzani, L. (2008), "(Dis)Credit Ratings,"
CFA Magazine: 14-15.

About the author:
This article was written by Edward Bace a lecturer at BPP
Business School London.

BPP Business School is a leading provider of postgraduate
education with an excellent range of courses including the
MSc Finance and MSc Management degrees.

21 Reasons The Economy Is About To Crash

2010-06-22T20:10:00.000-07:00

1) Easy Money was the chosen solution to keep the good times
rolling, even though the good times were questionable.

2) Productivity was already being impacted by poor allocation of
resources, wars not going well.

3) Financial oligarchs effectively took over the government,
existing laws were not enforced, and as thing came to a head in
2006 and 2007 the big brokers (deal makers, IPO, LBO's) were
hiring specialists in bankruptcy reorganization. They were
poised to buy stuff up on the cheap when things blew up.

4) The recent "recovery" is really just the same recession, but
given a hit of crack so it can party on a little longer. Many
trillions were spent, but it mostly benefiting big business, big
banks/brokers. Long term benefits to the economy are
non-existent.

5) Government workers have increased their pay like 30% to 40%
whilst non-gov workers have treaded water, even if they have a
job at all.

6) Government is expanding it's powers and owning businesses.
Whilst theoretically, expanded powers could be useful, why we
anyone assume so, given that existing laws and oversight were
already so poorly performed.

7) Lobbying, campaign contributions, and restrictions on how any
Gov official could migrate from an oversight of an industry to
an executive or lobbying position must be instituted.

8) Deflation is likely to be the near term hobgoblin.

9) The Gov can literally just print money, seriously. They can
hand out that paper money to pay off debts. They do not have to
roll over every debt. All the governments with soveriegn
currencies can do this. The Euro cannot. This is called
competitive devaluation.

10) Inflation can take hold someday. You best not have all your
assets in paper money or equivalents. These changes may happen
relatively quickly, like by 2012.

11) The US has plenty of military muscle, expect it to be used
more, especially as things go bad.

12) If anyone owes you money, get it now.

13) Very few, maybe 1% of the population learned anything from
the greatest financial crisis in a century. Or they "learned"
that the Gov can indeed save us by strong Gov intervention in
free markets. This makes the next crisis more dangerous.

14) Very few of the problems of the crisis were solved by those
trillions of dollars thrown at the situation. It was more just a
transfer of wealth from a captive audience to the ogliarchs. The
bad debts, bad assets are still on the books, they have just
been covered up. Those in the know, know it, and they are
pulling out all the stops to "get theirs" before round 2.

14) There may be a QE2 (Quantitative Easing, money printing,
throwing money at large banks/brokers), or the USA could follow
the austerity trend that is all the rage (pun intended).

15) Reviewed Conquer the Crash by Big Daddy Pretcher. We all
love Pretcher, he is a free thinker, like Armstrong, but he has
been so wrong for so long, he is not infalliable. His view on
Gold is wrong, it is not just a commodity that reacts like
others.

16) Gold is a currency. Paper gold is a speculation device,
owning gold ETFs and even gold miners is not the same as owning
physical gold. Silver is good for making change, buying a tank
of gas, bag of rice, etc.

17) We are not at the precipice of Primary 3 wave down, we could
be near the end of the 1st 5 waves down (completion of wave 1).
Wave 2 could slog sideways for years, like a zombie propped up
by QE2.

18) Most people have lived beyond their means for a long time.
Most "young people" say 35 and younger, have only lived in a
bull market.

19) In order for any chance of moving forward with positive
results a few things must happen--banks and investment
advisers/brokers/deal makers must be separated by a firewall,
not a just a company division name, lobbying must be curtailed,
contract law including making bondholders take their lumps, must
be restored.

20) Never has the world been so intertwined. Never has the
situation for competitive devaluation of every countries
currency been so nicely setup.

21) There is still something like $600T of notional value of
derivatives floating around out there, and apparently no one
even knows where they are or how to track them. This is many
multiples of the world GDP. This can't be good for the common
man.

About the author:
World recognized trends forecasters, known by many around the
world most addictive & highly accurate. Sign up for a FREE
Trends alert at: http://www.forecastfortomorrow.com

Goldman Sachs: The Next American Revolution

2010-04-28T19:36:00.000-07:00

Allegations of fraud brought last week by the Securities and Exchange Commission is a shocking departure from the culture of collusion among the U.S. government and the nation's top banks. That despite the position of this publication and myriad others broadly categorized as "fringe" who have consistently and vociferously objected to the two or more standards applied to organizations and individuals by a corrupt legal system.

Throughout the 200 year-or-so history of linked financial markets, the name of J.P. Morgan has almost always been dominant. Goldman Sachs, though newer in terms of participatory history, has quickly risen to join J.P. Morgan at the forefront of the only industry that credibly dictates to government.

To many, the scandal surrounding Goldman Sachs apparent rigging of the craps tables in the house's favour comes as no surprise. The Gold Antitrust Action Committee has been stridently demanding an investigation into the concentrated short positions that plague the gold and silver markets to no avail. They've suffered from an absence of public concern or support for their position because the relationship between gold and silver markets and personal finance is not intellectually accessible for the majority of people. So the press, absent public interest, generally passes up GATA coverage, even though the implications for the citizens of the United States and the world include constitutioality and civil rights.

That may be changing.

The excesses of the personalities attracted to such an industry demands that episodes of gross rapaciousness should regularly come to light in the press, and such incidents are generally followed closely by censureship by government, a distancing between banking and government, vigorous regulation, and public revulsion.

Is it conceivable that an independent wind is blowing through the halls of justice? Or is this merely the set stage for the sacrifice of a few lambs to render complete the getaway of the real culprits higher up the food chain?

Speculation aside, one of the unavoidable results of this first volley across the hallowed bows of Big Banking is the focus that is now being directed to the futures and derivatives business, which is where the accumulated real losses of these institutions is perrenially stored as liabilities so they can be booked as profit on their balance sheets. The figure, according to the Commodities and Futures Trading Commission own numbers, of $600 trillion is the amount which lurks under the auspices of "notional" value in unwound transactions encumbering the heretofore dark and mostly unregulated market.

If the CFTC and SEC are genuinely determined to rectify the now public disgrace of such nepotistic administration, we could be on the verge of a major re-ordering of the financial industry landscape world wide.

The manipulation long present in this market according to the allegations of organizations such as the Gold Anti Trust Action Committee (GATA) has been responsible for the depressed price of precious metals, and outside of GATA, the super-inflated price of oil which peaked in July of 2008 at $148 a barrel.

Now they're coming out of the woodwork in Goldman's defense, thought the defenders are hardly credible and without bias. Warren Buffett today said he has "full confidence" in Goldman Sachs, while private equity firm Blackstone came out with a more forceful endorsement.

Blackstone CEO Stephen Schwarzman is quoted as saying, "We have been working with Goldman Sachs for the 25 years since Blackstone was formed and we never had any circumstance where there was any question about ethical character or behaviour. We are a major client of Goldman's and we will continue to remain a major client."

A week after the first allegations, we are now seeing the predictable flood of corrobaratory evidence unearthed by the press that suggests the moral decay among the foot soldiers now receiving blame originates at the top. (Emails show Goldman Sachs execs boasting about the profit they were making from horribly misappropriated lending.)

Goldman Sachs though isn't going to lay down like Lehman Brothers was forced to. The tentacles of the Goldman monster penetrate global governments on every level that matters, as many of the Treasury and Federal Reserve alumni identities prove. Goldman is certainly at the forefront of the "Too Big to Fail" propaganda, which is true only if caveated with "because that would bring down the government".

We reiterate the position "Too big to fail means too big too exist". If institutions that can deflect any responsibility for their actions to junior scapegoats are permitted to run amok with their massively influential capital concentrations, we are institutionalizing criminal destructive forces and protecting them. Its like breeding giant elephants in your living room. Sure, they're big and healthy, but look at the state of your house!

Among the many lessons we should be learning in this era of daylight robbery by our institutional and individual pillars of society is the obvious reality that people only aspire to be bankers because they feel entitled to a greater share of personal wealth, and not just despite the impoverishment of a broad social group to accommodate such plunder, but that is precisely how they demand it is done. This is morally reprehensible. In 200 years, if we survive, these bankers and that mentality will be deemed criminal, and those crooks will go to jail.

Through our evolution in the developed world over the last thousand years, there was a long-running battle between those who would let the church govern, and those who, successfully, argued for the separation of church and state. A democratic government is obliged to refrain from permitting special interest groups from influencing and especially infiltrating policy. The current practice of recruiting treasury and government financial advisors from the top personnel of banking is a despicable and blatant conflict of interest.

What these elitists perennially fail to recognize is it is precisely this smug refusal to eliinate such glaring abdications of government responsibility that incites riots and revolutions. When the financial misery inflicted by these institutions begins to affect even its middle and upper middle classes, rebellious organization and literature manifests.

At some point, the unemployed will see that there is an emergent moral obligation to correct such injustice, rather than seek employment or financial assitance. The United States is right now failing to make that distinction, and at its own peril.

I am Canadian with a long family history of intermarriage and American - Canadian residence and business. With a thoroughly bi-national perspective, it is now abundantly clear to me that one of the greatest distinctions between Canadians and Americans is that the Canadian business elite don't underestimate the importance of a more-or-less uniform standard of living for all citizens - even at their own expense. Consumer rights are defended, sure, but we don't have to worry about predatory lending by financial institutions against the credit-unworthy because it runs contrary to Canadian ethical thinking. Bad loans are bad business, and the integrity of the Canadian economy throughout the crisis is testimony to Canadian ethical and business fortitude.

This is why Goldman Sachs should be the first domino to fall. The United States government needs to stop shielding the super elite and thinking that they're getting away with it. They are not. There will be a day of comeuppance, and its likely not that far off.

The opportunity for President Barack Obama is to now demonstrate genuine leadership by attacking the corruption that continues to aid and abet the illegal manipulation of markets through excessivley large and influential institutions. Corporations can't go to jail, but their charters can be revoked for cause. If the government of the United States doesn't act decisively and meaningfully, the people eventually will.

World recognized trends forecasters, known by many around the world most addictive & highly accurate. Sign up for a FREE Trends alert at: http://www.forecastfortomorrow.com

Blankfein Takes Heat From Congress

2010-04-27T19:48:00.000-07:00

Goldman Sachs circus begins.

