News muse Views-Farm Subsidies, JP Morgan Bank Losses

The 2012 Farm Subsidy. Proposed legislation offers another opportunity to assess the idiocy of picking and supporting favored political constituencies. It changes the legalized embezzlement of taxpayer funds in the form of paying farmers for NOT planting crops to one of subsidies for crop insurance, not only for the insurance payments, but for the deductibles that farmers must pay in the event of a failure to collect on the underlying insurance. Kind of like the auto insurance deductibles you pay when you have an accident, generally used to minimize fraud through unauthorized claims, and to reduce premiums by having the insured pay for part of the loss in order to collect the much larger amount of actual loss.

But why any such program in the first place? Congress (wouldn’t you know it?) designed crop insurance programs  in the 1980s to get away from an older program of directly paying farmers for crop losses due to disasters. (Why?-we don’t pay manufacturers when their products fail, or when they lose plants to disaster, they are supposed to have insurance!). Nevertheless, Congress designed a plan with private insurers to generate crop insurance, which farmers, making logical business decisions, could buy. Along come the “vote getters” (re-election time, don’t’ you know) and farm state representatives and the farm lobby, heavily subsidized plans that cover 85% of a farm’s yield (real or imagined-fraud is rampant) or expected revenue (who guesses?).

Now, they want to subsidize the deductibles! Let’s end this in favor of a 1% tax on farm crops, each and every one, no exceptions, to fund a crop insurance fund, obviously paid for by those who benefit from it, which would insure losses (through claims and audits) and be charged with the mission of scientific and environmentally friendly farm support.

Bank Regulation, Volcker Rule, JP Morgan speculative losses. The recent reporting of a Two Billion dollar loss  (that’s Billions with a big “B” folks!)in bond trading operations (hedging) at JP Morgan reinforces the need for re-institution of the separation of investment banking and non-standard banking activities from standard banking activity-savings, mortgages, small business lending.  There could be another way, which is to limit any bank’s speculative and highly leveraged hedging operations to “prudent man” levels, i.e. 10-15% of total bank assets, AND limiting leverage to say, five-to-one or ten-to-one (unlike now, where leverage can go up to 99/1 (risk 1 Billion dollars (routine) by putting up collateral (shareholder’s and sometimes Depositor’s  money!) of just 5% or less of the transaction’s value. The risk-and potential reward-is large and growing. There are up tp 600 Trillion (that’s Trillion with a big “T” folks! )outstanding of “derivatives” at any one time, ten times the Total World GWP (Gross World Product), and Trillions more (that’s Trillions with a big “T” folks!) in other security and investment trading categories. Virtually all these transactions are un-regulated, not cleared (tracked and recorded, like stock trades)  through any licensed exchanges, like the NYSE, or CME (Commodities Exchange), and really, just “chips” in a very large casino, meaning no “transparency” for investors to judge. (Whose value is sometimes determined AFTER the trade is made, or whose value is subject to the whim of a trading desk which trades in advance of client trades to ensure a profit opportunity even before the customer’s trade is executed.

Solution? Require banks and financial institution to limit leverage of investment operations to less than 10%; require increases in shareholder investment equity to 15-20% of capital and Prudent Man investing regulations limiting investment to 10% of any issuer or class of securities thereby limiting loss potential significantly, so that ALL losses are borne by equity owners (including executives) not by taxpayers- no more “Too Big To Fail!”

While the expected gnashing of teeth and rending of $2,000 suits would be loud, it pales by comparison to the cries of  governments (translate taxpayers) when called to rescue the future over-leveraged speculators!

Bankers will always find a way to make money, even with these restrictions, and will absolutely undertake risk-management behavior that reduces their personal exposure as equity owners. Shareholders will make sure that those who persist in the kind of risk-taking behavior that leads to shareholder losses find new employment more suitable to their (now demonstrably limited) talents.

