slightly Right of Center

The Summer of Our Floundering

2010-07-01T15:46:00.000-07:00

I hear that our National leaders want to celebrate the economy this summer. Unlike them, I am struggling to build up my business in an environment where potential clients keep putting off work.

While we can never know where we would have ended up, if we had taken another path, it is clear that this country is currently stumbling down a path of diminishing returns.

It is impossible to get the results you seek, when your path undermines the structures and stores needed to get the results. The structure I am refering to in this case, are those structures which create income and profits -and- the stores I refer to are the accumulated assets financial and otherwise created in the past.

Like a farmer in a famine, we are now eating our our future.

Some seeds, such as beans and corn are also food. If you need to produce more food, you must plant more seed. The seed for eating and the seed for planting are finite in their total amount. Seed can only be used for one purpose or the other. If you eat it, it is not available for planting.

If you fail to produce enough food you have a problem that can be solved in one of three ways: 1. Go Hungry, 2. Eat some of your planting seed (needed for the next season), 3. Obtain food from someone who has excess and repay them in the future.

We now have endured an economy that has stumbled since 2008. While many individuals and businesses have had to go "hungry" out of neccesity, both the federal and many state governments thus far have primarily borrowed from outside and played financial games that are eating some of next year's planting seed.

The dynamic at play is dangerous. When a poor nation gets into a real famine, millions of people die and most of the planting seed is consumed. Famine qucikly becomes a downward reinforcing cycle, as each season's crop is deprived the proper planting seed needed. Even with outside help, it takes decades to restore a self-sustaining internal balance.

It is clear that collective government spending, plus the debt and taxes driven by it, are in fact hampering the ability of individuals and businesses to grow and profit. Both governmental consumption and governmental promises are undermining the structures needed to pay for those promises.

To see our future we need merely to look at Greece. The European Union has had to face the limitations of its ambitions as the Greek government has failed financially. The Greek government's policies and promises to the poor, labor unions and governmental class of the population have begun to go unfilled. The Greek economy simply could not produce the income to support the mushrooming cost of its promises. The Greeks ran out of gimics and one-time measures to balance their budgets and pay their bills -and- at the same time they ran out of credit with their creditors. Since they are tied to the Euro, they could not escape their obligations by devaluing their currency. They needed to go to Brussels for a bail-out.

They are rioting in the streets in Athens on a regular basis. Move forward a few years, and replace, Greece with California, the Euro with the dollar and Brussels with Washington. It appears to be our shared path without drastic reform and restraint.

The Oil Spill Armageddon

2010-05-27T14:45:00.000-07:00

In the 1998 meg-adventure movie Armageddon, The federal government needs to rely on a shady and untrustworthy group of deep-sea oil well drillers to save the world.

Harry Stamper is the owner of an independent oil exploration company that is experienced but just a step away from one failure or another. Harry has been snatched off his oil rig in the South China Sea and flown to Houston by the military. Dan Truman is top administrator at NASA and wants Harry to quickly teach his team of astronauts how to use a drill that Harry designed but never commercialized. Harry is told that an 800 foot deep hole needs to be drilled in a Meteor headed for Earth. He realizes in just a few minutes that NASA knows nothing about drilling.

Harry Stamper (played by Bruce Willis) has a discussion with Dan Truman (played by Billie Bob Thorton).

Harry Stamper: What's your contingency plan?
Dan Truman: Contingency plan?
Harry Stamper: Your backup plan. You gotta have some kind of backup plan, right?
Dan Truman: No, we don't have a back up plan. This is it.
Harry Stamper: And this is the best that you can - that the-the government, the U.S. government! can come up with? I mean, you're NASA for cryin' out loud, you put a man on the moon, you're geniuses! You're the guys that think this shit up! I'm sure you got a team of men sitting around somewhere right now just thinking shit up and somebody backing them up! You're telling me you don't have a backup plan, that these eight boy scouts right here, that is the world's hope, that's what you're telling me?
Dan Truman: Yeah.

Harry Stamper's assessment of the government plan starts at 4:45 of this clip. courtesy of YouTube

After realizing that NASA must take a crew with "real world" drilling experience to the asteroid to have any chance of success at drilling to the 800 foot depth required, the following dialogue takes place between Dan Truman and General Kimsey (played by Keith David).

General Kimsey: If you're trying to make me feel better about this scenario, give it up.
Truman: To tell you the truth, I'm kind of encouraged. This guy Chick here was an Air Force commando for six years.
General Kimsey: We got robbery, assault, arrest, resisting arrest. We got a collection agent for the mob. Two of these guys have done serious time.
Truman: Look, they're the best at what they do.
General Kimsey: So am I. And I'm not so optimistic. We spend 250 billion dollars a year on defense. And here we are. The fate of the planet is in the hands of a bunch of retards I wouldn't trust with a potato gun.

The assessment of the "real world" drilling team occurs at 1:29 of this clip. courtesy of YouTube

Although, we all know the outcome of the Armageddon movie, we do not yet know the outcome of the Gulf of Mexico Oil disaster. British Petroleum and the U.S. Government have shown us that despite their difference, they must both work together to solve this problem. In the meanwhile, the Gulf of Mexico has become an environmental and economic disaster.

I leave you with the following two Armageddon quotes.

Chick: This is turning into a surrealistic nightmare!

Rockhound: Wow, this is a goddamn Greek tragedy.

For a full set of memorable quotes go to IMBd.com.

Should The US Annex Northern Mexico or Be Honest With Itself?

2010-05-02T14:13:00.000-07:00

It seems as though it is time to simply annex northern Mexico and redraw a more easily defendable border with our southern neighbor. By my rough estimate we would incorporate four new states and nearly 30 million people but at least we could move off the current malaise of politicization of both border security and what to do with the roughly 10 million people who have entered the country illegally.
Let the politicians fight for the new, formerly Mexican, voters the old fashioned way. The progressives could offer cradle-to-grave programs for our newest victims of misfortune and the conservatives could offer sink-or-swim individual liberty. Which system would these relatively poor but socially conservative new citizens choose for themselves? It is indeed hard to tell.
As farfetched as the above idea might sound, it may be easier than building a political consensus to solving what really ails our nation.

Whether we agree on the solution or not, there are two issues that need to be resolved at a federal level that we are willing to discuss:
1) What do we do about securing the US-Mexico border?
2) What do we do about the 10 million people (or so) who have entered the country illegally?
There is far more agreement on securing the border than what to do with the people who are already here. These are tough issues but not the toughest ones facing the nation. Those are rather the issues that we are unwilling to discuss openly and honestly.
The new law in Arizona is definitely a reactionary law, but it is nearly identical to existing federal law, so what is the real source of the angst being expressed from many different corners?
Anyone living in or spending time in southern Arizona knows that the operations of Mexican drug cartels and human traffickers have spilled over the border with automatic weapons, kidnappings and murder. We also know of the additional burdens placed upon hospitals and schools by people who have entered the country illegally. Many people see the new Arizona law as a reasonable reaction but others see it as an unfair and racist action.
Why such angst? There are two fundamental beliefs underlying the angst. They are also issues that we are reluctant to honestly and openly discuss:
1) A belief that the wealth and prosperity of the US has come at the expense of the rest of the world -and-the US has an obligation to the poor and oppressed people of the world.
2) Law enforcement is inherently racist regardless of the law itself.
* Postulate 2A) Local law enforcement is inherently more racist than federal law enforcement.
Many of the groups and local governments that have assisted people who illegally crossed the border are motivated by the belief that we owe these people either humanitarian assistance or compensatory assistance. The most troubling aspects of this movement, is not the humanitarian efforts, but rather local politicians who feel free to defy laws they disagree with when it comes to immigration while attempting to enforce other laws such lawn watering and the consumption of poly-saturated fats. This creates cynicism in law abiding citizens, chaos for law enforcement and equal justice for none.
I contend that the real unstated issue behind most of the Arizona law angst in this nation comes from a belief that law enforcement is inherently racist -and- that law officers are either outright racists or biased with regards to race. The belief, by some, that the police and their actions are always biased and capricious is the core unspoken and undermining issue that the nation needs to face. It is not solely an Arizona problem.
Indeed the efforts to recast the local enforcement of existing federal law as Jim Crow or Nazi Germany only work when the focus is kept upon police action and one’s imagination is kept upon the old video images of Birmingham, Alabama Police Commissioner Bull Connor spraying peaceful civil rights marchers with a fire hose and then attacking them with police dogs –or- images of the Gestapo coming into homes and dragging away victims into the night.
I would not pretend that there are no racist or biased police officers, but enforcement of the law is required in a civil society and even more so in a democracy. America in 2010, including Arizona, is nothing like 1950s Alabama or 1930s Germany and to infer so is to purposely distort emotions and diminish the suffering of blacks in the segregated South and Jews in Nazi Germany.
I am not optimistic with regards to this issue as I find very few politicians willing to speak the truth or take a principled stand; they are mostly posturing themselves for political expediency based upon their perceived constituency. Two New York politicians have been outspoken on Arizona's new law.
I am more bothered by the hypocrite, Republican NYC Mayor Bloomberg, who sees nothing wrong with enforcing all kinds of social policy laws that infringe upon people's ability to choose for themselves in NYC, but has a problem with Arizonians trying to curtail the much more severe problems that they face on a daily basis. While he sees NYC law enforcement as fair and just, he unfortunately sees Arizona law enforcement as racist. At least the ambulance-chasing Democrat, Al Sharpton is an equal opportunity accuser and makes charges of racism in law enforcement across all regions of the country.