Did The Bank Bailout Work?

2010-03-30T17:22:00.000-07:00

By: Marquis Codjia

A few months ago, the crumbling global economy was atop the
agenda of many G20 leaders. Social unrest, banking sector
meltdown, global growth conundrum, and stock market yo-yos were
the main discussion topics among the planetary leadership.

Governments the world over addressed the most imperative issue,
the banking pandemonium, with massive cash inflows into a sector
that hitherto epitomized capitalism at its best (and worst),
with a modus operandi more akin to central intervention in
communist economies.

The global tab ranges from 4 to 5 trillion US dollars according
to the most optimistic estimates, but the overall costs may run
higher in the future.

The financial rescue of the ailing banking sector, in principle,
was the right course of action and various experts across the
political spectrum saw eye to eye on its criticality, including
the staunchest free-market theorizers who routinely treat as
leftist energumens out of the antediluvian era those who dare
buck conventional wisdom regarding the role of government in
social economics.

It was flummoxing, however, to observe how lenient authorities
were vis-à-vis banks throughout the bailout process on top of
the very favorable terms under which funds were disbursed.
Hence, financial institutions that benefited from state largesse
were able to quickly use monies received to regain profitability
and reimburse their respective governments.

Other parts of the economy didn't experience so swift a
recovery. Unemployment is still high; the mortgage sector is
still in a shambles. Banks have been reluctant to lend, creating
an underperforming productive sector and a lethargic private
consumption. The stock market may be up but, debatably, the
"real economy" is still down.

Banks played a crucial role in the current economic malaise but
anti-bailout commentators were wrong to vilify them and to
affirm that such guilt should have precluded public rescue.
Financial intermediaries are an epochal pillar of our
post-modern economies and it would have been socio-economically
ruinous and politically unpalatable to let them sink.

Admittedly, a majority of banks are today more cash awash and
profitable than a year ago albeit some pockets of the industry
are still comatose owing to the liquidity hemorrhage that has
devastated them since the recession erupted.

Regrettably, nothing has changed. These institutions are
resorting again to the erstwhile practices that wrought havoc to
the economy in the first place, under the aegis of a regulatory
body eerily blind, deaf and tongue-tied.

Banks, evidently, should be encouraged to pursue and make
profits as any private concern. But when such a financial quest
comes at the expense of an entire system or poses a systemic
threat to the productive sector of the economy, the argument in
favor of tougher regulation becomes of preeminent import.
Companies need to utilize hedging for exposure control; yet,
speculators lately seem to use derivatives to bet against their
very benefactors. Although outrageous to vast swaths of the
populace, such practices are explicable if one considers that
the speculating camp only furthers private interests of elites
(their investors) who seldom factor morality into the
profitability equation.

Case in point: Greece. The Hellenic government bailed out its
banking sector with billions of dollars only to see their
country downgraded a few months later because of an perceived
default risk.

At this moment, elected officials and central bankers should
ponder the following question: did the bailout work? Or, stated
differently, did the mammoth cash infusion into banks and the
associated supplemental initiatives reach the initial goals?

Seasoned economists and social scientists will grapple amply
with issues regarding program effectiveness and efficiency in
the future, but prominent experts currently believe the answers
to such interrogations are negative. George Mason University
economist Peter Boettke posited that bank bailouts have created
a "cycle of debt, deficits and government expansion" that in the
end "will be economically crippling" to major economies, whereas
Barry Ritholtz, famed author of Bailout Nation and CEO of
research firm FusionIQ, thinks the rescue programs could have
been conducted better.

It can be argued that the initial rescue phase of the bailouts
program was effectual in that it helped avert a domestic and
global banking hubbub. But, contrary to popular credence, that
was the easiest part. The courageous headship of political
leaders and regulators cannot be underrated in the process, but
it is indisputably far facile for a powerful central bank, like
the US Federal Reserve, to make journal entries to the credit of
targeted institutions and replenish their corporate coffers via
the much celebrated "quantitative easing".

The Fed, just like other G8 central banks, is in an enviable
position because it can create money 'out of nothing' by
increasing the credit in its own bank account.

Regulation is where actual political bravery need be shown from
authorities, and so far the lack of sweeping reforms in the
financial sector may obliterate the latter's plodding recovery.

At present, there are five distinct reasons explicating the
mediocre results obtained so far from the bailout scheme.

First, the much needed financial overhaul is taking longer to
move up the legislative ladder and reach US President Barack
Obama's desk because not only financial lobbies - such as the
über-powerful American Bankers Association - are exerting strong
pressure, but the political agenda is also crowded with the
healthcare reform and the geostrategic concerns linked to the
conflicts in Afghanistan and Iraq.

The fact that Senate Banking chief Chris Dodd, D-Conn., wants to
introduce reform in the sector will probably change little in
the short-term. Second, President Obama's own senior level
financial staff is composed of former Wall Street alumni and
lobbyists, and many skeptics are incredulous that a clique so
tied to financial interests can spearhead true reforms in an
industry that was previously munificent to them.

The next two factors are endogenous to the banking industry. One
is the past experience of regulation and deregulation cycles
that usually make laws dissipate over time, and the other stems
from the idiosyncratic ability of financial engineers and
investment bankers to design new products and techniques to
counter existing laws.

Finally, the regulatory endeavor should be global in scope, and
the present lack of geographic cooperation and the practical
difficulty to track systemic risk within the industry are
currently handicapping further advances.

(Article initially published at http://wp.me/pMqmW-8y)

About the author:
I'm a finance professional with a solid, varied risk management
experience in the financial services arena. I have been involved
in capital markets for a few years now, in the course of my work
but also as a trader. I'm an MBA graduate from Rutgers
University Graduate School of Business at New Brunswick, New
Jersey, and a CPA (Certified Public Accountant). Read expanded
bio at http://marquisc.wordpress.com/about/

Joe Biden F Bomb

2010-03-23T20:24:00.001-07:00

Much adieu about nothing but it is kind of funny. Biden isn't the first vice president to get criticized for language such as this. Remember the furor over Dick Cheney telling Sen. Pat Leahy to "go f..k yourself"? And, of course, we have the Nixon watergate tapes to reference for colorful use of foul language.

Note to republicans and conservatives: this is so petty an issue and using it only illustrates how impotent you've become. If you hadn't dropped the ball over the last ten years and sold out to corporate handlers this health care bill would probably still be dead on arrival like all the previous attempts.

HR 3590 Passes

2010-03-21T22:30:00.000-07:00

President Obama speaks moments after the historic passage by the House of Representatives of the Senate's health reform legislation.

The 3 Steps to Fix American Healthcare

2010-03-21T10:44:00.000-07:00

Copyright (c) 2010 Scott F Paradis

In the rush to pass healthcare reform congress and the president are failing to address the fundamental issues corrupting the system: Americans' approach to aging and mortality and the growing opportunity to siphon profits from an uncontrolled system. As the misguided debate rages on Capitol Hill attempting to infuse more funds into an already bloated system, opportunists continue to divert health related revenue to pad the bottom line. Instead of committing more resources we must take three aggressive steps to refashion American healthcare. We must limit profit; empower consumers; and promote healthy lifestyles.

The American healthcare system is a nearly perfect money machine: consumable services of universal demand which are easily manipulated by fear and greed. This money machine, however, is draining resources from virtually every aspect of the economy. We must institute well thought out measures to address highly charged emotional issues - literally the realities of life: death and taxes. And we need effective means to dissuade parasites from feeding off the system. We must turn off the road to financial ruin now and steer a new course.

Currently health related services account for 17.3 percent of the U.S. gross domestic product. By the end of this decade healthcare is expected to represent nearly one fifth of all domestic spending. With trillions of dollars in play lots of people are mining for healthcare gold. Today hundreds of billions of dollars of non health-related healthcare resources are siphoned off for at best marginal benefit enriching overpaid corporate executives, lawyers, politicians and an army of bureaucrats. The damage the parasites inflict amount, by some estimates, to one third or more of all healthcare costs. The first step to fix the healthcare system is to get the focus off profit and get it squarely on health.

Powerful corporations control access to healthcare services leaving consumers to fend for themselves mainly ill-informed and largely powerless, in often emotionally charged circumstances. Because of built in firewalls people have no incentive to, nor way of comparing healthcare related costs, services or records of performance. In addition to the lack of transparency consumers rarely have the power or incentive to choose more cost effective options. The system is designed like the games in Las Vegas - to ensure the house always wins. Special interests overwhelm individual consumers at every turn. Choices by informed, responsible individuals sustain rational, market-driven systems. To fix American healthcare we must empower and incentivize individual consumers to determine "best value" in a transparent healthcare system.

Every economic endeavor is a dance of supply and demand. While the current healthcare system primarily manipulates the supply side of the equation it is time Americans get serious addressing the demand side.

A lifetime is a temporary adventure. As troubling as this realization is, as a society we must come to terms with mortality and the components of modern life undermining wellbeing. We each are responsible for our own health and fitness, and collectively we are responsible for the environment driving the pace and quality of life. Improving the health, wellbeing and fitness of Americans in all stages of life will drastically reduce demand on the healthcare system. The most significant step to fix American healthcare is to honestly assess our circumstances and act uncompromisingly to promote health and wellness from cradle to grave.

Continuing down the current path, funneling national resources at an ever increasing rate to sustain an aging population and inflate opportunists' profits, will cause our healthcare system and then our national economy to collapse. While congress debates ways to increase the power and reach of the system, realize the solution lies with the people. Three steps are required to fix American healthcare: limiting profit, empowering individuals and improving lifestyles. We can stay our current course or we can fix the system - it is time to choose.

Scott F Paradis, author of "Promise and Potential - A Life of Wisdom, Courage, Strength and Will" http://www.promiseandpotential.com
publishes a free weekly ezine, "Money, Power and the Path to True Prosperity". Subscribe now at: http://www.c-achieve.com

Will the New Credit Card Laws be the Solution to Credit Card Debt for Which We've Been Searching?

2010-03-19T12:15:00.000-07:00

Marketing to college aged students has been an ethical issue for years for lenders like Bank of America, Wells Fargo and JP Morgan Chase. The government has finally put in their two cents on the issue in the new Credit Card Accountability and Responsibility Act of 2009 and they are putting in some serious restrictions.

A few of the large banks have offered personal financial education in an attempt to overcome those ethical issues. Despite those efforts, 84% of students have at least one credit card, with the average student having 4.6. The average balance on a student card is $3,000. On top of student loans, the average student is leaving college with more debt than they typically can handle.