Posted in business, Congress, economy, energy, finance, Obama, politics, society, Uncategorized | Tagged , , , , , , , , , , , , , , , | Leave a comment

News Muse Views- Child abandonment, School Standards, CIA, Naomi Riley

From WSj 4/28 (Inside Ethiopia’s Adoption Boom’) Lamenting the many millions of abandoned children world wide, almost exclusively due to poverty and inability to feed the many mouths of poor families, is a waste of time. The fact is that poor people have only limited choices for recreation; primarily sex and music. If you want to get a handle on overpopulation, it will take a different approach, including family planning, birth control (long term devices) and musical instruments…lots of musical instruments.

From WSJ 5/9 School Standards Pushback . Conservative Groups who oppose The Common Core standards adopted by 46 states, do so under the primary guise of protecting “state’s rights’ feeling , as is often justified, that federal interference continues to tramp on state’s rights and obligations to set their own standards. The problem is that political correctness, and teacher union pressures, have a,allowed/forced many states to actually lower standards, rather than raise them beyond Federal standards, which is often the case, that is, states choose higher requirements in areas like pollution, tougher criminal laws, eligibility requirements for social benefit programs, immigration, and more. Common Core standards are better than nothing, but over a generation we have seen the U.S. slip from Number One in education achievement to Number Seventeen, primarily as a result of “dumbing down” standards, AND evaluating the “challenged” inclusively with mainstream populations. Speaking of which inclusion of challenged -with everything from retardation to autism-into mainstream school populations has the look and feel of political correctness and moral achievement, but fails to deal with the effects, choosing instead moral justification,rather than the necessary alternative structures. Avoiding real or imagined prejudice because of parental pressure and personal failure to take responsibility is no reason to punish the majority of children. The current results of educational policies are all the proof needed that this is wrong. We have been reducing performance and teaching standards in favor of social inclusiveness for far too long when we should have a policy of raising standards every five years. We now create college graduates with a high school level education; worse, some need substantial remedial “education” before they can even participate in college-level learning.

Worst of all, the expansion of social science and basket weaving-style degrees means that more and more “graduates” enter the work force each year with skills(?) that employers don’t need or want( ( the U.S. allows hundreds of thousands of those from a variety of countries to work here to satisfy needed skill demands), financed with college loan programs that assure more go to college-the holy grail of education-and get less for their investment

NYT, WSJ, others. Naomi Riley, Chronicle of Higher Education.  Naomi Riley was fired for writing an article questioning the value of Black Studies Programs, and the purported education they produce, and the value of the college degree they generate. I sometimes wonder if society needs as many apologists, naysayers, detractors and black-mailers (notice the “educated” play on word style?) as we produce, and pay for.

Worse, Ms. Riley was writing , as hired to do, to provide a less liberal, more conservative perspective on the Chronicle’s liberal community of writers and bloggers, a more analytical, pragmatic point of view. The “smashback” was so extensive, so orchestrated that the Chronicle’s board caved immediately and fired Ms. Riley. Why such opprobrium? Because in challenging assumptions about black studies, Ms. Riley was calling into question the entire foundation of a substantial segment of the educational community, who is completely dependent on the income from perpetuating and reinforcing the myth of the need for such an educational pillar to support the progress of the pursuit of black studies, a sort of self-reinforcing mechanism that needs the presumption of guilt and the assumption of responsibility by the educational and liberal political establishment to provide employment for many more basket-weavers than we need.

Posted in Education, Family and Home, free speech, Immigration, politics, society | Tagged , , , , , , , | Leave a comment

News Muse Views-Gay Marriage, Sen. Lugar, Economic Austerity vs. Fiscal Reform

Gay marriage. President Obama lost an opportunity to “split the baby” by endorsing, without limits, gay marriage. Whet he should have done was redefine Civil Unions as the modern equivalent of Gay marriage, and in so doing offered traction to  religious groups who insist on religious freedom to not condone gay marriage, and the at-large totality of alternative lifestyles who insist on “marriage” as a civil right.Civil unions seem to meet the need of “splitting the hair.” As to the alternative lifestyle community who want religious sanction for their unions, they either join churches that provide such sanction, or accept the Civil Union umbrella and legal sanction for their relationship.