We need national leadership on both immigration reform and the fair and consistent enforcement of the law. I see very little of it. How can we provide stimulus funding to keep more local police on the job on one hand and then allow local police to be characterized as biased and racist on the other hand?
How you feel about the Arizona law is more driven by how you perceive police and their biases than it is based upon the law itself or the issues that led to the law and that is a problem.

Consensus Building Equals Ideological Compromise

2010-02-12T14:25:00.000-08:00

There is little consensus-building going on in Washington these days and in the void the American public has built consensus in opposition to the federal government. Whether you are a Republican, Democrat or an independent there is plenty to be upset with these days. Whether you believe in market based or public solutions there is reason to be unhappy with the machinations of the federal government.

Anyone who has either been through win-win negotiation training or used Steven R. Covey's methods from his book, The Seven Habits of Highly Effective People, knows that "compromise" is a dirty word in terms of a win-win solution as a compromise is defined as partial wins - partial losses for each party.

Congress seems to become myopic whenever the balance of power swings to an imbalance. The Senators and Congressmen seem to think that they have been given a mandate and quickly slip into a world of assumptions about what the public needs rather than what it wants. When the frame is "what the public needs" it empowers ideology over pragmatism and ultimately leads to abject failure in both policy and legislation.

Ideologues of all stripes spend their time wishing they had just enough power to force their ideas into law and policy. Its as though they believe in their own potential to truely behave as beneficent despots. True solutions in a democracy (democratic Republic) always require consensus building. Consensus building can lead to a win-win in the real world but can not be produced with ideological purity.

Once again, a political party is poised to fall on its own sword because it confused winning in the halls of Congress with winning in the real world or serving the will of the people.

Restarting an Economic Engine

2010-01-10T08:41:00.000-08:00

While spending and governmental policy create work and potential opportunity, it takes risk and confidence to restart an economic engine. Regardless of your party, you would probably agree that we need real growth in private sector employment to address the most serious problems faced by most Americans today.

Businesses across the country are cautious as a result of the sudden economic collapse of 2008 and the bankruptcies and defaults related to real estate and banking. Continued caution is keeping them from taking undue risk until their is more evidence of a turn-around.

Rather than encouraging entrepreneurial risk-tasking, current government policy is adding more uncertainty to the analysis. Businesses need to understand the cost of employees before they hire them as well as the return on investments before they make them.

Whether you support health care reform or not, it is important to understand that businesses are reluctant to hire new employees when the potential cost of an employee could swing by 20 - 30% depending upon the final health care legislation. The timing of this initiative may be ripe in Washington but it is terrible timing if you want to encourage businesses to hire new employees.

The other current anti-confidence wild card is the tax rates for both corporations and small business owners. The government has used up just about all the deficit spending it can finance in the global market and will soon be forced to raise tax rates or stop spending. What do you think the administration will do?

Rising tax rates can greatly impair the net realized return of investments made by both big and small business. This uncertainty is added to the accumulated risks and gives business a reason to wait on new projects.

Regardless of your position on the role of government, it is not the President's confidence in the economy that drives spending and growth but rather the confidence of consumers and small business owners is the driver.

We need to defer governemnt spending and eliminate tax rate uncertainty to allow business to regain its confidence and begin hiring again. We need a job recovery to regain consumer confidence and increase spending.

We are currently in a stall and moderation of the Administration's plans could bring us out of it. The next economic stimulus will come from spending restraint and tax rate stability.

Understanding The Inherent Power of a Free Market

2009-12-15T08:05:00.000-08:00

If you listen to many politicians and others who desire the power to take their "fair" share of another person's efforts or inheritance, you would get the idea that the "free market" is somehow responsible for economic inequality and makes profits by denying the common man or woman a just payment for their efforts. The free market can be cruel but it is inherently fair. It is far fairer than designed or prescribed systems which invite corruption, favoritism and legal bribes for votes.

I just read a headline, "Biggest Real Estate Flops of the Year"on Yahoo. It pointed out two very different examples of how the real estate and credit meltdown along with the continued recession has produced two bargains for buyers. The first bargain is Dunnellen Hall (The Helmsley Estate) in Greenwich, Connecticut which has dropped in selling price from $125 million to $60 million over the last year and is still wanting a buyer. The other bargain was the Pontiac Silverdome which was built for $55.7 million in 1975 and recently sold at auction for $583,000. (The article written by Jason Notte and provided to yahoo by TheStreet.com.)

What a buyer both can afford and is willing to pay determines the difference between 125 and 60 million dollars in either direction. Whether or not something has a profitable use determines whether a domed stadium (or any other asset) is worth hundreds of millions or hundreds of thousands. In fact the antiquated domed stadium is probably worth negative dollars and actually deflated the value of the land upon which it sits.

I point to this story for two reasons:
1) It emphasizes the multiplicative effect of the free market when you develop or invest in an asset that appreciates in value, due to the power of a market of buyers to create value through competition.
2) It hints at the ultimate futility of trying to support a valuation with bail-outs, subsidies or other non-market attempts to make-up for the lack of market demand and potential buyers.

Two buyers competing for either of these properties would create more wealth than any possible government subsidy or refinancing of any mortgage. When there are no buyers only drastic devaluation will create an opportunity to generate them.

When it comes to these two examples there are no villains and no victims in terms of the marketplace. These two properties are simply worth the price at which the seller and a buyer meet. A higher price and higher value received for that price go hand in hand. If the seller can not obtain their desired price they can meet the buyer by lowering price or hold onto the asset based upon its potential future value.

When you look at market-driven creation of value as a means of raising the standard of living of human beings in general a few things become apparent.

1) Long periods of modest economic growth create steady market demand for both consumed and durable products and result in investment and job creation which raises everyone's standard of living.

2) Rapid economic growth creates instability due to its inherent lack of sustainability and this itself leads eventually to collapse and misery.

3) Economic contraction leads simultaneously to a huge loss in the value of investments and also to job elimination to conserve cash resources.

4) Political (legal, tax-burden and regulatory) uncertainty itself moves investment from productive job creating endeavors to hard assets such as gold -or- moves the investment from an unpredictable nation to a more predictable nation.

5) Debt used for consumption rather than investment in durable goods and productive investments increases the likelihood of a boom-bust cycle and if debt repayment is defaulted above minimal levels it also leads to contraction.

The fairness of the free market comes from its ability to function as an arbitrator of merit. In the market place, merit trumps favoritism and corruption as long as buyers have the option to choose freely among choices and say no if the seller demands too high a price.

The potential for profit in the marketplace does tempt the greedy and the corrupt. Some sellers will attempt to extract more than they merit by stifling the choices which the buyers have or by forcing a sale against the free will of the buyer. This could be a large multi-national cutting prices below cost to drive a competitor out of business (an illegal practice) or a labor union attempting to represent the workforce (and compensation) of a certain employer at a certain location (a legal practice.) This could also be the government forcing everyone to pay more than the market price for milk, corn or health insurance by restricting competition.

The marketplace behaves differently when the government is involved but rarely creates more value as a result of government intervention and regulation. In some circumstances we have determined that regulation is needed for the public good. The basic issues which demand regulation which are:
1) Standards which ensure public health and safety.
2) Requirements that promises to pay or provide services in the future are backed with the retained financial ability to do so.
3) Oversight over the few products and services which due to extensive infrastructure or local delivery require regional/local monopolies to deliver a fair product for a fair price. (cable television for example).

Regulation beyond the basic three items above always limits competition and results in buyers paying more for less.

All this matters in the current economic climate as the perfect storm of
- debt fueled spending with no ability to repay
- corruption, incompetence and lack of governance in primarily government regulated industries and
- short-term transaction-based profit taking in the same government regulated industries
led to loss of a generation of asset based wealth and 10 million jobs.

The solution requires exercising both fiscal responsibility in governmental budgets and stability in governmental policy and demonstrated faith in the free-market, so that buyers determine value, investors can invest in the future and businesses can begin hiring once again.

"It's The Economy Stupid" Revisited

2009-10-25T11:55:00.001-07:00

The US dollar is facing unprecedented resistance to its primacy as the standard currency for global trade and the drivers for this let us know what is still wrong with the US Economy and Fiscal Policy.

Mind numbing debt with more debt on the horizon for the Federal Budget is taking its toll on those who invest in the US Dollar and those institutions and nations that loan money to the US Government. The Congress is now preparing not to bring spending in line with projected revenues but rather to increase the amount of debt allowed by law.

In order to consume more than we are earning, in this case more than taxes on our earnings are generating, we are essentially putting ourselves in a position where we are working for the government of the People's Republic of China and the foreign investment banks. Our lenders are getting nervous because our ambitions to grow government services are unchecked along with our appetite for debt. It is one thing to borrow money to build a bridge that will last 50 years, it is quite another to borrow money to give a benefit that is immediately consumed or hire an employee to deliver a service. In 10 years we will have a bridge to show for our debt and to continue to benefit from, whereas the consumed service and cost of delivering it will be long gone.

Our current largest lender, the Chinese have pegged the Yuan (RMB) to the US dollar at a rate of 6.83 Y to 1 USD and the consequence of this was their cost for imported and exchange purchased oil rose nearly 100% as did ours from December of 2008 through September of 2009. If the Chinese had pegged their currency to the Euro, they would have seen only a 75% increase in fuel oil price. They paid a premium for sticking with the dollar, how long will they pay it?