So, how will the act attempt to provide credit card debt help?

- No more freebies! Issuers cannot offer free items like t-shirts and pizza slices to entice students to sign up for credit cards on college campuses, college sponsored events (including sporting events), or within 1,000 feet of the campus.

- Anyone under 21 cannot secure a credit card without either an adult co-signer or proof of enough income to pay at least the minimum payment.

I hope that the new rules set forth will be able to put a dent in the massive amount of student debt. Unfortunately, something tells me that without any sort of education or free information about good spending practices and building credit, students can get into just as much trouble. They will be fair game to the credit industry after 21-and their naivety will only serve the interests of the credit card companies.

What other changes have come with the new credit card laws? The biggest change you will notice will probably be the ones to your statement. The highlights of the new format include:

- A structured format that features the fees and interests involved in your bill.

- A special section that explains how much time you will spend and how much interest you will pay for simply making the minimum payment every month. Some statements will even include a comparison of what paying more than they minimum can do to your balance.

- A toll free number for credit counseling. On top of those changes, everyone should receive their credit card statement at least 21 days before the due date.

There are many things these new laws can help us see-for a large amount of people, the newest format will only make it more clear that their need for credit card debt help is dire.

If you've already gotten in trouble with your credit cards and are looking for a permanent solution to your credit card debt, consider Missouri and Illinois Chapter 7 bankruptcy. You could be doing yourself the biggest favor by simply researching what kind of help Missouri and Illinois Chapter 7 can offer in your situation. Find an reputable attorney in your area who is willing to offer you free articles, blogs, bankruptcy faq, and even publications to educate you before you even step foot in an office.

Missouri Bankruptcy attorney James Brown has been working to relieve the debt of hard-working American families for over 15 years. He has dedicated his career to educating consumers about options for debt relief and has released 5 publications, including, "Get Out of Debt: Secrets Your Creditors Don't Want You to Know." You can request a free copy at http://www.castlelaw.net

A Bumpy Ride for Commercial Loans

2010-03-11T08:07:00.000-08:00

For anybody lulled into believing that the banking crisis is over, read the following excellent article on the current state of commercial loans.

A Bumpy Ride for Commercial Loans
By Stephen Bush

With business financing and working capital loans, commercial borrowers need to be prepared for a long and bumpy ride. Based on how chaotic the commercial banking climate is currently, this situation is expected to prevail for a long (but unpredictable) period of time. In spite of the frustrating and confusing business lending environment, a prudent commercial loans strategy is likely to produce the most effective results that can be hoped for by small business owners.

Misinformation and insufficient information will play a somewhat unpredictable role in achieving the desired outcome of business borrowers finding appropriate commercial finance solutions. The eventual success of commercial financing efforts will depend on an individualized and detailed assessment of the unique financial circumstances for a specific business, although it is appropriate to note that there are new and effective business loan options that will satisfactorily fill the commercial funding gap for many small business owners impacted by their current ineffective commercial bankers.

Anticipating the long and bumpy ride that lies ahead for even the most ordinary business financing request will be prudent and wise for small businesses. It has not been unusual for commercial borrowers to wait for one to two months before their bank finally declines to make a commercial loan that had appeared to be a mere formality when the lending process began, either because banks do not want to publicly admit that they are not presently making business loans or perhaps due to their somewhat secretive and changing guidelines for making such loans. Regardless of their prior description of "normal" for working capital management and commercial financing options, many business owners have already discovered how much and how quickly this has changed.

The rationale for describing the journey to business financing success as being both long and bumpy is based on a prevailing banking climate that is characterized by misinformation as well as insufficient information about current commercial finance options for small businesses. After they have finally been informed by their current bank that needed business finance help is not forthcoming, because they simply do not have enough information to successfully complete their task, a small business owner might be unsuccessful in their attempt to find a new source of commercial funding in one typical scenario involving insufficient information. When a commercial banker misleads a prospective business borrower by advising the business owner that the bank will be able to help in providing an unsecured working capital loan when the banker has already been told by senior bank officials that such financing will not be provided except for specific established business clients, this is an increasingly frequent misinformation scenario. Most banks are in fact eliminating or reducing working capital financing to small businesses as indicated by one public report after another.

Realistic expectations of what lies ahead in business financing efforts should produce more successful results. This article represents a sincere attempt to accurately portray the recent confusing and unpredictable state of commercial banking for small business owners, and this fulfills a primary purpose in describing current attempts to obtain small business loans as potentially being a long and bumpy ride.

Stephen Bush and AEX Commercial Financing Group provide help for small business finance programs and working capital loans:
http://aexcfgllc.com

Bailouts Not Working

2010-03-05T13:05:00.000-08:00

The bailouts appear to be only working for the elites on Wall Street. We still have massive unemployment. The government is running up huge, unprecedented deficits. Certain cartels and industries are running up the costs to the middle class(oil and health care for example). The future of our children and grandchildren has been mortgaged.

Here's an excellent article explaining why the road we're headed on is paved with rocks:

Bailing Is Not The Way Out!

Copyright (c) 2010 Scott F Paradis

As the government continues to attempt to bail out the sinking ship known as the U.S. economy, we find ourselves in the dubious position of realizing an infusion of cash only adds ballast weighing down the listing vessel. We are paying one credit card with another - a practice that may well end the grand American experiment.

While we deride Friedman's monetary policy and look to Keynesian fiscal policy for answers, we can't escape the reality - time and circumstances have changed. Old solutions will not work on this new problem.

Our mistaken national policy of installing finance as king, unleashed the unchecked creativity of Wall Street. The leverage invoked by wanton and reckless financial malfeasance left a wreck with two defining characteristics: a destabilized middle class and a penchant for needless consumption.

Through our desire to reside in more prestigious residences, drive ever more grand SUV's, and accumulate more impressive toys we have fallen prey to misguided financial policy, counter productive energy policy, and imprudent foreign policy. We have leveraged our future, willingly accepting the reward of trinkets for Manhattan while simultaneously shackling ourselves and future generations into lifetimes of debt service.

Addressing the crisis by plowing more money into the hands of the elite that brought us to this precipice only reinforced previous mistakes. It is time to stop concentrating wealth in the hands of the few while building debt for the working classes. We have undermined trust in what once had been the enabler of global stability - the U.S. economic engine. That engine is fueled by the optimism, innovation, and engagement of ordinary people with extraordinary vision.

Unfortunately, most often, real solutions, those demanding sacrifice, are left until all easy options are exhausted and the wreck rests on rock bottom. We haven't hit bottom yet, so we likely won't entertain real solutions soon. Those solutions, in the end however, will come from the people - a top down approach in our current political environment will not work.

As our financial system crumbled we are forced to reconnect to what matters most - to enduring values - to one another. Economic nepotism must be laid to rest. We must embrace a system whereby the moneyed elite and the masses act together in a collective self-interest based on universal, enduring principles. We must come to realize the material excess of wealth is a false idol leading us astray. We must come to recognize and embrace ideals more appealing than appearances and more enduring then accumulation.

Overcoming the greatest challenge of our time, demands we overcome the greatest challenge of all time - the double-edged sword of human nature: fear and hubris. The debt bubble and the aftermath of its demise is a flaunted example of the frailties of human nature. Admitting we have a problem is the fist step to fixing it.

Though we have strayed into believing accumulating is our highest purpose, this crisis may yet cause us to see a greater truth. We are here to experience, to act, to grow, to love. The stuff we accumulate does not endure. For in the end, it is the people we become and the love we share that matters. Bailing is not the way out. A coming together and a commitment to one another is.

----------------------------------------------------
Scott F. Paradis, author of "Promise and Potential: A Life of Wisdom, Courage, Strength and Will" http://www.promiseandpotential.com publishes "Insights" and a free weekly ezine, "Money, Power and the True Path to Prosperity". Subscribe now at: http://www.c-achieve.com

IBM Layoffs Coming?

2010-03-01T17:51:00.000-08:00

Several news sources are reporting that IBM will be conducting what they call "resource actions" this month(March). Resource actions are in reality layoffs/downsizing. This is a bit surprising since IBM posted their best year ever in profits for 2009 at 13.4 billion. There's been no official word yet so at the moment it's in the rumor stage. However, considering the fact that these leaks are coming from different locations it's probably a sign that there is something coming down.

Corporate downsizing is in vogue again after the recession hit. What concerns people is when companies making huge profits take these measures it seems unfair to the employees who helped build that profit. It probably is and a severance package most likely will be used to pay down credit cards, car payments, and perhaps get ahead on a mortgage. After that, there's a another paycheck taken out of the system and little spending money left to grease the economy. It's belt tightening time.

Another concern about this is the state of IT workers in the USA. During the technology boom of the '90's, jobs were created at breathless rates and the wages were outstanding. Things haven't been so rosy over the last ten years. A lot of jobs and production facilities were outsourced overseas, investment fell off after the dotcom bust, big companies gobbled up smaller ones and the software and hardware became much more user friendly therefore eliminating a lot of support positions. There's a lot of people with computer science degrees cleaning restrooms.

One could argue that this is the natural state of things in a dynamic free market economy where creative destruction of businesses fuels new advances and makes things better and stronger. My concern is that the IT industry is going in the same direction as steel and autos. Let's hope that this pending action doesn't include plans to outsource more work overseas.

Final rant:

I find it hard to believe that the economy can fully recover, much less expand, when our industrial base is shipped to China, good jobs are eliminated by downsizing, and the US government attacks the problem by throwing money we don't have at it. The bottom line is always a concern but when a company makes record profits and then eliminates jobs there's something a little out of kilter with fair play.

Generation Zero: Last Chance For A Wakeup Call?

2010-02-25T21:39:00.000-08:00

If you want to know who stuck it up the behind of the middle class while the Mainstream Media obfuscated the real story until NO ONE can figure it out, check out Generation Zero.

FINALLY...Wake up SHEEPLE...Your CONgressman is not your friend, he/she is a paid off shill for sociopaths who don't give a rat's ass about God, Country and Liberty.

New Credit Card Laws 2010

2010-02-22T12:07:00.000-08:00

New credit card laws go into effect today. here's a good article by James Brown which describes the details:

Do New Credit Card Laws in February Mean a Solution to Credit Card Debt?