Richard Lugar. Senator Lugar lost his primary nomination to a Tea Party activist with much stronger conservative leanings, (credentials not yet established) and will face a moderate Democrat in the general election. Tons of money will support both candidates to be sure, but the likelihood is that the Tea Party guy will win.The results are further validation of the antipathy that conservatives have with socially moderate Republicans, and even more for fiscally liberal Republicans.

Austerity and politics in U.S. and around the world. Greek elections; Italian election, Belgium, Netherlands, France. The delay in augmenting austerity measures in many countries is giving rise to a push-back from those whose social benefits are likely to be reduced, or even eliminated. Padded government payrolls, powerful unions, corruption that inflates expense, too-high tax rates on private investment; these have eroded politicians, and their populace’s will to right their fiscal ships. If France backtracks, if Greece, Italy, Spain, Portugal and others are unable to continue their austerity  programs, even toughen them, and approve the continuing measures demanded by the EU, and ECB, their economies may collapse into more Socialist, even Communist restructuring, even leading to  Depression, maybe worse than the 1930’s. America faces similar threats, with an even more reluctant liberal base, unwilling to reduce social benefits and entitlements, eyes closed to the inevitable collapse of American prosperity should government debt and expenses continue to build deficit budgets, rather than surplus budgets which would free up capital for private investment, by far more agile and productive than government waste.

Posted in business, Congress, economy, Family and Home, finance, Obama, Senate, society | Tagged , , , , , , , , , , , , | Leave a comment

Juan Williams and NPR-PC Push? Early Voting Negatives, China Trade Surplus, Getting Elected

Juan Williams and NPR-PC Push? Early Voting Negatives, China Trade Surplus, Getting Elected.

via Juan Williams and NPR-PC Push? Early Voting Negatives, China Trade Surplus, Getting Elected.

Posted in Constitution, Education, Family and Home, free speech, Internet, Obama, politics, Senate, society, voting | Tagged , , , , | Leave a comment

Ground Zero Mosque, Geitner-U.S. role in Mortgages

New York Mosque at Ground Zero
Most Americans support religious freedom; it’s one of the founding principles of our country.
But, not state sponsored religions. One of America’s deep suspicions is that America sees religion, for the most part, as personal and separate from the government.. Muslims see their government AS religion, part and parcel, fully integrated, and have little or no problem with Islamic law governing the actions of government. Unless those positions are reconciled, there is little hope of real tolerance.
In Muslim countries, those who hear of American customs and secular traditions wonder how it could be possible for religion to NOT control the state.
Fundamentalist radicals predict that one fact-tolerance to the point of submission -will be the downfall of Western and Christian societies.
Mosques have as much American Constitutional right as churches, temples, and other places of worship to exist and practice their religion.
When radical Islamic fundamentalist Imams and sheikhs take over mosques however, or plan mosques as recruitment centers for purposes other than secular integration, Americans look at the empirical evidence and wonder how far our tolerance is supposed to stretch.
I would hope that the Imam’s choice of this location is not politically-based, nor nefarious.
You can be sure of one thing; if it is built here, it will be the most infiltrated, most surveilled, most monitored mosque in the U.S.
So, in all likelihood, it will only do what it’s publicized “mission statement” purports, be a community center.

Treasury’s Tim Geithner on U.S.’s Role in Future of Mortgages

First, Geithner starts with a false premise; “the private sector’s full retreat from the mortgage market provides a compelling illustration of what would happen without some government role.”
That may be partly correct-the retreat-but the government role? They made it worse from the moment government colluded with Congress to promote “affordable housing” for those previously unable to participate.
The unconscionable compensation of Raines and others at Fannie and Freddie, the 145 Billion in losses so far, with more government “capital”demanded every month to cover continuing and rising levels of defaults, not just in mortgages insured and purchased by them, but in mortgage-backed securities of various types issued by them. Fannie and Freddie stockholders? Although trading for less than a dollar a share, any price still evidences shareholder “equity” which should have been the first to go.