The oil exporting nations receive dollar based payments for their oil and they are concerned about the devaluation of the dollar, which is why they are quietly exploring alternative currency options. The US dollar will be devalued if the value produced by our economy can not out grow this federal debt and the interest payments.

We are currently at the brink of a long-term downward and self reinforcing cycle. Unless we limit government debt and shore up confidence in US fiscal policy, the US dollar will be discounted and eventually abandoned as the global standard. The Euro has presented itself as convenient and disciplined option.

As we shop more debt with a devalued currency, we will need to pay higher and higher interest rates to attract fewer and fewer investors. We will also need to generate more tax revenues by levying higher taxation rates on an economy that must produce more to just to break even. There will also be less money to fuel and reinvest in the economy due to the double trap of less income after taxes and the added cost of buying energy and other imported goods with deflated dollars.

Who would take us over this brink? This is the economic policy of a third world debtor nation not a western democracy.

Failing Consensus the Democrats Run Toward Defeat Next Fall

2009-09-16T05:09:00.000-07:00

The democrats clearly see opportunity in their control of all branches of government and they correctly sense the window of opportunity for changing America is going to slam shut. I mused back in January, whether the democrats would make the same mistakes they made in 1993 and 1994 after the 1992 elections, and it appears that they will.

The democrats also could learn some lessons from the republicans and their recent run in control of the country. The current sad state of the Republican Party makes January 2001 seem forever ago. The republicans undid themselves during the George W. Bush years as they lost the trust of fiscal conservatives in their management of the Federal Budget and individual members of the republican leadership in Congress repeatedly shot themselves in the foot. Without a heightened sense of fear regarding post 9/11 National Security, it is likely the republicans would have lost the White House in 2004 and control of government sooner than they did.

Democracy requires educated, productive and independent people. Democracy and Capitalism go hand in hand as they both require merit to prevail. In a democracy, ideas are currency and the best ideas and policies are hammered by discussion and debate and illuminated by dialogue and need to rise to the top. In capitalism, goods or services are currency and the best product offered at the lowest price is hammered by competition and illuminated in a free and open marketplace and also needs to rise to the top.

We need a new word to describe a "compromise" bill in Congress because too many people confuse what is really a "bi-partisan" or "consensus" bill with the more negative general meaning of compromise as in compromising one's principles. Wise leaders understand that governing is different than opposing and that elections come and go like the waves in the the ocean, washing away sand and replacing it with new sand.

While the far right and far left will never be the source of a consensus agreement or decide a national election, they do raise issues and generate awareness in the center. The democrats benefited greatly from independent and centrist voters in the 2008 elections and yet they seem dismissive of criticism from the center and want to discredit legitimate concerns by labeling critics.

The labelling of criticism of President Obama's policies as racism does nothing to quell real racists who are few in number nor does it bode well for minority candidates in the near future. When we criticized President Bush, it was accepted that as President he was fair game for criticism no matter how deserved or undeserved. Now if we criticize President Obama, we are racists, how disingenuous. As a fiscal conservative and current independent, you are saying to me, that you want my vote but if I disagree with you, you will not discuss the merits of your policy or practice but you will "deal the race card from the bottom of the deck" rather than try to convince me with discussion or debate or illuminate me with dialogue.

The other thing that the democrats and President Obama need to do, is to stop attacking Capitalism and profits. The United States faces a real global challenge and a national anti-capitalism sentiment will just drive more investment, operations and profits across our national boundaries and benefit nations with more favorable policies and attitudes. We stand to lose to the European Union, Russia, China, India and Brazil who do not demonize either capitalism or profits and are more interested in growing their pie than carving out bigger pieces for special interests and non-productive players. Learn from our Canadian neighbors where many of Canada's wealthy families moved their residences and business interest out of Canada in response to regressive tax policy begun in the 1960s.

Health Care: Mongering All Around, When Money is the Issue

2009-08-16T08:32:00.000-07:00

Sarah Palin did fiscal conservatives a disservice by focusing on "death panels" and mongering fear to build opposition to the Obama - Pelosi -Reid health care initiative. Although the left wing has used intimidation and outrage consistently since Gore lost the Presidency in Florida and the courts, outrage did not prevent or end the Iraq War. When your outrage exceeds your argument, you lose the vast center of the population.

Democrats, who are rightly upset about the worst of the behavior of the opposition to their health initiative have set themselves up to look like hypocrites because they often encouraged (Speaker Pelosi) and mostly looked the other way when their political allies practiced the same tactics on a seemingly inept George Bush and a war-mongering Dick Cheney.

So while the far right mongers fear to get citizens to act out and the left wing fights back, we need to get the politicians to discuss the real issue here, which is money and the economy. An expansion of health care services has to be paid for. Since a solution that can not be payed for is not a solution, what do the current federal health care service programs teach us?

Medicare although providing needed services to retired Americans is not a solution because it is not fundable in the future. In order for the economics of Medicare to work, we need both a perpetual baby boom and less services consumed on a per senior lifetime basis. Neither scenario is going to happen.

Both the Democrats who created the Medicare system and the Republicans who added services to it are responsible for the system in its current state. While waste and fraud are huge issues within Medicare (>10% of its cost) the "sword of Damocles" which hangs over all of our heads is the "criminal" funding model. I call it criminal because it is a Ponzi scheme and in any private endeavor it would be a crime.

Unlike individuals and the private sector, Congress writes rules that allow it to make material promises to the public which it can not keep under any reasonable scenario. When asked a health care funding question on Meet the Press today, Rep. Charles Rangel, Chairman of the Ways and Means Committee refused to answer the question and instead expressed his outrage about the expression of right wing outrage. He chairs the singular committee for the levying of federal taxes and raising revenue but does not want to discuss how we fund a future multi-trillion dollar obligation.

The other major federal health care service program is Medicaid. While Medicaid is not subject to the same demographic issues as Medicare, it is underfunded in just as onerous a way. Medicaid reimburses hospitals for services, which they are by law required to provide, at less than the cost of delivering those services. The difference between the cost of consumed services and reimbursement is simply added to the overhead cost of operating a hospital and redistributed to anyone who is paying for services. It is cost shifting and therefore a hidden tax on anyone receiving health care through private means.

Now the same federal government that is running a huge operating deficit and already is committing legal "fraud and theft" with the funding of Medicare and Medicaid wants to expand its role and control of health care service delivery. The Federal government needs to reform itself before it expands services.

The Democrats, who either see their sweeping November election victories as a mandate or "once in a generation" opportunity have approached this issue with too much focus on expediency rather than an open discussion with the American public. Are we going to relive 1993 and 1994, where the Clintons squandered their first administration and empowered a Republican minority?

The independents and moderates who supported President Obama in the election did not vote for a boundless expansion of debt and a take over of health care (the universal payer option). The popularity and goodwill extended to the President has never been extended to Speaker Pelosi or Senate Majority Leader Reid.

The Democrats need to limit their initiatives to reform and regulation in the health insurance industry and providing modest financial assistance for health care to the poor and working poor.

Clunkers and Junkers Stimulate the Economy

2009-08-02T08:34:00.000-07:00

While the American Recovery & Reinvestment Act of 2009 (ARRA) which needed to be passed in a hurry 6 months ago remains over 90% unspent and non-stimulating, the Cars Allowance Rebate System (CARS) program funding was spent in its first week.
http://www.cars.gov/

The Cash for Clunkers initiative has two things going for it that the rest of the stimulus package lacks.
1) Individuals and Small Businesses are making the spending decision. Anyone who had been looking at replacing an older vehicle with a newer one has an economic incentive to do so
(... as long as the existing vehicle qualifies and the new vehicles is at least 4 MPG more fuel efficient.)
I am kind of sorry that I own two older fuel efficient Honda Accords as neither one qualifies as a clunker.
2) There is excess inventory in the automotive industry and the dealers are incented to move the inventory off the lots and thus they are willing to front the money and handle the cumbersome paperwork needed to process the rebate.

When incentives whether they are rebates, vouchers or tax credits are given directly to individuals and small business they will quickly move to take advantage of the underlying economic value unlike bloated bureaucracies and the politicians, lobbyists and layers of red tape.

If the rebates of $3500 to $4500 had been smaller, there is no doubt that the program would be generating less demand. This is a classic micro economic price-demand curve in action.

There have been problems galore with the CARS program this week in spite of its success. The web-site crashed, the program ran out of money, deals that were done had to be undone and then many were redone. None of those problems were created by the individuals or small businesses doing their best to stimulate the economy and reduce their carbon footprint.

The problems in the program thus far, all lie with Congress and the Federal bureaucracy that is neither quick, efficient or nimble at delivering a simple rebate.

It is time to rethink the ARRA of 2009 and kill any spending which does not occur in the 12 months and also eliminate wasteful non-stimulus pork. Maybe the remaining $500 million could be best spent by individuals and small business.

It is also time to rethink how the government will provide health care to the poor and working poor. With vouchers or rebates or tax credits it is possible that individuals and families can find adequate health care directly from a physician.

Health Care Destroyed: Lawyers Writing Rules for Health Care

2009-07-24T07:01:00.001-07:00

While there is definitely a purpose and need for the legal profession, the fact that lawyers dominate elected office positions and governmental appointments puts them in the unique position of writing the rules that every profession and industry must follow including their own.

Unlike health care where there is no Constitutional mention or right, ever since the Supreme Court ruling in Gideon v. Wainwright (1963), there has been a right to an attorney in criminal proceedings if the person charged with a crime can not afford one.