Though the new credit card rules were put forth in 2009, many of the biggest consumer protections won't go into effect until February 22nd. So, what are these big consumer protections? Here are some of the highlights:

- Any credit card holder now reserves the right to say no to any account changes. His or her account will be closed based on the old terms and he or she will be given 5 years, if they choose to opt out.

- People under 21 cannot get a credit card unless they have an adult co-signer or they can show proof of enough income. The new laws have also included some extra protection for students, going as far as to specify the amount of yards a credit card company must be away from the campus in order to make any sort of offer.

- Companies will now give card holders at least 21 days to make any monthly payments. This should stop credit card companies from arbitrarily moving up or changing due dates in order to collect late fees. - Card companies are now required to disclose to the card holder the consequences of making a minimum payment every month. Companies will finally tell their card holders how much time it will truly take to pay off, how much interest they are looking at, and more.

- In the event that a card holder has multiple accounts, payments that exceed the minimum payment will be applied to accounts with higher interest balances first.

If you are thinking that these new laws are the answer to your prayers for finding a solution to credit card debt, you may not be thinking about the big picture. It sounds wonderful that they are giving you the option to close your account if the terms of service are changed but, how likely are you to go without a credit card? Credit card debt statistics show that the dependency Americans have on credit cards has only grown—and a change in interest rate just might not be enough to make you break things off with your MasterCard.

These new rules will undoubtedly cut into the profits of the big card companies, also. So, if they can't collect late fees or extend the terms of payment for card holders, will they just take it as a loss? Doubt it. Credit card companies will want to protect their profits. They will find another way to make money—and one way that they will probably do it is to get more serious with their collection efforts. The need for a St. Louis Missouri or Fairview Heights Illinois bankruptcy attorney to provide credit card debt help may not be over.

If you need help with your credit card debt help now, these laws are probably a little late. Contact the best bankruptcy attorney in your area to find out if Chapter 7 or Chapter 13 bankruptcy in Missouri and Illinois could be the solution to credit card debt for which you've been looking.

----------------------------------------------------
Missouri Bankruptcy attorney James Brown has been working to relieve the debt of hard-working American families for over 15 years. He has dedicated his career to educating consumers about options for debt relief and has released 5 publications, including, "Get Out of Debt: Secrets Your Creditors Don't Want You to Know." You can request a free copy at http://www.castlelaw.net

Work Hard, Go to College, Get a Good Job

2010-02-12T07:45:00.000-08:00

Copyright (c) 2010 Willie Horton

This is the conventional "wisdom" that has been foisted on so many children during their formative years - when we all formed our view of the world, how it works and our place in it. It suggests that hard work will be rewarded and that you have to work hard to be a success. It suggests that higher level education will make you a better person and will secure your future. And, of course, it suggests that a good job will provide the necessities of life on an ongoing basis and, indeed, security into old age.

All of these myths have been busted over the last couple of years. Not only are they the myths of an economic and social system that is in disarray, they are myths that squeeze the very spark of creativity, ingenuity, adventure, enterprise and excitement out of us. And, unfortunately, as psychology tells us, these myths become our beliefs at a very early age - probably, eleven or twelve. And it is for the very reason that these myths are held as subconscious beliefs that so many people are now lost - wondering what has gone wrong, hurting because they see no other way, fearful that if they haven't lost their "good job" already, there is certainly no such thing, any more, as job security.

The personal world view encapsulated in the "work hard, go to college, get a good job" attitude diminishes the believer right from the word go. It say that you must conform, it says that this is the path of least resistance, the path that sets out your whole life ahead of you. It closes down your options - not because those options are not there, but because you don't believe that you have them. Above all, it subliminally suggests that you are a flawed person, in need of betterment through an education system that, in its very nature, demands conformity. In short, it squeezes the life out of the vast majority of people - and perpetuates a system whereby very few people rise above the crowd to achieve uncommon success - and system where very few of us find or live our true passion.

And, what's the point of getting up in the morning without passion? Over 70% of Americans don't like their job - they're the lucky ones, of course, that have one. How can you do your best, in your daily life, if you don't like what you're doing? The answer, of course, is that you cannot. Research tells us that to say that normal people only half-heartedly do what they're doing would be to vastly overstate the reality of the situation. Normal people only pay about 1% attention to what they're doing - the rest of their attention or mental energy is lost in the void of those early-created beliefs that have led them to this sorry state.

You need to have excitement in your life - the normal life is boring, in comparison to what life can be, because normal people follow mundane patterns which amount to little more than going through the motions of living. You need to find and to follow your passion - otherwise you are missing out on the true joy of living. Excitement and passion have nothing to do with what is going on around you - they have nothing to do with economic trends or, indeed, what other people think about you. Excitement and passion are all to do with what's going on within. As a result, you don't have to go looking for excitement and passion - let them find you.

Let's take a practical example near to so many people's heart. What if you're doing a job you hate? You have two choices. You can decide to stop hating it or you can do something else. "I hate my job" is a useless thought. In entertaining that useless thought, you diver your energy into the thought, devote less attention to what you're supposed to be doing, as a result of which the job becomes ever more difficult and you end up proving yourself right - it's a self-fulfilling prophecy. Research from the University of Chicago shows that some of the most fulfilled people are doing some of the most boring, repetitive jobs - but they choose not to see the job as such. The second option is to take the plunge - do something different, perhaps completely different, something that truly turns you on. This requires what normal people would call courage, but if you're in the right state of mind, such leaps are not courageous, they're simply the obvious thing to do.

Either option requires the correct state of mind - one that is clear and present. A clear and present mind will not give any quarter to useless thought. A clear and present mind will know what to do if a "leap of faith" is called for. By clear and present I simply mean what the words themselves, in their simplicity, actually suggest: clear of thought and focused in the present - the two go hand in hand. You develop this clarity and presence by dismantling your mundane life - in simply, non-threatening ways for starters. More practical examples: eat your breakfast before your shower tomorrow instead of after it; dress yourself starting with the leg and arm that you do not habitually lead with; get up ten minutes earlier and meditate - the list is endless, you can make up your own.

At the end of the day, your passion, excitement, success and happiness is entirely up to you and your state of mind. The ball is in your court - you can stay on the normal set of rails that take you round and round the same little track, or you can jump aboard the express train of clarity and presence and see where it takes you.

Willie Horton, an Irish ex-accountant and ex-banker, has worked as a success coach to business leaders and sports people since 1996. He moved to the French Alps in 2002, from where his free weekly Self-Help video seminar is sent to thousands of people worldwide. His Online Personal Development Self Help Workshop is used all over the world, clients say it's life-changing. Info: http://www.gurdy.net

How The Current Economy Has Changed Consumer Behaviors

2010-02-07T11:42:00.000-08:00

How The Current Economy Has Changed Consumer Behaviors
Copyright (c) 2010 Gareth Schweitzer

Since the economy began its downward spiral into recession in early 2008, we have seen changes in consumer behaviors and habits. Studies have shown that mindsets have shifted and that the current consumer is a very different person than the consumer of several years ago. Many marketing research services have begun to create their own surveys and reports to gain insight into this new consumer that we are dealing with today.

What most marketing research services begin with is an analysis of consumer behaviors - what are the top drivers of purchase decision making? Are people considering their purchase decisions with more thought to the future consequences? What are people buying more of? Less of? These questions and more can produce an effective study with meaningful results.

So far, various market research services have discovered that durability is a key propeller of consumers' purchase decision making. This suggests that consumers are looking to the future and considering the long-term implications to their current purchasing actions. It means that consumers believe the economic recession is here to stay, at least for a while. Consumers expect spending levels to remain at these reduced levels indefinitely, and they are making their decisions accordingly. A study that questioned consumers regarding their top reasons for buying a product produced the following results: the top three reasons for buying a product are
1) it is durable and will last for a long time;
2) the product will make the consumer's life easier; and
3) it is something the consumer has always wanted to have.

In another study by a marketing research services company, questions deconstructed what purchases and experiences people miss the most since the economic downturn. The questions posed elicited four main responses:
1) 24% of respondents said they miss dining out in restaurants (including fast food restaurants);
2) 15% said they miss traveling and taking vacations;
3) 14% said they miss buying apparel (clothes and shoes) that they used to purchase; and
4) 10% said they miss the ability to buy something on a whim, and the freedom to buy whatever they want without having to worry about the future. Sentiments like these will likely lead to an increasing desire for these more luxury items and behaviors, and eventually will bring forth increased spending. It is uncertain when this increased spending will begin, but it is clear that it will happen eventually.

Market research services have pressed consumers for more information regarding their opinions of luxury goods. We've found that after consumers made attempts to forgo luxury items, they realized that it is not too difficult to go without these goods; many consumers say now that their current budgets reflect the fact that luxury items seem unnecessary to them now. Out of people who declared that they are on a permanently stricter budget with respect to luxury goods, 42% of them said the reason is because they no longer feel a need to have these luxury items.

In fact, the definition of luxury seems to have changed. In one market research services study, consumers declared that small splurges are now luxuries to them: they feel guilt over eating out (even if it's inexpensive) or buying an item at full price. In the past, luxury items were more extravagant: expensive cars, high-tech electronics, and fancy clothes. Consumers indicate that they, in fact, do not want to be associated with these big-ticket displays of wealth. The recession has brought about a fundamental shift in the way people view happiness. Consumers now say that the things they want most in life are not material, but emotional. People want to be happy and spend time with family and friends. One survey reveals that the top indicators of success (according to the consumers surveyed) are 1) being able to have dinner with family often; and 2) being able to exercise every day.

From these survey results and from the current state of the economy, it is clear that the current American consumer is very different now than he or she was several years ago. As the definition of luxury changes, producers must adapt their products and marketing strategies to fit the current spending conditions. In the next few months and years we will experience changes (some lasting, some temporary) in the market and economy. As these changes evolve, market research will be crucial to determining successful strategies for producers.

Gareth Schweitzer is President of The Omnibus Company. The Omnibus Company, a division of Kelton Research, provides fast and accurate Omnibus surveys, Omnibus studies, and strategic consumer insights to public relations and marketing professionals looking for newsworthy, actionable data. http://www.omnibus.com

Why is Small Business Not Hiring?

2010-01-27T16:52:00.000-08:00

By: Bill Watson

I am in business for myself. My number one goal, besides making
a profit, is not having employees. I wonder how many other small
business owners feel the same way? It's no surprise that the
unemployment rate hangs above 10%. The government is smothering
small business. Too bad Obama only hires Ivy League academics
with big business buddies for advisers.