There needs be no role for government in private markets, whether mortgages, financial instruments or condoms, other than transparency-enforcement through registration and audit rules, and capital requirements that place the onus of failure from bad decisions, OR marketplace corrections, on the equity owners and investors-exclusively; NO TAXPAYER BAILOUTS, LET THE FREE MARKETPLACE WORK IT’S MAGIC.
One of the real problems in the first place was housing affordability; housing priced way too high due to regulatory compliance costs, many unnecessary; land prices for the same reasons, and taxes far out of proportion to the “value” of poor services provided by state and county, if provided at all,and unwarranted demand stimulated by government-generated “housing affordability” policies.
The true need for participation by government is limited to reducing the ungodly cost of government’s role in the free marketplace. Taxes- Income, Employment, Regulatory costs, the everyday astronomical and yet still growing rapidly cost of government; unneeded, ideologically-driven social services, the costs of bureaucracy and it’s minions, and endless other costs that prevent the free marketplace from offering affordable housing.
Americans have lost the “visible horizon of personal success” that marked for so long the goal line of personal home ownership; save 10-20 percent as a down payment, find a house that met your family’s needs for space and schooling, at reasonable distances from work and leisure, and make the mental tradeoffs that allowed a qualified and willing buyer to find a willing seller and complete the transaction.
The imbalance between average middle class income and housing as a percentage or multiple of that income has never been greater.
What does that mean?
It means that the system of granting mortgages got out of whack with the credit-ability and repayment capabilities of the generation of home buyers , some 7-10 million at this point, who simply can’t afford to repay their mortgages, whose income has not kept pace with housing prices and costs of ownership, and whose market value is up to 50% less that what is owned. No wonder millions are not paying, and getting to the point of just walking away from their mortgages. Over several hundred thousand in 2009, more projected for 2010. Many are staying rent-free until they are evicted or move voluntarily, to rentals that offer as much or more-for less.
Banks say that many just kept “coming back to the well” by re-financing multiple times taking out the increases in equity for vacations, big screens, jewelry, whatever. “Those aren’t responsible homeowners, they took advantage.” To say nothing of the un-publicized criminal infiltration of the system to the tune of Billions of dollars in financing and refinancing money obtained with false documents, employment verifications by mob-front businesses, and more.
One wonders how so many home-equity loads, refinancing and so on could without the help(collusion) of the banks.
In all, the government’s role, their “impossible mission” is to force the lenders, banks, financial institutions, investors to “mark to market” their mortgages and mortgage-based securities. That may mean using the balance of bank bailout funds, including those repaid, to nationalize and re-capitalize banks that fail because of market forces.
No Boo-Hoo for investor and equity losses, but forcing the banks to generate new capital and investors at much higher levels would open the door to greater success in the future. The rebuilding process will be long and hard, but America will be better off if it re-affirms the principles of personal responsibility and freedom, and opportunity through a transparent free marketplace.
Take the losses, no matter how large ($745 Billion and up by some estimates, just for “underwaters”) Having taken the losses, rewrite the mortgages at reasonable rates reflective of the payment capability of the owners.
The market would quickly turn around. Part of the deal could be equity sharing between owners and financial institutions, wherein at some future time, part of the appreciation realized at the time of sale, say 25%, could be earned by the financial institutions for their “good faith” efforts in resolving the mess.
Having cleaned up the mess, what would be the future?
For one thing, 4-5 millions underwaters would be gone from the marketplace; demand might resume normal trends of supplying several million housing units a year just to satisfy recurring demand from new family formations.
There is a solution, even multiple solutions, but they all involve allowing the free marketplace to work, and keeping the government out of it in the future, except for insuring transparency, market-based and reality-based regulation to prevent fraud, and maintaining ownership incentives regarding tax deductions and tax offsets that have traditionally helped U.S. ownership levels, and ARE more reflective of a free marketplace.

Posted in business, Congress, economy, Family and Home, finance, Obama, politics, Senate, society, Uncategorized | Tagged , , , , , , , , , , , , , , , , , , | Leave a comment

Free Speech is Costly

A Baltimore Sun Column by Michael Barnes and Connie Morella, respectively a Democrat and a Republican, and former members of Congress, calls for Public Funding of campaigns to end the “stranglehold” of corporate, union, and institutional money on the election process, and on Congress.