How does the legal system handle this "right". In Massachusetts, at your arraignment, the judge asks you if you have already secured your own attorney. If you have not, the judge inquires about your income and assets. The judge then assigns you a court appointed attorney if it seems plausible that you can not afford an attorney. They actually authorize a specified amount of billable hours when they appoint the attorney. People who can afford an attorney, typically hire one because they want the best defense possible.

Who are court appointed attorneys? In Massachusetts, any practicing attorney may register and receive a modest amount of court appointed work at a below market fee structure. Attorney's who either have un-billable hours or those that want criminal court experience place their names on the roster. I do not know the specifics in other states and I am not proposing Massachusetts as the ideal model but merely to show how streamlined the process of providing legal care to the working poor and indigent is.

I remember very early on the pecking order of prominence as expressed to me by my grandfather; first was doctors, then lawyers and third was anything else. Doctors and lawyers used to be on relatively equitable footing with most practicing doctors and lawyers running their own professional practice and often creating some type of limited liability partnership to share work with other professionals.

The combination of Governmental bureaucracy (tax code, medicare, medicaid, etc.) and corporate cost management (third party payment of all types) has forced the base of health care and emergency care out of the free market where excellence and efficiency carry the financial rewards.

It has also forced many doctors into being employees not independent owner/practitioners. They have de-linked doctors from the market forces by which people select and pay for almost any other service. They have also burdened Doctors with an administrative paperwork nightmare and given them no relief from lawsuits that tend to treat the doctors as if they were defective car seats and the patients as if they were helpless healthy infants with full lives ahead of them.

The cure to the health care system requires removing routine health care and its economic model from those of emergency care and how we insure individuals from the costs of catastrophic care.

Returning most health care to a fee for service arrangement between a patient and a doctor of their choosing is the cure for much of what is wrong with the current system. Having patients make choices as adults with pocketbook consequences about their treatment is the best method of cost control. Eliminating all paperwork except medical records and a simple doctor-patient bill is they way to drive non-health care cost downward.

Having a stream-lined system similar to the current food stamp system for distributing health care funds directly to poor is a better way than what is proposed. Creating a simple system akin to the court appointed attorney system to ensure doctor availability to the poor.

Separating routine health care, to be paid directly or from a patient owned health care fund, from the insuring of individuals for costly catastrophic and emergency care.

Implementing tort reform to allow doctors to practice in a cost effective manner and begin to treat patients as having some responsibility in their own health care and reflecting that all disease can not be cured and eventually we all die. Why do people sue doctors at a far greater rate than they sue their lawyers? Are lawyers really that much more skilled or professional in their practices?

A final note, government incursion into health care has not interfered with the health care choices of the wealthy and those with golden insurance packages (a tax-free benefit), but it has simultaneously driven up costs for the typical American and limited their choices. The current health care legislation will drive up cost (and create debt for future generations), reduce our choices and drive all but the rich into a downward spiral of mediocre health care.

Should someone who earns $50,000 per year and pays $6,000 per year for health care, receive the exact same quality and quantity of health care as someone who does not work or is an illegal immigrant? Please note that someone earning $500,000 per year is not going to have their access to high end health care diluted even if they are paying more in taxes. The diminishment of health care as delivered will be born by the middle class.

The middle class can never benefit by class warfare and policies that reek of it are wrong, no matter whether supported by Democrats or Republicans.

Congress is Rushing into a Healthcare Disaster

2009-07-19T07:44:00.000-07:00

There are plenty of things wrong with the system of health care in the United States but a close look at the existing Federal Health programs should give pause before committing another $trillion in spending.

The existing medicare system for the elderly is clearly unaffordable going forward. It is based upon a pyramid scheme for funding.

The existing medicaid system pays less than cost for most services and is the major driver of cost shifting in hospitals. That is the reason services for those who can pay are charged at 2 to 5 times their actual cost.

The Veteran's Administration (VA) hospital network provides an essential service for disabled and aging veterans but it is not comparable in cost or quality to the better community and private hospitals. It is a place you go to because it is free, not a place you go to if you have a choice. I am not dismissing the tremendous improvements made in recent years at the VA, but it is simply less than top quality private sector health care.

Due to their majority in the House and their super-majority in the Senate, the Democrats are able to rush a bad proposal forward without debate. I just watched another fear and gloom television commercial from Healthcare Now! http://www.healthcare-now.org/ ,which was followed by a commercial from Healthcare For America Now! http://www.healthcareforamericanow.org/ . These two separate but related groups only seem to differ with regards to direct focus upon a "single-payer" system which is done by Healthcare Now! but not Healthcare for America Now!.

These groups call any debate "obstructionism". These groups are heavily pro-labor union and anti-business. They are both fomenting crisis and calamity and urging that this administration initiative be rushed through now. These calls are similar to the tactics employed around economic stimulus where fear that the American people would disapprove of the contents of the American Recovery Act led to the act being rammed through Congress with no review of the final legislation.

These groups blame "for-profit" motives for the current system. How is it that when it comes to entertainment, information technology and much of what we call "innovation" a "for-profit" motive is understood to be the catalyst for investment and initiative but when it comes to health care it is "evil".

We all know that the current system is flawed but there is no crisis calling for a knee jerk response. There is time for debate. There is need for this legislation to be publicly vetted and for Congress and the administration to fully hear the American public.

The real costs of health care are driven ever upward by the disconnections that would create an efficient and effective health care system. There is too much bureaucracy in the existing system. The number of non health care deliverers (doctors, nurses, etc.) who are being paid with health care dollars is staggering. Due to the paperwork and administrative costs.

Much of the bureaucracy and waste in the existing system is driven by the sweep of HIPPA and other poorly constructed legislation combined with unending lawsuits that enrich law firms and a handful of "victims" and drive up extraordinary costs for each of us through adding to the cost of medicine, equipment and cover your ass procedures.

The Republicans derailed the Clinton health care initiatives of 1993 and did very little during the 14 years they controlled Congress to reform the current system. However, we already have examples that the government is unable to drive the cost of health care downward or be honest about properly funding it in the present let alone the future.

AIG Update: Barbarians Inside the Gates

2009-06-15T15:34:00.000-07:00

Today AIG's lawyers revealed new and more shocking allegations regarding past practices of AIG and its Executives by suing former CEO, Maurice Greenberg or as his buddies on the Board of Directors called him "Hank", for looting a measly $4.3 Billion dollars in stock on his way out the door in 2005. He took this stock even though he left under a cloud of suspicion of accounting irregularities. He was able to do this through his participation in C. V. Starr & Co., Inc., which beneficially owned 396,000,000 shares of AIG stock according to the 2006 Prospectus. It is very clear in reading the prospectus that the AIG auditors had difficulty with the exact ownership of AIG stock by AIG executives through the Starr Group.

The AIG Board, whom has consistently failed to earn their paychecks for governing AIG on behalf of the stockholders was motivated in 2005 by the irregularities and ambiguities to enact a comprehensive set of corporate reforms to guarantee proper governance and independence of board committees. When you read through what they enacted, it is even harder to fathom the collapse to come and the gross compensation given out after failure. It's not light reading, but it's all laid out in the 2006 proxy.
http://www.ezonlinedocuments.com/aig/2006/proxy/HTML2/default.htm

If you read my earlier blog on AIG, you are already aware of their lack of proper governance on behalf of the shareholders of the corporation.
http://rightofcenter-pmoshei.blogspot.com/2009/03/lack-of-governance-is-real-story-in.html

You will note that since my last blog on AIG, there has been tremendous turn over on the Board at AIG. According to AIG's 2009 Proxy Statement; "Ms. Rometty and Mr. Sutton resigned on May 7, 2009, and Messrs. Bollenbach, Feldstein and Orr informed AIG in May 2009 that they would not be standing for reelection. Mr. Tse submitted his resignation in March 2009 to become effective at the 2009 Annual Meeting of Shareholders."

The leaves only George L. Miles, Jr. from my bandit list of those board members responsible for governance left standing. Miles (2008 compensation of $412,000) and Morris W. Offit (2008 compensation of $274,200) are the only board members remaining from the glory days of AIG.

By the way, the share holders of AIG are attempting to bring some sanity to the situation through initiatives requiring executive compensation to require long-term ownership of AIG stock and requiring special "shareholder" meetings for certain types of corporate actions. Needless to say, both of these measures were opposed by the board.

Supreme Court Capitulates on Chrysler

2009-06-09T17:14:00.000-07:00

In the name of expediency the Supreme Court has sold small Chrysler dealers, American consumers and the Pension Funds from the State of Indiana that loaned money to Chrysler down the river.

Unfortunately, Judge Ginsberg could not get the support of her brethren on the US Supreme Court and this disastrous deal moves forward again.

While many will suffer, who benefits?

The UAW benefits as it has successfully stolen a chunk of Chrysler's dwindling assets and a huge chunk of its future by getting the administration to unfairly and in violation of bankruptcy law give it 55% of the new Chrysler.

Fiat who gets Chrysler's assets cheap without any obligations to past consumers or dealers who are being dumped.

Supreme Court may Right the Chrysler Deal

2009-06-08T15:20:00.000-07:00

Thanks go out to Supreme Court Justice Ruth Bader Ginsberg. She put the Chrysler bankruptcy deal on hold. This Obama administration brokered deal ignores established bankruptcy law and sets a poor precedent for businesses needing private investment. It offers a quid pro quo pay-off to the UAW through VEBA (55% owner post bankruptcy), more than coincidentally a large supporter of the Obama campaign. The Congress needs to take a serious look at the use of TARP money in the structure of this deal.