I used to have employees. My business was providing marketing
research, sales consulting, and sales services to small
technology companies. All my employees worked from home and were
located in several states. The work was all on computers and
phones. It seemed so simple.

Enter the IRS. They have rules. You can buy the 20 volume "US
Code of Federal Regulations" written by the IRS from the
Government Printing Office for $974. This does not include
around 100 volumes of the court tax cases nor individual state
tax laws. If a business has employees they are required to know
the latest tax rules and pay federal taxes, state taxes, social
security taxes, and employment security taxes for each employee.
If you happen to make a mistake you could face interest, fines,
and imprisonment.

I had one employee in Oklahoma who I had to let go due to tax
issues. Oklahoma could not agree on how to classify my business,
so they were going to charge a tax on my services. It is really
important to know which box to check on these government
applications!

Deductions are another wild ride on the IRS train. I guess it is
made complicated by all the big shots paying for legislators to
give them loopholes. I spend a lot of time looking for
loopholes. For example, take the vehicle deduction. Everyone I
know uses the per mile formula for getting their deduction. It
is certainly easy. Did you know there is another way to deduct
your car? It is called the Actual Method. You deduct all
expenses of the vehicle including depreciation. It is
complicated to do, but you will have a much larger deduction.
IRS = time and money. Good for lawyers and accountants, bad for
small business.

Enter the Obama administration. They were elected on the
promises of higher taxes, nationalized healthcare, and Cap and
Trade. All the stimulus money given to Wall Street and state
governments are just late additions to the power game. All of
this spells death to the small business. Thank goodness we are
still a capitalist economy with the hope of large profits to
cover massive government intrusions.

Now that the banks have been saved, everyone wonders why people
are not lining up to borrow money. I can answer that - small
business owners are scared to death! Why would they take a risk
and borrow money knowing they will have to adjust their business
to every whim of this gigantic government?

If I need help now, I pay independent contractors. A 1099 form
for each contractor at the end of the year and it's done. It's
not the best way to do business, but it's safe. Nationwide, this
is not good for the economy.

Small business is not looking for a government handout or
bailout. We just need the government to get out. If the
government really wants people working and the economy to grow,
look to small business. Reduce the tax burden, relax the rules
on employment, and stop protecting big business.

About the author:
Bill does online marketing for small business. Check out his
political blog at questionsbybill.com

Lloyd Blankfein In The News

2010-01-13T08:57:00.000-08:00

Lloyd Blankfein, CEO of vampire squid Goldman Sachs, is being grilled about how he's been doing God's work by a congressional committee today:

From Bloomberg: Blankfein Says He Wasn’t Asked to Take AIG Haircut

Reuters: Goldman's Blankfein defends business practices

Huffington Post: I didn't see Blankfein honestly answer one question

Here's some snippets of the questioning from New York Times:

"Mr. Angelides pressed Mr. Blankfein about selling securities tied to subprime mortgages while at the same time betting against them. Mr. Blankfein said he “really needs to explain this because the press swirling around this. Because the firm was accumulating positions, “we have to go out ourselves and source the other side of the transaction,” he said. He said there was no simultaneous selling of securities and then betting against them."

"Mr. Angelides asked Mr. Blankfein what the two most significant instances of negligent behavior by Goldman Sachs. In response, Mr. Blankfein said his firm got caught up in extending more and more leverage to private equity firms and other and, thus contributed to the froth in the market. Mr. Blankfein stops short of saying the firm was negligent."

"Mr. Blankfein said that his firm noticed that lending standards and covenants on large corporate loans were much lower than usual, but that like the rest of the industry, the firm rationalized those looser standards by arguing that the world was getting wealthier and other excuses. “We talked ourselves into a place of complacency,” he said."

"“When was Goldman first alerted to the fact there were serious problems with subprime mortgages?” Mr. Wallison asked. Mr. Blankfein didn’t know exactly when the firm became aware of the the crisis, but he said the firm had turned bearish on housing prices in late 2006 and thought problems in the mortgage market would grow out of declining home prices."

Fritz Henderson Resigns GM Post

2009-12-01T18:29:00.000-08:00

GM CEO Fritz Henderson abruptly resigned this afternoon. No explanation was given.

From Reuters:

"General Motors needs to explain why chief executive Fritz Henderson is resigning. Replacing the group's driver could well be a good thing. After all, Henderson belongs to the old guard who drove the carmaker into bankruptcy. And as Fiat and Ford have shown, new blood from outside the industry helps power a turnaround. But the lack of an explanation from GM sends some worrying signals.

Granted, it should come as no surprise that there were growing tensions between the chief and his board - Henderson, for example, was more publicly optimistic about an initial public offering next year than chairman Ed Whitacre Jr."

Huffington Post reports that Henderson's daughter made an obscenity laced post on Facebook claiming that Henderson was fired.

Ed Whitacre , the current chairman, takes over for the interim. Whitacre(friend of Rahm Emanuel) was appointed by the government as Chairman of the Board earlier this year.

Unemployment Rises to 10.2%

2009-11-06T06:47:00.000-08:00

Just in this morning from BLS:

"The unemployment rate rose from 9.8 to 10.2 percent in October, and nonfarm
payroll employment continued to decline (-190,000), the U.S. Bureau of Labor
Statistics reported today. The largest job losses over the month were in con-
struction, manufacturing, and retail trade."

"In October, the number of unemployed persons increased by 558,000 to 15.7
million. The unemployment rate rose by 0.4 percentage point to 10.2 percent,
the highest rate since April 1983. Since the start of the recession in
December 2007, the number of unemployed persons has risen by 8.2 million,
and the unemployment rate has grown by 5.3 percentage points."

AND....THE MANCESSION CONTINUES:

"the unemployment rates for adult men (10.7 per-
cent)"

We were assured that the stimulus bill that was passed earlier this year would keep unemployment at 8% and save 3 million jobs. There's been a loss of 3 million jobs since then. You sure have to love keynesian solutions....

Goldman Sachs Under Fire

2009-11-03T19:29:00.000-08:00

There's been a spate of articles within the last week investigating Goldman Sachs role in the financial crisis.

From McClatchy:

"In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting.

Goldman's sales and its clandestine wagers, completed at the brink of the housing market meltdown, enabled the nation's premier investment bank to pass most of its potential losses to others before a flood of mortgage defaults staggered the U.S. and global economies.

Only later did investors discover that what Goldman had promoted as triple-A rated investments were closer to junk. "

THERE ARE PENDING LAWSUITS FROM PENSION FUNDS,AMONG OTHERS

More from Matt Taibbi on the AIG fiasco:

"The important thing to remember about all of this is that just because Goldman was buying “insurance” from Cassano, that doesn’t mean they were being responsible. On the contrary: Goldman was creating well over ten billion dollars worth of exposure to a guy that they must have known was an absolute idiot. Now, in a world where actual capitalism existed, Goldman should then have been highly invested in making sure that AIG did not go under. A dead and bankrupt AIG should not have been good news to a company like Goldman Sachs, which had billions of dollars riding on AIG’s financial health.

But if anything Goldman behaved throughout the runup to AIG’s collapse like it couldn’t care less if the company died. In fact Goldman accelerated AIG’s demise by making margin calls against AIG, for both the CDS deals and for deals it had done with Win Neuger, who was running AIG’s securities lending business. What really sank AIG was the fact that the downgrade of its credit rating permitted companies like Goldman to demand large sums of money from AIG in the form of these margin calls, and AIG could not get its hands on enough cash to meet its demands, resulting in the death spiral situation we all witnessed last September. Of all the firms making such demands against AIG, Goldman was the most aggressive (I have more on this coming out in a forthcoming book) and my sources who were involved in the AIG bailout bunker scene of a year ago almost to a man report that Goldman and its chief Lloyd Blankfein took an extremely hard line with AIG.

Why would it act like that? Well, in a normal capitalistic situation, it wouldn’t. But Goldman, it turned out, had an ace in the hole. It seems that when the state stepped in and decided to bail AIG out, its former director, Stephen Friedman, was among those making the decision that AIG’s counterparties should be paid 100 cents on the dollar for its CDS debts. It never made sense that AIG/AIGFP would decide on its own to pay its creditors 100 cents on the dollar for its debts, but now we know, thanks to reporting from Bloomberg, that it wasn’t AIGFP and its CFO Elias Habayeb who was making that decision."

From Janet Tavakoli:

"The government’s 100% payout to AIG’s counterparties was a gift, and the negotiations were done in secret. The monoline insurers were in a similar situation with a variety of deals from a variety of counterparties. (Structured Finance Pp. 405‐427) For example, in 2008, Citigroup Inc. accepted about 60 cents on the dollar from New York‐based bond insurer Ambac Financial Group Inc. to retire protection on a $1.4 billion CDO. Ambac said the underlying “super senior” was worth about zero, and the protection payment would otherwise have been near the full $1.4 billion. Citigroup got a relatively huge payout, since other “high grade” deals have been settled for as low as ten cents on the dollar.

The irony is that Goldman Sachs may not have been involved in the worst of the deals, but its officers had unusually high profile in AIG’s damage control. Goldman’s deals with AIG may have all been completely proper, but deals like GSAMP Trust 2006‐3 indicate that Goldman should not be exempt from the general fraud audit of mortgage securitizations that all of the former investment banks [Lehman, Bear Stearns, Morgan Stanley, Goldman Sachs, Merrill Lynch, and some foreign banks doing business in the U.S. (DMB Pp. 97‐107.)] should undergo."

The fact that there's been a revolving door between government and Goldman employees doesn't seem to get enough major media attention. Couple that with a list of politicians who have been on the receiving end of GS campaign contributions and connect the dots with legislative activity and appointments. A scandal of huge proportion looms, if anybody bothered to look into it. Of course, all the t's crossed and i's dotted may be perfectly legal but ethics and morality are noticeably absent.

GDP Posts 3.5% Gain In Third Quarter

2009-10-29T13:32:00.001-07:00

The US GDP(gross domestic product) rose 3.5% for Q3 according to the Bureau of Economic Analysis.

" The increase in real GDP in the third quarter primarily reflected positive contributions from
personal consumption expenditures (PCE), exports, private inventory investment, federal government
spending, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP,
increased.