Barnes and Morella are toting a bill called the Fair Elections Now Act, which would replace the evil “special interest” funding with small donations (undefined) from constituents, with matching Federal funds-paid for by a tax on large government contracts-another tax!

Right now politicians have the best of all  political worlds; virtually unlimited campaign fund-raising ability, with funds provided by direct campaign contributions, unlimited funds spent on “issue” campaigning by special interest PAC’s, unions, and corporations, and non-profits (all possible because of the Citizen’s United Supreme Court decision, which in effect offers that corporations, small business, institutions-all have additional “Citizenship” rights to their Free Speech on issues, if not directly on the election campaigns of politicians.

Anyone who thinks that the new definition of a “citizen” is not harmful to American representative government is not looking at the long-term ramifications. Let’s consider that corporations are an artificial “construct” of law, originally intended and grown from the pooling of liability between partners, then shareholders/investors to shield them against unlimited liability and risk, and has become a significant part of the history of capitalism. Incorporation has many advantages in the modern world of global trading and commerce, including the unique ability to aggregate investor capital and allow business to expand.

But, corporations in the modern sense didn’t even exist until the early 1800’s, and didn’t become widely established in America and then other capitalist societies until the late 1800’s.

Why the brief history? Because, with the Supreme Court decision freeing contribution by corporations, unions, and institutions, non-profits, virtually any kind of association or organization, to “issues and causes not directly claimed,  sponsored, or affiliated with or by candidates” (my interpretation), a new class of Citizenship Rights has been conferred on to those artificial constructs not previously allowed them, or allowed in limited circumstances. (What’s next? Corporations, Unions and other”constructs” running for office? “Elect Microsoft as your Senator from Washington. The SEIU (union) is your candidate for Congress , Elect Greenpeace for President”).

Don’t laugh! Strange things are happening. In one swoop, we just created another 23-25 million “Citizens” ( 23-25 millions small businesses) to fund elections and candidates-and maybe run for office in the future.

So, “evil” special interests financing of candidates and issues would be replaced with the legislation under way, with up to 180 co-sponsors to date, with yet another tax used for government funding of election campaigns.

Liberals feel that the positives of more campaign contributions (Citizens United and FEC Advisory-No limits on Independent donations ) outweigh the negatives by far. But others worry that freeing all these organizations, businesses and institutions, liberal and non-profits, for unlimited donations to “issue and cause” independent campaigns and advertising can only lead to trouble, and a windfall for the media. (Google, the nation’s largest Internet advertiser, is exploring ways to tie issues to search results-or, if they and others are not, they are missing a huge opportunity.

 This trend may be a way for Liberals to retake the advantage they have come to expect.

The problem is that neither is right; neither is correct in the law or the consequences..

All this scheming and manipulation for advantage wouldn’t be necessary if there was more responsiveness from elected officials to the concerns of American and the vision of America that the Founders cared about; Personal Responsibility and free-market opportunity-your risk, your reward. 

America is polarized by competing ideologies within a system that progressively weakens the concept of States Rights through government claiming more and more regulatory “territory,” and disincentives to investment, entrepreneurship and capitalism.

We are progressively weakening the spirit of the founding of America-free enterprise, personal responsibility, and opportunistic risk-taking.

The free spirit tradition of America is being replaced with creeping, progressive “Socialism” that supports, in ever greater degrees, creating more poor and minority populations on one hand, and redistributing through social programs the accumulated wealth of generations of America’s capitalist traditions and success.

“Robin Hooding” the entrepreneur and investor to support socialist programs is a sure guarantee of the demise of  America; we’re not that far away from the tipping point, either.

As always, it is necessary to point out there there wouldn’t be rich or successful or a middle class without the free market system based on personal achievement through risk-taking and personal responsibility. Unfortunately, the numbers of entrepreneurs seem to be declining, while the numbers of people “feeding” off the system are increasing more rapidly. (Over 40% of the U.S. households and people pay no taxes at all, none, Nada, leaving just over 50% to support the programs considered so necessary).