When secured creditors are dumped for political reasons, we all ultimately pay the costs. Bankruptcy is an orderly process for settling the affairs of a failed business, the order of claims needs to be maintained to allow businesses to borrow money for growth at reasonable rates. If secured creditors (in this case a pension fund loaning money to Chrysler) can be displaced by unsecured creditors (in this case the UAW) by bankruptcy courts then chaos will hurt US based businesses in favor of European Union based companies, where secured loans will have more real "security". This would make loaning money to Airbus safer than loaning money to Boeing, BMW and Daimler safer than Ford, etc.

There are many things wrong with the Chrysler deal, including the sudden dropping of dealers in May, which has "stolen" the future from many small dealerships without compensation and forced hundreds of small businesses into bankruptcy and employees into unemployment. Dealerships had their contracts surreptitiously broken and were left with soon to be worthless auto and parts inventories. You can read the raw deal given to 789 small businesses and their employees and communities. http://www.chryslerrestructuring.com/

Another thing wrong with the Chrysler deal is that customers of the "old" Chrysler will not be able to make claims for vehicle warranties or defects against the "new" Chrysler. They will instead be making a claim with a new, grossly underfunded rump Chrysler.
http://www.chryslerllc.com/en/news/

How can the Obama administration justify the deal from a public policy point of view? How can they favor the Chrysler management and unions who presided and gutted Chrysler as they collectively killed it over consumers, independent dealers and pension funds.

In the end, the brokers of destruction will be paid off handsomely. This snag may temporarily delay Robert L. Nardelli from moving on to his next victim. Mr. Nardelli, the current head of Chrysler, destroyed half of the stockholder value at Home Depot during a period of stock market growth before departing with over $100 million in pay-off money.

He was also the 1st runner-up to Jeffrey Immelt at General Electric, where Mr. Immelt also destroyed of GE stockholder equity during the 7 years before the market melt down. Jack Welch may have known how to run GE, but he did a poor job in lining up successors.

Common Sense, Swine Flu (H1N1 Flu) & the Mexican Border

2009-05-01T06:49:00.000-07:00

Those close to the outbreak of disease are always unlucky and those who catch the disease early on also suffer. When the south China, civet cat induced SARS outbreak occurred in 2003, it was very clear that the United States had been lucky and Canada had not. A specific series of events led to the quick transmission of SARS to a relatively large group of people in Toronto before a full understanding of SARS and its symptoms were known. Members of a church visiting a hospital with an unidentified infected patient spread the disease to their congregation. Canada had 151 cases and 43 deaths while the US had 27 cases and 0 deaths.

While most people remember the televised panic in Honk Kong, once identified, the global SARS outbreak was quickly controlled. According to the World Health Organization (WHO), "a total of 8,098 people worldwide became sick with SARS during the 2003 outbreak. Of these, 774 died." To see where SARS eventually spread to, click on the following link.
http://www.who.int/csr/sars/country/table2004_04_21/en/index.html

While SARS was new and deadly, it was quickly contained. The three most important things learned from SARS, to consider when looking at the swine H1N1 flu pandemic are:
1) The vast majority of SARS cases and deaths occurred near its epicenter in China. China had repeated outbreaks for another year.
2) The global Air transportation system quickly moved individuals exposed to SARS across the globe. Many of those travellers arrived home without symptoms and unaware of their exposure. Notice that there was only one exposure in Africa and none in South America, which are two relatively poor continents.
3) Once the disease was recognized (by symptoms and lab tests) and the basics understood, It was just as quickly brought under control in the developed parts of the world and due to the cost of air travel, there was little exposure in poorer nations/regions outside of southeast Asia.

With regards to Swine Flu, Mexico is very unfortunate as was Southern China with SARS. Mexico is taking fairly drastic action to prevent the spread of the disease while they get a handle on it. Unfortunately it will ripple through Mexico as it did in China.

With regards to the United States, public health officials have implemented similar protocols to other flu and disease outbreaks. The Center for Disease Control has updated information.
http://www.cdc.gov/h1n1flu/

Many public officials and individuals have made uninformed, careless, foolish and reckless statements. Among the careless statements are those by Vice President, Joe Biden. His advice contradicted the advice of public health officials and if followed would damage certain sectors of the economy.

Across the United States, individual school districts have reacted by closing schools where there was no evidence of any exposure. While those school officials maintain that they were being cautious, I maintain that they were merely pretending to be doing something. Why is common sense so lacking when it comes to School Districts? Why is pretending to do something, so often confused with actually doing something in this country?

Again also, the conspiracy theorists are out talking. The very individuals who think they are more likely to survive an automobile accident without wearing their seat belts are often holing up like its Armageddon when there is a health problem like this.

Finally and most importantly, we must stop pretending that we are doing something about the porous and therefore uncontrollable border with Mexico. This outbreak will only break out in the United States, if public health regulations and quarantines are bypassed.

While it is relatively easy to screen air passengers returning from vacation in Mexico and relatively difficult but possible to screen vehicles driving legally across the border, it is impossible to screen people crossing the border illegally. I am not calling for a fear driven or reckless reaction here but a rather an open debate on the need for an actual solution to controlling the flow of people across the US-Mexico border.

We have allowed a black market in manual labor to render our border and immigration policies meaningless. It is time for the politics of blame to stop and time for a practical and pragmatic solution. We are far better off having permitted and documented legal aliens working in this country than the current situation. Recognizing and regulating a permanent alien workforce will not make all problems disappear and will create some additional problems but it will better protect all of us and allow the US - Mexico border to be reshaped in terms of illegal crossings and reformed in terms of security.

We also need to supplement this with tougher action on those who enter the country illegally and those who employ undocumented workers to dry up the manual labor black market permanently.

The Tempest in a Teapot at a Tea Party

2009-04-18T06:22:00.000-07:00

On April 15th, there were several hundred "tea parties" held to protest the tax and spend policies of the federal government and the huge spending bills passed in the past 4 months under the Obama administration and the democratically controlled congress.

I first heard about the tea parties listening to the Glenn Beck show on the radio a few months ago. (I do listen to Glenn Beck occasionally and find him to be over dramatic, pessimistic and at the same time "spot on" on some issues.) I have checked out the discussions on the Glenn Beck related 9-12 site and made a few comments but I can not say that I found the dialogue on the site to be very engaging or informative.

How to perceive and report upon the TEA protests appears to be a huge point of contention.

Crowd estimates vary depending upon which source you cite. Although scientists can measure the size and density of a cloud on the planet Jupiter, we seem to have lost the ability to measure the size of a crowd ever since the organizers of the Million Man March did not want to admit their failure to deliver anywhere near a million men in public. It seems about 250,000 people participated in about 350 individual protests. While there is significance to a quarter million people expressing their dissatisfaction with government policy, I can not tell you whether that number in and of itself is a measure of success or failure.

As with all protests of dissent, the protesters themselves were an amalgam of groups and individuals with different points of view. I am not naive to the fact that many of the conservative talk radio hosts and the Fox News network talked up the protests but there appears to be no evidence that they paid nor organized the local events. You ended up with a mix of fiscal conservatives who opposed government spending by both Bush & Obama, together with conservatives and republicans and anti-Obama folks from across the spectrum including a few racist groups. All in all, anti-Iraq war protests during the Bush administration included amalgams that ranged from pacifists to democrats to anarchists. Opposition to the person and party in charge always brings out the disenfranchised of every stripe.

The long-term impact of the TEA party protesters and their movement can only be guessed at this early on. Remember that in spite of everything thrown at him, Bush was reelected to a second term.

One thing that is clear is that many supporters of Obama come off as sore winners. The worst I have heard is actress Janeane Garofalo, who said the following on MSNBC during Keith Olbermann's show last week, "Let's be very honest about what this is about. This is not about bashing Democrats. It's not about taxes. They have no idea what the Boston Tea party was about. They don't know their history at all. It's about hating a black man in the White House." She continued, "This is racism straight up and is nothing but a bunch of teabagging rednecks. There is no way around that."

Her statement shows arrogance, denigration and playing of the "race card" by an angry white women. She was outraged when anti Iraq War protests were dismissed in such a fashion and now she has quickly behaved in the exact same way.

The name calling and lack of civility actually bother me more than criticizing any points the TEA protesters were trying to make.

Pirates are Boarding the Ship

2009-04-15T06:58:00.000-07:00

If America's problems were only as simple as stopping Somalian pirates from boarding a ship.

At least with pirates you can:
1) tell the difference between the pirates and the crew of the ship
2) call out the Military and shoot a few pirates to show them you mean business
3) pay them ransom and get your ship back
4) if things get really out of hand, again call out the Military to drop a couple of bombs on their million-dollar compounds inside of Somalia

Pirates are after all thieves and when they steal or receive ransom, the shipping line is out the money but the pirates spend it on electronics, boats, weaponry, luxury items, their payroll, etc. The money is recirculated in the global economy.

Unfortunately, America's pirates do not stick out in their speedboats armed with rocket launchers and AK47s but rather they wear suit and tie and arm themselves with lawyers or lobbyists or PAC money. Also unfortunate, is the fact that America's pirates are WORSE than thieves. I first learned this expression in graduate school taking a course in the Taguchi approach to statistical analysis of designs.

"Worse than a thief" means that what is gained (in cheapening the design) is far outweighed by what is lost (to society).

Transaction based incentives whether at Freddie Mac, Fannie Mae, Countrywide or AIG sent a few million dollars into the pockets of the executives, brokers and agents and led to the collapse of the US Real Estate Market.
By my estimation, for the gain of $500 Million in Bonuses and $500 Billion in profits, these pirates caused $7 Trillion dollars in damages. I would take a thief any day.