The upturn in real GDP in the third quarter primarily reflected upturns in PCE, in private
inventory investment, in exports, and in residential fixed investment and a smaller decrease in
nonresidential fixed investment that were partly offset by an upturn in imports, a downturn in state and
local government spending, and a deceleration in federal government spending.

Motor vehicle output added 1.66 percentage points to the third-quarter change in real GDP after
adding 0.19 percentage point to the second-quarter change. Final sales of computers subtracted 0.11
percentage point from the third-quarter change in real GDP after subtracting 0.04 percentage point from
the second-quarter change."

However, at least half the gain was due to temporary government stimulus schemes. The market is reacting well to the news and the pundits are claiming this marks the end of the recession.

It's too quick to claim this is the end. As Barry Ritholtz points out his Big Picture
blog:

"The 1st question to ask about GDP is the degree of inorganic/artificial gains. As the above paras suggest, much of the improvement is where the government is spending, incentivizing, or bailing out various sectors: Autos, Residential RE, and Fed spending. As expected, Inventory reduction helped, and unexpectedly, increasing imports hurt.

A large chunk of the gains — 1.66 percentage points — came from Car sales in the form of cash for clunkers; this will not be in the Q4 data.

Home building soared 23.5% — reflecting a combination of zero percent interest ratyes (ZIRP) and 1st time homebuyers tax credit. That was good for another 0.5 percentage points of GDP.

Well over half of the gains are therefore government related.

Also of note: Nominal GDP was below forecasts, thanks to a surprise 0.8% gain in the deflator (That also added to the REAL GDP figure). Hence, a chunk of the gains are pure inflation."

Claims that the recession is over are premature, at best. The Q4 Christmas shopping season will be a huge test. Credit card companies have jacked up interest rates and decreased credit limits on millions of people. It's extremely likely that it will have a negative effect on sales.

Chris Dodd: Bankster's Best Friend

2009-10-26T21:01:00.000-07:00

Senator Chris Dodd says he will introduce legislation to freeze interest rates on credit cards. That's nice. This, after the major credit card companies have already screwed everybody. Does anyone remember the term "loan sharking"?

I hope Peter Schiff slams this duplicitous moron to the high hills.

Here's Dodd's top 20 campaign contributors over the last five years:

1 Citigroup Inc $265,694
2 SAC Capital Partners $262,800
3 United Technologies $255,800
4 Royal Bank of Scotland $223,700
5 Bear Stearns $190,500 $190,500 $0
6 American International Group $183,700
7 ActBlue $144,800
8 Merrill Lynch $129,950
9 Goldman Sachs $127,950
10 Credit Suisse Group $114,800
11 Morgan Stanley $110,600
12 Travelers Companies $104,700
13 JPMorgan Chase & Co $103,550
14 The Hartford $94,550
15 Hartford Financial Services $90,300
16 St Paul Travelers Companies $88,750
17 General Electric $81,700
18 Bank of America $80,350
19 Ernst & Young $80,250
20 FMR Corp $78,950

What Recovery?

2009-10-21T20:40:00.000-07:00

Larry Summers says the economic recovery is on track.

From Reuters:

"The U.S. economy is firmly poised for a recovery from its deep recession but growth may be moderate and the job market will not revive immediately, senior White House aide Lawrence Summers predicted on Wednesday."

"It will be some time before unemployment starts to decline. Once it declines it will take a long time to return to normal levels, given how elevated it is," he said."

RIGHT...How does an economy that is 70% consumer spending revive if 10%(really20%)of it's citizens don't have an income? "For a long time" according to Summers.

""The question of what will propel growth throughout the expansion is still a crucial one," Summers added. "But that's always the case at the beginning of expansions."

WHAT WILL PROPEL GROWTH? THE ONLY THING DOING IT NOW IS MORE MONEY SKIMMING BY OUR FINANCIAL WIZARDS ON WALL STREET.

"On the economy, Summers said the $787 billion stimulus package and inventory rebuilding by businesses were among the "dominant drivers" lifting the economy."

WHAT STIMULUS? STATES GETTING MONEY TO BALANCE(NOT) THEIR BUDGETS? Does anybody see stores restocking their shelves? Is shipping and rail up? NO.

"Summers said the oil price, which hit a one-year high above $81 a barrel on Wednesday, did not risk throwing the U.S. recovery off the rails.

"I think the increase in oil prices is probably ... more a reflection of recovery and the expectation of continued recovery than a threat to recovery," he said."

NO,LARRY, IT'S THE DEVALUED DOLLAR AND COMMODITIES HOARDING BY YOUR BANKSTER BUDDIES.

Well, what would anybody expect. They can't come right out and tell us we're in uncharted waters and they're just winging it.

TARP Recipients Ordered To Make Big Salary Cuts

2009-10-21T16:08:00.000-07:00

It looks like the natives are getting restless about reported big bonuses to the Banksters prompting the government to take some action. Not enough, soon enough...

From Detroit News:

"The Treasury Department will announce as early as today that it is slashing the pay of the top executives at seven companies, including General Motors Co. and Chrysler Group LLC, that received government bailouts.

In June, the Treasury Department imposed a number of restrictions on automakers and financial institutions that took government loans under the $700 billion Troubled Asset Relief Program. But Citigroup, Bank of America and the American International Group expected to see their pay and benefits cut much greater than the automakers', government officials said.

The Treasury Department's special master, Kenneth Feinberg, has been reviewing the compensation of the highest paid executives at the TARP recipient companies.

The New York Times reported that the seven companies that received the most assistance "will have to cut the cash payouts to their 25 best-paid executives by an average of about 90 percent from last year. For many of the executives, the cash they would have received will be replaced by stock that they will be restricted from selling immediately."

And for all executives, the total compensation, which includes bonuses, will drop on average by about 50 percent, The Times said. A government official said the Treasury Department didn't dispute the report.

Total compensation for the top executives at the seven firms will decline, on average, by about 50 percent, the Associated Press also reported, attributing the information to a person familiar with the administration's decision."

Greenspan: Break Up Big Banks

2009-10-16T07:51:00.000-07:00

From Bloomberg:

" U.S. regulators should consider breaking up large financial institutions considered “too big to fail,” former Federal Reserve Chairman Alan Greenspan said.

Those banks have an implicit subsidy allowing them to borrow at lower cost because lenders believe the government will always step in to guarantee their obligations. That squeezes out competition and creates a danger to the financial system, Greenspan told the Council on Foreign Relations in New York.

“If they’re too big to fail, they’re too big,” Greenspan said today. “In 1911 we broke up Standard Oil -- so what happened? The individual parts became more valuable than the whole. Maybe that’s what we need to do.”

At one point, no bank was considered too big to fail, Greenspan said. That changed after the Treasury Department under then-Secretary Hank Paulson effectively nationalized Fannie Mae and Freddie Mac, and the Treasury and Fed bailed out Bear Stearns Cos. and American International Group Inc. "

Well, it's about time a big government official starts to call it as they see it. Too bad nobody currently in office is entertaining the same thoughts.

Unemployment Rate Hits 9.8%

2009-10-02T10:55:00.000-07:00

Figures released this morning show the highest unemployment rate since 1983. Some are putting a spin on it saying the increase was only .01% from august.

From BLS:

"Household Survey Data: Since the start of the recession in December 2007, the number of unemployed persons has increased by 7.6 million to 15.1 million, and the unemployment rate has doubled to 9.8 percent. (See table A-1.)

Unemployment rates for the major worker groups–adult men (10.3 percent), adult women (7.8 percent), teenagers (25.9 percent), whites (9.0 percent), blacks (15.4 percent), and Hispanics (12.7 percent)–showed little change in September. The unemployment rate for Asians was 7.4 percent, not seasonally adjusted. The rates for all major worker groups are much higher than at the start of the recession."

Here's another interesting tidbit:

"The preliminary estimate of the benchmark
revision indicates a downward adjustment to March 2009 total nonfarm
employment of 824,000 (0.6 percent)."

That means, of course, that another 824,000 people are unemployed that previously reported.

What does all this mean? As always, it's hard to predict the future and when this will all top out but considering the lack of economic activity and credit conditions it will take a long time to get back to the 5-6% range which is considered acceptable and normal.

Auto Sales Tank In September

2009-10-01T15:24:00.000-07:00

Auto sales tanked in september which means the "cash for clunkers" program provided just a temporary sales increase. Not unexpected.

GM sales fell 45%, Chrysler 44% and Ford 5.1%. Among imports, Toyota fell 13%, Honda 23%, and Nissan 11%. Oddly enough, Hyundai posted a gain of 27%. Total of all vehicles sold was 745,997.

The interesting thing is the huge drops in GM and Chrysler compared to Ford. This trend has been ongoing since the bailouts. Perhaps people are more willing to buy Fords because of some resentment against the other two automakers and the fact that Ford is still solvent(for now).

The perception of Japanese auto quality doesn't seem to have made a difference either. Hyundai is doing well. That may be the result of their warranty and the recent program to insure payments against job loss. On the other hand, GM's 60 day no questions asked return policy seems to have had no effect so far.

Of course, people are reluctant to take on new car payments in the current economic climate. If the old car is still running, they're more inclined to keep it or get it fixed if there are problems. With so many people unemployed and credit tight, the days of trading in for a new auto right after the old one is paid appears to be a thing of the past. At least in the numbers.

High Frequency Trading: The Truth

2009-09-30T22:21:00.000-07:00

Mass confusion and conspiracy theories abound about high frequency trading. What exactly is it and how and who drives it? Does Goldman Sachs have secret software to manipulate it?

Here's a few good primers gleaned off the web:

From Wharton:

"It sounds like science fiction -- something from I, Robot or The Terminator, where the machines take over. But totally automated "high-frequency trading" is part of the stock market right now -- a big part.

According to some estimates, high-frequency trading by investment banks, hedge funds and other players accounts for 60% to 70% of all trades in U.S. stocks, explaining the enormous increase in trading volume over the past few years. Profits were estimated at between $8 billion and $21 billion in 2008.

Some market observers, members of Congress and regulators are worried. Are those profits coming out of ordinary investors' pockets? Is Wall Street's latest qet-rich-quick scheme going to harm innocent bystanders? "I don't think it would hurt people to become educated as to the intent of these strategies," says Wharton finance professor Robert F. Stambaugh. "What is their effect on the markets? There is a little sense of 2001: A Space Odyssey [in that it] does kind of create an air of mistrust."