Liberals and Socialists get tongue-tied when trying to explain and justify just how you can continue to benefit from a system which rewards a lack of motivation, education and no sense of personal responsibility, while at the same time bleeding us to death with taxes, policies, regulations, mandates and mis-allocation of capital resources, so currently in evidence. 

The potential solution?

Ask every American to read the Declaration of Independence and the Constitution prior to the next, in fact prior to every, election. Most will surely feel constrained to “cry out” in favor of issues and candidates that offer hope of restoring the vision of America and it’s founders: personal freedom-to live, to achieve or fail; to pursue a dream as individual to each of us as our fingerprints, but each dream needs a nurturing environment to have a chance.

We’re losing that opportunity, it appears, ever more rapidly.

Posted in business, Congress, Constitution, economy, Education, Family and Home, free speech, Immigration, Internet, Obama, politics, Senate, society | Tagged , , , , , , , , , , , , | Leave a comment

Iran – More dangerous than we think

  Arnaud De Borchgrave’s column of June 14  in Newsmax ( is too encouraging of military intervention by far. He also notably offers that the U.S. military would be the one who plans and carries out the strike(s), rather than say, a coalition of NATO/UN or even Pan-Arabic forces(Saudi Arabia? Hint, hint). A military strike, however, must not only take out multiple nuclear facilities, it must neutralize Iran’s military counter-measures, and it’s retaliatory capabilities.    

   Iran has the capacity to strike in and across the Gulf of Hormuz, and throughout the Middle East at U.S. and friendly country military installations and energy structures, to say nothing of Israel proper, their declared target. Nuclear weapon capability magnifies the  threat capability a million-fold.  

   U.S. action would be a Declaration of War; everybody knows it.
   De Borchgrave’s analysis is compelling however, and the refusal of  influential Arab states to mutually condemn Iran and assert strategic leadership defines part of the problem. On one hand Arab states respect strong leadership and want the respect of the world community at large. By only paying lip service, if that, to nuclear non-proliferation, even though it is in their best interest not to be placed in a position of being bullied by Iran, they will wind up being led to revolution and destruction. 

   When, not if, Iran asserts its leadership through the threat potential of nuclear weapons, energy resources will then become serious weapons in the Islamic Fundamentalist threat to the West. Iran could insist that Saudi Arabia, under threat of a nuclear attack, cut off any dealing with the West. Similarly, Qatar, Yemen, the Emirates, in fact any energy supplier to Western or non-Muslim countries could be faced with no-win choices.    

   Were Iran facing a unified Pan-Arabic coalition of condemnation and sanctions, we might have a different story.
   Factionalism and tribal traditions including religion, are still the underlying dynamic in the Middle East.
   Continually painting the West and other religions as the feared outsider intent on destroying Islamic values and Muslim society, unifies Middle East overt and hidden opposition to any Western strategic efforts to contain Iran.

    We must understand that Iran’s religious leadership, Ayatollah Khomeni in particular, sees Iran as the seat of Pan-Arabic history and culture, with Islam as it’s unifying political”glue, ” leading to a potential new Islamic Caliphate, reminiscent of the glory-day eras that have occurred multiple times in  thousands of years.
   It would be a mistake to underestimate the control Khomeni exerts through his religious leadership, which in turn defines the difference between Iran and representative governments of the non-Muslim countries.

   With religion the unifying and driving force of the political structures of the Middle East, it is unlikely that we can find a solution to any problems, absent a real effort to help create and support a Pan-Arabic strong coalition, willing to see the modern world in secular terms, and not in either/or religious terms.
  Religion sacrifices itself to logic, faith not being subject to reason. That dynamic alone prevents satisfying religiously-driven policy with rationality.

   It seems the only long term solution is to assist the Islamic-motivated and controlled governments in transitioning to secular governments, where reason and rationality have a least a chance to prevail.
   So long as religious values drive governments and subvert secular values, there is little chance that existing conflicts within, and external to, the region can be managed to successful conclusions

Posted in Middle East, Obama, politics, society, Terrorism | Tagged , , , , , , , , , , , | Leave a comment