Both Republicans and Democrats walked these thieves into the vault and looked the other way as they not only looted the vault but destroyed the bank.

name Change to slightly Right of Center

2009-03-27T17:30:00.000-07:00

I am trying to more accurately communicate that my aim is the center not the right. I recognize that my fiscal viewpoint is conservative and my values tend to fairly libertarian but peppered with a heavy dose of common sense.

I have gotten some very positive feedback on my AIG article, including kudos and encouragement from the corporate governance columnist for Business Week, Bev Behan. She wrote about the need for better governance at AIG this past fall.
http://www.businessweek.com/managing/content/nov2008/ca20081118_408443.htm

I am also mulling how to promote my blog and working on ideas for new articles.

If you would like to be notified when new articles are published you can either sign up as a follower, use RSS to get an automatic feed or email me and let me know. I will send you an email when I publish.

Lack of Governance is the Real Story in the "Bail-out Bandit" Bonuses

2009-03-22T07:06:00.000-07:00

Have you ever heard of George L. Miles Jr., Virginia M. Rometty or James F. Orr III ?

The media and Congress should help you get to know them, because these are three of the people who continue to sign off on the gross executive compensation packages at AIG.
How about Frederic W. Cook? The man that advised AIG's board on both Executive and Board compensation from 2005-2008.

I wonder if Congress will speak with these servants of the now tax payer stockholders?

Miles (CEO of WQED) is the chair of the Nominating and Corporate Governance Committee and a member of the Public Policy and Social Responsibility Committee and earned $299,443 for his service in 2007 according to Forbes. He has been a director at AIG since 2005.
Rometty (Sr. VP at IBM) has continuously been a member of the Compensation and Management Resources Committee since January 2007 and earned $254,193 for her service in 2007. She has been a director at AIG since 2006.
Orr (Chairman of The Rockefeller Foundation) is the current chairman of the Compensation and Management Resources Committee and has continuously been member since before 2007 when he earned $269,443 for his service. He has been a director at AIG since 2006.

Can you believe that AIG actually has a Public Policy and Social Responsibility Committee? Heaven forbid their behavior if they didn't.

AIG is a public corporation and is owned by its Shareholders not the management.

It has nine independent directors and two Executives on it's Board of Directors who are responsible for governance of the corporation on behalf of the shareholders, not the management. Governance seems to be a lost art in both corporate and institutional America. What happened to the ability to provide oversight on behalf of the stockholders and to uphold the bylaws of the corporation.

While the taxpayers are outraged in the moment due to the government bail-out, the legal responsibilities of the Board to effectively govern are NOT new.

(I have copied sections of AIG documents in/part below as well as links.)

Here are the responsibilities of directors as outlined in AIG's Corporate Governance Guidelines: amended 6/15/08.
"The members of the Board serve as the elected representatives of the current and future shareholders, act as advisers and counselors to the Chief Executive Officer and senior management and oversee management’s performance on behalf of the shareholders."

Do deals which pay bonuses to the same people who lost Billions of dollars of the shareholder's equity seem consistent with this?

On April 4, 2008 AIG sent the following information to the stockholders in its proxy statement for the May 2008 annual meeting:
"The Compensation and Management Resources Committee ... is responsible for reviewing and approving the compensation ... including the performance measures and goals relevant to that compensation. ... These responsibilities, which may not be delegated to persons who are not members of the Compensation and Management Resources Committee, are set forth in the Committee’s charter.....
To provide independent advice, the Compensation and Management Resources Committee selected Frederic W. Cook & Co. as a consultant and has used the services of the Cook firm since 2005. ....
The Cook firm has advised the Committee that the design and operation of AIG’s executive compensation programs reflect a pay-for-performance compensation philosophy that is reasonable and competitive with companies in the financial services industry. "

With all of this oversight in place both before and after the collapse of AIG and compensated directors governing, what the hell happened and is happening now? We need to find out by dragging both current and former Directors of AIG's Board before Congress. Why are we focused upon employees who have no authority to approve thses deals? Maybe it's because Congress does not want to draw attention to its own lack of oversight.

In case you do not know who governed AIG during this mess I have provided the player's list below:
The directors of AIG who retired in 2008 due to age were: Marshall A. Cohen (former Canadian Deputy Minister of Finance) and Frank G. Zarb (former Chairman of NASD -NASDAQ).
One director announced his resignation effective at the May 2008 board meeting: Stephen L. Hammerman (former CFO and Vice Chair at Merrill Lynch & Co.).

Several directors resigned later in 2008: Ellen V. Futter (President American Museum of Natural History), Richard C. Holbrooke (former US Ambassador to the UN), Fred H. Langhammer (Chairman Global Affairs Estee' Lauder), former board Chair Robert B. Willumstad (former President & COO Citigroup) as well as CEO Martin J. Sullivan.
Link to Board as 2007 Annual Report: http://www.ezodproxy.com/AIG/2008/AR2007/HTML2/aig_ar2007_0052.htm

The Current Board includes the following long time directors in addition to Miles, Orr & Rometty: Martin S. Feldstein (Professor of Economics Harvard University - director since 1987), Edmund S. W. Tse (Sr. Vice Chair Life Insurance AIG -director since 1996), Morris W. Offit (Chairman Offit Capital Advisors- director since 2005), Michael H. Sutton (Former Chief Accountant of the United States Securities & Exchange Commission - director since 2005)
AIG Board newcomers: Stephen F. Bollenbach (former CEO Hilton Hotels - director since Jan. 2008).
Chair and CEO Edward M. Liddy who joined AIG in Sept. 08, Dennis D. Dammerman (former Vice Chair GE) in Nov. 08 and Suzanne Nora Johnson (Former Vice Chairman Goldman Sachs) in July 08.
Link to current Board: http://ir.aigcorporate.com/phoenix.zhtml?c=76115&p=irol-govboard

I have provided additional details and complete text of excerpts from both AIG corporate and SEC sources below:

Link to AIG Board Compensation Policy: http://www.sec.gov/Archives/edgar/data/5272/000095012309003734/y74794exv10w53.htm

selected AIG Board Committees (as of 3/19/09)
Nominating and Corporate Governance Committee: George L. Miles, Jr. - Chairman, James F. Orr III, Virginia M. Rometty
Compensation and Management Resources Committee: James F. Orr III - Chairman, Stephen F. Bollenbach, Dennis D. Dammerman, Suzanne Nora Johnson, Virginia M. Rometty
Public Policy and Social Responsibility Committee: George L. Miles, Jr., Morris W. Offit
Link to current Board Committees: http://ir.aigcorporate.com/phoenix.zhtml?c=76115&p=irol-govcommcomp

AMERICAN INTERNATIONAL GROUP, INC.
CORPORATE GOVERNANCE GUIDELINES
(Amended June 15, 2008)
I. INTRODUCTION
The Board of Directors (the “Board”) of American International Group, Inc. (“AIG”), acting on
the recommendation of its Nominating and Corporate Governance Committee, has developed this set of Corporate Governance Guidelines to promote the effective functioning of the Board and its committees, to promote the interests of shareholders and to set forth a common set of expectations as to how the Board, its various committees, individual directors, and management should perform their functions. These Guidelines are designed with AIG’s current business operations, ownership, capital structure, and economic conditions in mind.
II. ROLES OF BOARD AND MANAGEMENT
The business of AIG is conducted by management under the oversight of the Board. The roles of
the Board and management are related, but distinct. AIG’s business strategy is developed and
implemented under the leadership and direction of the Chief Executive Officer by its officers and other employees. The members of the Board serve as the elected representatives of the current and future shareholders, act as advisers and counselors to the Chief Executive Officer and senior management and oversee management’s performance on behalf of the shareholders. In performing its general oversight function, the Board reviews and assesses AIG’s strategic and business planning as well as management’s approach to addressing significant risks and challenges facing AIG. As part of this function, the Board reviews and discusses reports regularly submitted to the Board by management with respect to AIG’s performance, as well as significant events, issues and risks that may affect AIG’s business or financial performance. In performing its oversight function, the Board and its members will maintain frequent, active and open communication and discussions with the Chief Executive Officer and the management of AIG.
XI. BOARD RESPONSIBILITIES
E. Executive Compensation. The Compensation and Management Resources Committee
makes recommendations to the Board with respect to (1) AIG’s general compensation
philosophy, (2) the compensation programs applicable to senior executives of AIG and
(3) the development and implementation of other AIG compensation programs.
The Board and the Compensation and Management Resources Committee are committed
to the full, fair and transparent disclosure of executive compensation. This commitment
will be considered in connection with AIG’s public disclosures regarding executive
compensation.
link to full document: http://library.corporate-ir.net/library/76/761/76115/items/300256/Corporate_Governance_Guidelines_061508.pdf

To contact the non-management members of AIG's Board of Directors as a group or the other members of the Board of Directors with respect to concerns or other matters you may do so:
By writing: c/o Special Counsel and Secretary to the Board, American International Group, Inc. 70 Pine Street, 27th Floor New York, NY 10270
Email: boardofdirectors@aig.com
All concerns will be addressed and complaints will be processed promptly.
link to full web page: http://ir.aigcorporate.com/phoenix.zhtml?c=76115&p=irol-govcontact

From the 2008 Proxy published 4/4/2008 Board Committee Reports
"Compensation and Management Resources Committee
The Compensation and Management Resources Committee, which held nine meetings during 2007, is responsible for reviewing and approving the compensation awarded to AIG’s Chief Executive Officer (subject to ratification or approval by the Board) and to the other key employees under its purview, including the performance measures and goals relevant to that compensation. The Committee is also responsible for making recommendations to the Board with respect to AIG’s compensation programs for key and other employees and for oversight of AIG’s management development and succession planning programs. These responsibilities,
which may not be delegated to persons who are not members of the Compensation and Management Resources Committee, are set forth in the Committee’s charter, which is available in the Corporate Governance section of AIG’s corporate website at http://www.aigcorporate.com/.