Its defenders say high-frequency trading improves market liquidity, helping to insure there is always a buyer or seller available when one wants to trade. And so far, high-frequency trading doesn't look threatening, according to several Wharton faculty members. Indeed, it may well provide benefits to mutual fund investors and other market participants by reducing trading costs. But at the same time, several note that not enough is known about how trading at light-speed works, whether it can be used to manipulate markets or whether benign-looking moves by different players could interact to produce a new financial crisis."

From Advanced Trading:

"What we learned amazed us. HFT was now accounting for as much as 50-70% of the volume. And under every rock we turned, we found HFT engaged in: (1) what clearly looked like a questionable practice that cost institutional investors money, or (2) raised questions whether HFT was enjoying an unfair advantage versus classic institutional investors.

In response, we alerted our clients to what we learned. Eventually, others began to raise questions, too, including Senators Kaufman and Schumer. The SEC proposed banning the practice of flash orders, and has begun to look into other areas, such as dark pools, co-location, and how technology and automated trading have changed the market. HFT is categorized by the rapid trading of thousand of orders systematically and automatically, by computers analyzing instantaneous changes in prices and quotes. We have three issues with HFT."

From Bloomberg:

"The U.S. Securities and Exchange Commission is reviewing stock-market practices that use advanced technology to determine whether they give some traders unfair advantages, SEC Chairman Mary Schapiro said.

The agency is examining topics including high-frequency trading and instances where brokerages put computer servers close to exchanges, Schapiro said in a Sept. 10 letter to U.S. Senator Ted Kaufman. The SEC is also scrutinizing rules that let securities firms set up trading systems that compete with stock exchanges, she said.

If the interests of “long-term investors and professional short-term traders conflict,” the SEC’s “clear responsibility is to uphold the interests of long-term investors,” Schapiro said in the letter, which Kaufman released today.

Kaufman, a Delaware Democrat, and Senator Charles Schumer, a New York Democrat, have pressed the SEC to rein in computer- driven strategies that they say benefit hedge funds and may be harmful to retail investors. The SEC on Sept. 17 will propose banning so-called flash orders, which allow some traders to see information about stock transactions a fraction of a second before they are routed to other platforms."

Things get more interesting by the day. There seems to be no end to schemes to shave money. I sometimes wonder if all these financial wizards got their training from watching the movie "Office Space".

Ken Lewis Leaving Bank of America

2009-09-30T19:37:00.000-07:00

Ken Lewis is leaving Bank of America at the end of the year. The search for a successor is underway. Lewis says the decision was his.

Lewis has been under fire this year for the Merrill Lynch takeover. Shareholders of BofA were upset that they were not fully informed of the losses that ML had been suffering. In addition, Lewis is the subject of a probe by New York attorney general Andrew Cuomo.

It was alleged earlier this year that Lewis was pressured by former treasury secretary Hank Paulson and fed chairman Ben Bernanke to take ML despite his hesitation. The facts remain to be clarified.

More from Bloomberg

Consumer Credit Toast?

2009-09-10T18:42:00.000-07:00

"The market has been on a tear since March precisely because the banks have been able to cover up their insolvency and are gambling with that Federal "put" to them but in doing so they have further damaged the consumer's balance sheet. Not only have interest rates spiked higher on consumer revolving credit (credit cards) but in addition the banks have plowed money into commodities (oil in particular) doubling its price over the last few months and putting a further twist on the thumbscrew of consumer budgets via gasoline prices!

This is now showing up in the outstanding credit numbers - the consumer's balance sheet and health is deteriorating fast as consumers simply are unable to afford their existing debts, say much less taking on any new ones. There is zero evidence of stabilization in this regard, irrespective of Geithner's claims to the contrary."

Read the rest at Market Ticker

Is Health Care A Right?

2009-07-23T19:48:00.001-07:00

Notice: The following article is Copyright 1993 by Leonard Peikoff and is being distributed by permission. This article may be distributed electronically provided that it not be altered in any manner whatsoever. All notices including this notice must remain affixed to this article.
Health Care Is Not A Right

by Leonard Peikoff, Ph.D. Delivered at a Town Hall Meeting on the Clinton Health Plan. Red Lion Hotel, Costa Mesa CA. December 11, 1993

Good morning, ladies and gentlemen:

Most people who oppose socialized medicine do so on the grounds that it is moral and well-intentioned, but impractical; i.e., it is a noble idea -- which just somehow does not work. I do not agree that socialized medicine is moral and well-intentioned, but impractical. Of course, it is impractical -- it does not work -- but I hold that it is impractical because it is immoral. This is not a case of noble in theory but a failure in practice; it is a case of vicious in theory and therefore a disaster in practice. So I'm going to leave it to other speakers to concentrate on the practical flaws in the Clinton health plan. I want to focus on the moral issue at stake. So long as people believe that socialized medicine is a noble plan, there is no way to fight it. You cannot stop a noble plan -- not if it really is noble. The only way you can defeat it is to unmask it -- to show that it is the very opposite of noble. Then at least you have a fighting chance.

What is morality in this context? The American concept of it is officially stated in the Declaration of Independence. It upholds man's unalienable, individual rights. The term "rights," note, is a moral (not just a political) term; it tells us that a certain course of behavior is right, sanctioned, proper, a prerogative to be respected by others, not interfered with -- and that anyone who violates a man's rights is: wrong, morally wrong, unsanctioned, evil.

Now our only rights, the American viewpoint continues, are the rights to life, liberty, property, and the pursuit of happiness. That's all. According to the Founding Fathers, we are not born with a right to a trip to Disneyland, or a meal at Mcdonald's, or a kidney dialysis (nor with the 18th-century equivalent of these things). We have certain specific rights -- and only these.

Why only these? Observe that all legitimate rights have one thing in common: they are rights to action, not to rewards from other people. The American rights impose no obligations on other people, merely the negative obligation to leave you alone. The system guarantees you the chance to work for what you want -- not to be given it without effort by somebody else.

The right to life, e.g., does not mean that your neighbors have to feed and clothe you; it means you have the right to earn your food and clothes yourself, if necessary by a hard struggle, and that no one can forcibly stop your struggle for these things or steal them from you if and when you have achieved them. In other words: you have the right to act, and to keep the results of your actions, the products you make, to keep them or to trade them with others, if you wish. But you have no right to the actions or products of others, except on terms to which they voluntarily agree.

To take one more example: the right to the pursuit of happiness is precisely that: the right to the pursuit -- to a certain type of action on your part and its result -- not to any guarantee that other people will make you happy or even try to do so. Otherwise, there would be no liberty in the country: if your mere desire for something, anything, imposes a duty on other people to satisfy you, then they have no choice in their lives, no say in what they do, they have no liberty, they cannot pursue their happiness. Your "right" to happiness at their expense means that they become rightless serfs, i.e., your slaves. Your right to anything at others' expense means that they become rightless.

That is why the U.S. system defines rights as it does, strictly as the rights to action. This was the approach that made the U.S. the first truly free country in all world history -- and, soon afterwards, as a result, the greatest country in history, the richest and the most powerful. It became the most powerful because its view of rights made it the most moral. It was the country of individualism and personal independence.

Today, however, we are seeing the rise of principled immorality in this country. We are seeing a total abandonment by the intellectuals and the politicians of the moral principles on which the U.S. was founded. We are seeing the complete destruction of the concept of rights. The original American idea has been virtually wiped out, ignored as if it had never existed. The rule now is for politicians to ignore and violate men's actual rights, while arguing about a whole list of rights never dreamed of in this country's founding documents -- rights which require no earning, no effort, no action at all on the part of the recipient.

You are entitled to something, the politicians say, simply because it exists and you want or need it -- period. You are entitled to be given it by the government. Where does the government get it from? What does the government have to do to private citizens -- to their individual rights -- to their real rights -- in order to carry out the promise of showering free services on the people?

The answers are obvious. The newfangled rights wipe out real rights -- and turn the people who actually create the goods and services involved into servants of the state. The Russians tried this exact system for many decades. Unfortunately, we have not learned from their experience. Yet the meaning of socialism (this is the right name for Clinton's medical plan) is clearly evident in any field at all -- you don't need to think of health care as a special case; it is just as apparent if the government were to proclaim a universal right to food, or to a vacation, or to a haircut. I mean: a right in the new sense: not that you are free to earn these things by your own effort and trade, but that you have a moral claim to be given these things free of charge, with no action on your part, simply as handouts from a benevolent government.

How would these alleged new rights be fulfilled? Take the simplest case: you are born with a moral right to hair care, let us say, provided by a loving government free of charge to all who want or need it. What would happen under such a moral theory?

Haircuts are free, like the air we breathe, so some people show up every day for an expensive new styling, the government pays out more and more, barbers revel in their huge new incomes, and the profession starts to grow ravenously, bald men start to come in droves for free hair implantations, a school of fancy, specialized eyebrow pluckers develops -- it's all free, the government pays. The dishonest barbers are having a field day, of course -- but so are the honest ones; they are working and spending like mad, trying to give every customer his heart's desire, which is a millionaire's worth of special hair care and services -- the government starts to scream, the budget is out of control. Suddenly directives erupt: we must limit the number of barbers, we must limit the time spent on haircuts, we must limit the permissible type of hair styles; bureaucrats begin to split hairs about how many hairs a barber should be allowed to split. A new computerized office of records filled with inspectors and red tape shoots up; some barbers, it seems, are still getting too rich, they must be getting more than their fair share of the national hair, so barbers have to start applying for Certificates of Need in order to buy razors, while peer review boards are established to assess every stylist's work, both the dishonest and the overly honest alike, to make sure that no one is too bad or too good or too busy or too unbusy. Etc. In the end, there are lines of wretched customers waiting for their chance to be routinely scalped by bored, hog-tied haircutters some of whom remember dreamily the old days when somehow everything was so much better.

Do you think the situation would be improved by having hair-care cooperatives organized by the government? -- having them engage in managed competition, managed by the government, in order to buy haircut insurance from companies controlled by the government?

If this is what would happen under government-managed hair care, what else can possibly happen -- it is already starting to happen -- under the idea of health care as a right? Health care in the modern world is a complex, scientific, technological service. How can anybody be born with a right to such a thing?

Under the American system you have a right to health care if you can pay for it, i.e., if you can earn it by your own action and effort. But nobody has the right to the services of any professional individual or group simply because he wants them and desperately needs them. The very fact that he needs these services so desperately is the proof that he had better respect the freedom, the integrity, and the rights of the people who provide them.