Nineteen key employees are currently under the purview of the Compensation and Management Resources Committee, including all of the executive officers named in the 2007 Summary Compensation Table. Mr. Sullivan participates in meetings of the Compensation and Management Resources Committee and makes recommendations with respect to the annual compensation of employees under the Committee’s purview other than himself. Pursuant to AIG’s By-laws, the Board ratifies the determination of the Compensation and Management Resources Committee as to the compensation paid or to be paid to Mr. Sullivan in his capacity as
AIG’s Chief Executive Officer.

The Compensation and Management Resources Committee does not determine the compensation of the Board of Directors. The compensation of directors is recommended by the Nominating and Corporate Governance Committee and is approved by the Board.
To provide independent advice, the Compensation and Management Resources Committee selected Frederic W. Cook & Co. as a consultant and has used the services of the Cook firm since 2005. The Compensation and Management Resources Committee directly engaged the Cook firm to review and comment on AIG’s executive compensation framework in relation to the objectives of the framework and market practices.

Members of the Cook firm regularly participate in Committee meetings and provide information on compensation trends along with specific views on AIG’s compensation programs.
The Cook firm has advised the Committee that the design and operation of AIG’s executive compensation programs reflect a pay-for-performance compensation philosophy that is reasonable and competitive with companies in the financial services industry. The Cook firm has also provided advice to the Nominating and Corporate Governance Committee on AIG director compensation and market practices with respect to director compensation. The Cook firm reports directly to the Chairman of the Compensation and Management Resources
Committee and does not provide any services to AIG’s management.

The Board has determined, on the recommendation of the Nominating and Corporate Governance Committee, that all members of the Compensation and Management Resources Committee are independent under NYSE listing standards."

link to full 2008 proxy (the most recent proxy filed): http://www.ezodproxy.com/AIG/2008/Proxy2008/HTML2/default.htm
link to 2007 Annual report (the most recent filed): http://www.ezodproxy.com/AIG/2008/AR2007/HTML2/default.htm

Blog writer quoted in smartmoney.com on cash flow and company lay offs

2009-03-22T06:59:00.000-07:00

I was using my Linked-in account and checking out the questions in the "Business Analytics" a few weeks back and it lead to an interview with a reporter for Smartmoney; a Wall Street Journal Publication.
Here's the original question and my answer. A link to the Smartmoney.com article is below as well.

The Question:
What do businesses look at when deciding on the necessity and size of layoffs? Asked by Aleksandra Todorova 11 days ago in Staffing and Recruiting, Business Analytics

My public answer:

The three things that are looked (in various ways).
1. Cash Flow
2. Revenues (going forward)
3. Cost Structure

While businesses may do thorough studies of their cost structure vis-a-vis competitors and conduct market/economic analysis to forecast future growth; it is the rate at which "free cash" is being consumed that drives the timing and size of most lay-offs.

Unlike vendors and creditors, where terms can be negotiated and cash outlays deferred or slowed, payroll is an immediate weekly/bi-weekly drain on the cash needed to operate the business. Often loan covenants directly (revolving AR backed credit) and indirectly (term loans of all types) force a company to cut short-term costs in order to keep the loan out of technical default.

Short-term layoffs are almost always directly proportional to cash flow reductions. Permanent layoffs are often a blend of current cash flow and the estimated shortfall in near future revenue growth.

The staffing required to generate/produce current revenue is usually the most secure in a lay offs as are the people required for basic internal operations.

However, people recently hired of all types are most often let go as well as a percentage of people involved in future sales.

Another special category that is hit in a layoff are "troublesome" people whom a manager has tolerated. Given budget cutbacks, local managers often "clean" house and this is an area for potential HR/ legal problems.

Finally, companies may dump an entire plant, product line or outsource an inefficient/expensive internal function such as telemarketing.
end of my answer

This answer led to a request for an interview and then another follow-up and finally the smartmoney.com article published on March 17th, 2009. http://www.smartmoney.com/Personal-Finance/Employment/Are-Layoffs-Looming-at-Your-Company/?hpadref=1

The Mortgage Mess and Who is Responsible

2009-02-26T17:29:00.000-08:00

Sitting there behind the economic melt down and financial sector collapse is the sub-prime mortgage mess. Let me briefly lay out the chicken and egg scenario that was created over a decade and collapsed in the last 36 months.

Sub-prime mortgages were developed as a response to both demand and government policy. On the demand side there are both potential and existing homeowners and the housing/financing industry (developers, builder, Realtors, mortgage companies, lenders, lawyers, inspectors, etc.). On the social policy side there was a desire to have increased home ownership by non-traditional homeowners such as minorities, single-parent families and lower income households.

The key ingredient to the fluidity (relative ease) of obtaining mortgages in the US, is the ability to convert a mortgage (the actual legal obligation) into a mortgage-backed resalable financial product. Fannie Mae and Freddie Mac are the independent but federally backed institutions for doing this but private financial institutions do so as well. With this system in place a lender writes a mortgage, sells the future stream of income and receives back the assets needed to write another mortgage.

To achieve its social policy, the government implemented lowered standards for qualifying for a mortgage (in terms of income & creditworthiness) and allowed mortgages to be written at less than repayment value (sub-prime) for the first few years of the loan. They did this rather than merely providing direct assistance to the intended beneficiaries of the social policy.

When you hear sub-prime; remember that it means repayments at less than the cost of the bank borrowing the money. It facilitates a sale predicated on either, the increased equity in the home or the increased ability of the homeowner to repay being sufficient to make up the difference at a time in the future. Once in place, this became a self-perpetuating crap shoot.

Many people, not just the intended beneficiaries, bought homes they could not afford to repay because they bought the maximum they could finance rather than take responsibility for only buying what they could afford to pay back.

The industry knowingly built/sold more homes and wrote even more mortgages (through repetitive refinancing) to people whom they knew could NOT eventually repay the mortgage. (They knew this from their collective historical experience. Which is where the original rules came from to begin with.)

In the short term it worked because housing prices were artificially boosted by the increased demand, as demand was temporarily delinked from the ability to repay the mortgage. But eventually, as the mortgages themselves adjusted to actual repayment levels and the relative supply and demand of housing cooled to rebalanced the value of homes to the real rate of GDP growth, people began to default on these mortgages with no new equity to bail them out.

As the defaults grew, the house of cards built upon it began to collapse. Congress has oversight responsibility for both Fannie Mae and Freddie Mac as well banking in a broader sense and repeatedly denied the severity of the problem and refused to change the policies or practices which created the dynamic until the new housing industry began to collapse.

Who is responsible in order:
1) the authors of the legislation/regulations that lowered standards to achieve a social home ownership goal.
2) speculators who used the short-term "free" money created by the dynamic to churn the equity in real estate into a stream of cash for spending.
3) the industry which took short term transaction-based profits with full knowledge that the mortgage involved in the transaction was "at risk".
4) people who bought more home than they could afford hoping that it would work out somehow. 5) every oversight committee in government and industry corporate boards of directors for failure to exert proper governance in the face of greed, corruption, ideology or expediency.

and.... the house of cards extended into the broad economy due to the linkage of all sorts of financial products that were backed by either real estate equity or mortgage repayment.

Where did the money go:
1) some of the equity only existed on paper because real estate backed equity was first inflated and then deflated with the collapse of the real estate market.
2) some to people and companies that spent billion & billions of dollars of equity ratcheted out of real estate on consumption.
3) some to the industry and individuals who made money on specific transactions.

Capitalism at Risk?

2009-02-20T06:37:00.000-08:00

If you have listened to or watched Glenn Beck or Sean Hannity recently, you are aware that they are declaring the imminent death of capitalism in the United States. I am not sure of how much of what they are saying is based upon belief and how much is based upon their need to entertain or maintain attention but there is an important and subtle point that is not being touched upon.

Capitalism as an economic system works because it works. Essentially, it is the economic version of Natural Selection. An organization that produces a better product/service at a lower total cost has an advantage over those with inferior products/services and those with higher costs. The marketplace matches demand with supply by adjusting prices upward or downward until there is a transaction. Just as capitalism works independent of governments or beliefs, so does the marketplace.

We know from history that capitalism grew out of the city-states and merchants. The first corporations were formed to fund dutch trading expeditions. Although the land-based Royalty participated in these ventures or needed to be paid off through taxes, the development of capitalism occurred in spite of the power structure. In nations where public corporations created wealth, the royalty was either disposed of or relegated to ornamental status. Sometimes, for periods of time Socialist or Communist political movements have hijacked national economies. In the end, they have produced inefficiency, stagnation and shared misery. In the worst cases, they have used war and brutal repression to remain in power.

What has happened to capitalism in these circumstances? Has the marketplace disappeared?

Communism in mainland China in 1949, produced an economic giant in Taiwan twenty years down the road. Corporations simply move to more profitable (amenable) nations through relocation or more subtly through economic growth. The marketplace in a controlled economy simply moves as well either off-shore or underground. Has the "war on drugs" reduced the economic benefit accrued to drug dealers? Regardless of your position on drug policy, you can not deny the existence of a profitable "black" market functioning in spite of governmental efforts.