You have a right to work, not to rob others of the fruits of their work, not to turn others into sacrificial, rightless animals laboring to fulfill your needs.

Some of you may ask here: But can people afford health care on their own? Even leaving aside the present government-inflated medical prices, the answer is: Certainly people can afford it. Where do you think the money is coming from right now to pay for it all -- where does the government get its fabled unlimited money? Government is not a productive organization; it has no source of wealth other than confiscation of the citizens' wealth, through taxation, deficit financing or the like.

But, you may say, isn't it the "rich" who are really paying the costs of medical care now -- the rich, not the broad bulk of the people? As has been proved time and again, there are not enough rich anywhere to make a dent in the government's costs; it is the vast middle class in the U.S. that is the only source of the kind of money that national programs like government health care require. A simple example of this is the fact that the Clinton Administration's new program rests squarely on the backs not of Big Business, but of small businessmen who are struggling in today's economy merely to stay alive and in existence. Under any socialized program, it is the "little people" who do most of the paying for it -- under the senseless pretext that "the people" can't afford such and such, so the government must take over. If the people of a country truly couldn't afford a certain service -- as e.g. in Somalia -- neither, for that very reason, could any government in that country afford it, either.

Some people can't afford medical care in the U.S. But they are necessarily a small minority in a free or even semi-free country. If they were the majority, the country would be an utter bankrupt and could not even think of a national medical program. As to this small minority, in a free country they have to rely solely on private, voluntary charity. Yes, charity, the kindness of the doctors or of the better off -- charity, not right, i.e. not their right to the lives or work of others. And such charity, I may say, was always forthcoming in the past in America. The advocates of Medicaid and Medicare under LBJ did not claim that the poor or old in the '60's got bad care; they claimed that it was an affront for anyone to have to depend on charity.

But the fact is: You don't abolish charity by calling it something else. If a person is getting health care for nothing, simply because he is breathing, he is still getting charity, whether or not President Clinton calls it a "right." To call it a Right when the recipient did not earn it is merely to compound the evil. It is charity still -- though now extorted by criminal tactics of force, while hiding under a dishonest name.

As with any good or service that is provided by some specific group of men, if you try to make its possession by all a right, you thereby enslave the providers of the service, wreck the service, and end up depriving the very consumers you are supposed to be helping. To call "medical care" a right will merely enslave the doctors and thus destroy the quality of medical care in this country, as socialized medicine has done around the world, wherever it has been tried, including Canada (I was born in Canada and I know a bit about that system first hand).

I would like to clarify the point about socialized medicine enslaving the doctors. Let me quote here from an article I wrote a few years ago: "Medicine: The Death of a Profession." [The Voice of Reason: Essays in Objectivist Thought, NAL Books, c 1988 by the Estate of Ayn Rand and Leonard Peikoff.]

"In medicine, above all, the mind must be left free. Medical treatment involves countless variables and options that must be taken into account, weighed, and summed up by the doctor's mind and subconscious. Your life depends on the private, inner essence of the doctor's function: it depends on the input that enters his brain, and on the processing such input receives from him. What is being thrust now into the equation? It is not only objective medical facts any longer. Today, in one form or another, the following also has to enter that brain: 'The DRG administrator [in effect, the hospital or HMO man trying to control costs] will raise hell if I operate, but the malpractice attorney will have a field day if I don't -- and my rival down the street, who heads the local PRO [Peer Review Organization], favors a CAT scan in these cases, I can't afford to antagonize him, but the CON boys disagree and they won't authorize a CAT scanner for our hospital -- and besides the FDA prohibits the drug I should be prescribing, even though it is widely used in Europe, and the IRS might not allow the patient a tax deduction for it, anyhow, and I can't get a specialist's advice because the latest Medicare rules prohibit a consultation with this diagnosis, and maybe I shouldn't even take this patient, he's so sick -- after all, some doctors are manipulating their slate of patients, they accept only the healthiest ones, so their average costs are coming in lower than mine, and it looks bad for my staff privileges.' Would you like your case to be treated this way -- by a doctor who takes into account your objective medical needs and the contradictory, unintelligible demands of some ninety different state and Federal government agencies? If you were a doctor could you comply with all of it? Could you plan or work around or deal with the unknowable? But how could you not? Those agencies are real and they are rapidly gaining total power over you and your mind and your patients. In this kind of nightmare world, if and when it takes hold fully, thought is helpless; no one can decide by rational means what to do. A doctor either obeys the loudest authority -- or he tries to sneak by unnoticed, bootlegging some good health care occasionally or, as so many are doing now, he simply gives up and quits the field."

The Clinton plan will finish off quality medicine in this country -- because it will finish off the medical profession. It will deliver doctors bound hands and feet to the mercies of the bureaucracy.

The only hope -- for the doctors, for their patients, for all of us -- is for the doctors to assert a moral principle. I mean: to assert their own personal individual rights -- their real rights in this issue -- their right to their lives, their liberty, their property, their pursuit of happiness. The Declaration of Independence applies to the medical profession too. We must reject the idea that doctors are slaves destined to serve others at the behest of the state.

I'd like to conclude with a sentence from Ayn Rand. Doctors, she wrote, are not servants of their patients. They are "traders, like everyone else in a free society, and they should bear that title proudly, considering the crucial importance of the services they offer."

The battle against the Clinton plan, in my opinion, depends on the doctors speaking out against the plan -- but not only on practical grounds -- rather, first of all, on moral grounds. The doctors must defend themselves and their own interests as a matter of solemn justice, upholding a moral principle, the first moral principle: self- preservation. If they can do it, all of us will still have a chance. I hope it is not already too late. Thank you.

Copies of this address in pamphlet form are available for $15 per 100 copies or $125 per 1000 copies from: Americans for Free Choice in Medicine, 1525 Superior Ave., Suite 100, Newport Beach, CA 92663, Phone (714) 645-2622, Fax (714) 645-4624. Copies of Dr. Peikoff's lecture, "Medicine: The Death of a Profession" may be purchased in pamphlet form for $2.50 each (catalog number LP04E) from: Second Renaissance Books, 110 Copperwood Way, P.O. Box 4625, Oceanside, CA 92052, Phone (800) 729-6149. (Quantity discounts are also available: $1.85 each for 10-99 copies, catalog number LP66E, $1.50 each for 100-499 copies, LP77E; $1.25 each for 500-999 copies, LP88E; and $1 each for 1000 copies and over, LP99E.)

Also available from Second Renaissance is the pamphlet "The Forgotten Man of Socialized Medicine: The Doctor," containing articles by Ayn Rand and Leonard Peikoff. (Catalog number AR10E, $2.95)

Additional information on why national health care programs don't work is available from: Objectivist Health Care Professionals Network, P.O. Box 4315, South Colby, WA 98384-0315, Phone (206) 876-5868, FAX (206) 876-2902. This organization publishes a newsletter on health care and distributes a copy of it in their health care information package.

Almost ten years ago, Leonard Peikoff predicted that our medical system would be dismantled. Looking at the young people in the crowd, he remarked:

"If you are looking for a crusade, there is none that is more idealistic or more practical. This one is devoted to protecting some of the greatest [men] in the history of this country. And it is also, literally, a matter of life and death---YOUR LIFE, and that of anyone you love. Don't let it go without a fight!"

From "Medicine: The Death of a Profession" by Leonard Peikoff from concluding remarks from 1985 presentation with Dr. Michael Peikoff.

Dr. Leonard Peikoff, author of The Ominous Parallels and Objectivism: The Philosophy of Ayn Rand was a long-time (30 year) associate of the novelist/philosopher Ayn Rand and upon her death in 1982 was designated as her intellectual and legal heir. He received his Ph.D. from New York University in 1984 and taught at Hunter College. Over the years, he has served in the capacity of professor of philosophy, lecturer and chairman of the board of the Ayn Rand Institute and is currently one of the principal lecturers and instructors of the Objectivist Graduate Center. He has lectured extensively at such prestigious speakers' forums as Ford Hall Forum in Boston on several topics including philosophy and current events. Additionally, outside of academia, he has taught courses on philosophy, rhetoric, logic and Objectivism audio version of which are available from Second Renaissance Books listed above.

Chrysler Cash For Clunkers: They'll Match It

2009-07-22T16:56:00.000-07:00

Chrysler,which is now out of bankruptcy(thanks to our tax dollars), has a new program in which they will match the government's new cash for clunkers program or offer 0% financing for up to six years. It really is the old rebate or zero finance ploy which the auto companies have used in the past. Reworking it to coincide with the government rebate is a pretty smart marketing ploy. It remains to be seen if it will cause a substantial increase in sales.

There's a few caveats with the government program and it sure will be interesting to see car salesmen working deals with this one. If anyone is considering this be careful you don't get screwed. Learn everything you can about the program and make sure you do your homework on how much your old vehicle is really worth(check Edmunds.com for that).

Here's a good resource with interactive tools that will guide you through the new program: Cash For Clunkers Facts

Bernanke: I Don't Know

2009-07-21T22:07:00.001-07:00

It's The Economy, Stupid!

2009-07-21T20:01:00.001-07:00

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"It's the economy, stupid" was a phrase in American politics widely used during Bill Clinton's successful 1992 presidential campaign against George H.W. Bush. For a time, Bush was considered unbeatable because of foreign policy developments such as the end of the Cold War and the Persian Gulf War. The phrase, coined by Clinton campaign strategist James Carville, refers to the notion that Clinton was a better choice because Bush had not adequately addressed the economy, which had recently undergone a recession.

In order to keep the campaign on message, Carville hung a sign in Bill Clinton's Little Rock campaign headquarters that said:

Change vs. more of the same
The economy, stupid
Don't forget health care.^[1]

Although the sign was intended for an internal audience of campaign workers, the phrase became something of a slogan for the Clinton election campaign. Clinton's campaign used the recession to successfully unseat George H.W. Bush. In March 1991, days after the ground invasion of Iraq, 90% of polled Americans approved of President Bush's job performance.^[2] Later the next year, Americans' opinions had turned sharply; 64% of polled Americans disapproved of Bush's job performance in August 1992.^[2]

The phrase is repeated often in American political culture, usually starting with the word "it's" and with commentators sometimes using a different word in place of "economy." Examples include "It's the deficit, stupid!"^[3] "It's the corporation, stupid!"^[4] "It's the math, stupid!"^[5] and "It's the voters, stupid!"^[6]