Capitalism is the most efficient economic system for creating wealth and the marketplace is the final judge. While we may agree to socialize certain services such as education because the services are going to be given away rather than sold, there should be no illusion that the marketplace will offer an alternative product if there is demand for it. When it comes to medical procedures, gambling-entertainment and education; people already cross borders to get the best product or best value. What will be the future traffic pattern?

The pragmatic consequences of this are that while the US economic output (Gross Domestic Product) is at risk and our typical standard of living is at risk,, capitalism is not at risk at all.

Stimulus Package Rammed Through

2009-02-15T07:35:00.001-08:00

The myth of bi-partisanship was run up the flag pole and brought down in tatters once again this week. I am concerned whenever the dominating political party rams something through Congress without debate and disclosure. There is no reason that the stimulus package could not have been chunked into three or four spending bills except political expediency.

I might point out that the Republicans behaved in a similar way during the early Bush years.

Whether you support any part of the economic stimulus package or not, the political process did not serve the best interests of the typical American household. As I've mentioned earlier, the fall bail-out (TARP1) was rushed through and tremendously inefficient (The government overpaid banks for assets.) and apparently ineffectual.

Every spending bill is subject to added on contamination due to political quid-pro-quos. The larger and quicker the process, the deeper and darker the shadows where this contamination hides. As sunlight exposes the depth and degree of spending that neither stimulates the economy nor benefits the typical American contained within this spending bill, I expect a strong negative reaction from the public.

I did not like the way the Bush administration pushed their pet projects through the media and Congress when the Republicans held the edge and so far this is more of the same old politics.

Wall Street Misunderstood: Governance Reform Needed

2009-02-12T05:36:00.000-08:00

You can tell that the corporate public relations consultants and experts have properly prepared the CEOs of the federally bailed out corporations to be apologetic and otherwise say all the right things in public and before Congress. These "hand-out bandits" know that CEO salaries and bonuses are now in the cross-hairs.

When executives get performance pay and bonuses without delivering, they are robbing the stockholders of the corporation and this represents malfeasance on the part of the corporation's board of directors.

I believe very few people understand that the primary beneficiary of the billions of dollars infused into these companies are the stockholders not the management. Directly and indirectly retirement and pension funds own the largest chunk of equity in corporate America. The executives in most cases are hired guns who own a tiny percentage of the companies stock. (Most of the exceptions are companies that are run by the person who founded the company.) Unfortunately, corporate boards are way too cozy with the executives and fail to truly protect the interest of the shareholders.

It is time to change the governance rules regarding the selection and independence of corporate boards. Pension funds like California Public Employees' Retirement System (CalPERS) have pushed for and developed models for better corporate governance.

When good governance is practiced by the board of directors of a corporation, our collective interests are protected. The real focus of protecting shareholder (and with the bail-out bandits the taxpayer) interests and the lever for reforming pay-for-performance at the executive level is true independence on the part of the board.

Watching Obama and thinking about the Economy

2009-02-09T17:37:00.000-08:00

President Obama is on TV right now talking about businesses that can not get loans to fund growth and operations at the moment. While government spending can stimulate the economy (or restrain it) only the private sector can create the jobs that add to the nation's productivity and increase the Gross Domestic Product.

I tend to believe that for the next 3-5 years, we are going to face a "Cash Driven" economy. The financial markets have been gutted (already reshaped but not yet restructured) and government bailouts are going be diminished as they lead to inflation in some way, shape or form.

Given these limitations, those enterprises and product/services that work well on a cash flow basis are at a distinct advantage to those that do not.

While laid-off workers struggle to maintain their households, the biggest hits in the current shakeout have been to individuals and institutions with invested "wealth". Whether those losses occurred in real estate, equity (stock) markets or the derivative financial products based upon those markets. We have to face the fact, that we have lost one-half of a generation worth of "wealth" in a six month period of time.

The initial roll-back in investing was to cash equivalents and better yielding bonds. The shift of this capital is what created the sucking sound as the floor repeatedly fell out of the market for real estate and stocks. The bond market can only support a modest amount growth before it becomes a diminishing returns game with supply already outstripping demand on the borrowing side.

By necessity money will move back into traditional equity investments. They are in the long-term the only places for large amounts of equity to be invested and generate inflation beating returns. However, reinvestment will require positive cash flow and will favor cash-positive real estate investments and dividend paying stock. Individuals and institutions cannot afford (in the short term) and will not accept (in the midterm) investments that do not return a real cash dividend.

Do not Repeat Overpaying in the new Bail Out

2009-02-06T07:26:00.000-08:00

Is anyone surprised that the taxpayers overpaid banks for stocks and assets under TARP? If you don't remember making those purchases they were made on our behalf by the secretary of the Treasury, Henry Paulson. The largest overpayment was made to insurance giant AIG, which was overpaid $25.2 billion, according to the economists at the Congressional Oversight Panel. I wonder if AIG will be required to pay gift tax to the IRS?

In the 1980s, the criticism was over $400 hammers purchased by the Department of Defense due to its policies and rules. (Practices which essentially made every purchase a custom-ordered and non-competitive situation in the face of rules which required the job to go to the lowest qualified bidder.)

Any purchase which is conducted with an ulterior motive to receiving a fair market value for what is purchased is subject to a skewed result. In a rushed purchase, the buyer is always at a disadvantage as the seller is intimately familiar with the asset to be sold.

In order to avoid repeating this process, the Obama administration must pay heed to the following:
1) Slow down the rate of purchases and the size of purchases.
2) Invest in common stock only and buy it on the open market to utilize the markets ability to flex up and down. (As the price appreciates slow down the purchases, the goal is not public ownership of private companies but market stability and liquidity.)

For loans, employ loan covenants that emulate private working capital loans. Covenants that require earnings to stay in the business rather than being doled out and compensation that is optimized through the long-term appreciation of the equity value of the company.

Lastly, fair deals are always done at arms-length and this may be the "Achilles heal" of any plan. The regulators and government agents in these deals have most often come from the companies, trade associations and institutions that they are dealing with and in the future will return to them as lobbyists or paid advisors. A strict ethics code, a required public release of potential conflict of interest information and strict limitations as to future "quid pro quos" by a 10 year ban on financial relationship/dealings with all related parties are needed.

A Taxing Start for the Obama Administration

2009-02-01T06:55:00.000-08:00

If you've been paying attention to the tax troubles of Obama appointees; Tom Daschle (withdrawn nominee for Secretary Health & Human Services), Timothy Geithner (confirmed Treasury Secretary) and Nancy Killefer (withdrawn candidate to be the first chief performance officer for the federal government) it might remind you of similar issues with Clinton and Bush appointees.

Anyone remember Linda Chavez, Zoe Baird or Kimba Wood?

The most striking thing that comes across to me is that these high-level public servants (both Democrats and Republicans) are used to receiving gifts, perks, bonuses, fees and that they often have maids, drivers and nannies.

They may have theories about the problems of the middle-class but very little recent experience living on a tight budget or having to forgo a vacation. Do any of these people worry about being laid-off or having to go deeper into debt to get through a tight spot.

I wonder if this is why so many initiatives are focused on quid pro quos to special interest groups and pork-barrel spending to influence the next election? Maybe this is why so little of either Economic Stimulus package (Bush or Obama) is going directly to the middle class.

I get the feeling that politicians play their games the same way my children play with Nintendo. They play to win at all costs. The games often leave everything in the environment in a shambles and all but the winner dead. They never are held accountable for the damage they cause in the game, they just go on to the next game and it starts all over again.

Investing in Businesses with Failed Models

2009-01-27T09:11:00.000-08:00

On his way out to his guitar lesson my 20 year old son informed me that the government should not be bailing out businesses with failed business models. I have no idea why he thought to say this to me or where he got his information from.

Does my 20 year-old know of John Maynard Keynes and his new popularity as the Obama administration now attempts to stimulate an economic recovery? Has he read Machiavelli's, The Prince, a primer for understanding that politics is at its essence the ability to take and spend other people's money?

What twisted webs will be woven as the "new" economic stimulus package is encumbered with political agendas. We are clearly seeing some of the natural down cycle of Capitalism as the marketplace punishes those who committed fraud, made poor business decisions and refused to change failing business models.

General Motors is a prime example here. By the mid-1980's, it was clear that they were losing market share to Toyota and Honda. Instead of complete and total restructuring and accepting that the playing field had forever changed, they talked "big" change and only made incremental improvements. By the way, that's about 25 years ... to change.

Instead of a competitive Hybrid built for a competitive cost, they have a job bank which rather than forcing laid-off workers to get new skills and move on with a productive life, actually paid many people $30 an hour to do "nothing". Instead of the best built and lowest cost pick-up truck, they outspent everyone on advertising and marketing their over-priced yet still barely profitable products. ("Like a Rock"....... in the proverbial pond; GM stock prices revisited the 1950s this past year.)

In an effort to reinvent Cadillac they came out with a couple of sporty models but that doesn't change the following critique; "If you see a young person in a Cadillac, please send them my condolences on the death of one of their grandparents."

I hope GM makes it. I used to own GM stock. But, it may just be too late. Government money buys them just a little bit more time to get it right. While the corporation deserves what the marketplace is handing it, I am sympathetic to the plight of individual workers and families who stand to suffer greatly if GM fails.

Guantanamo Bay 365 days and counting down

2009-01-25T07:25:00.000-08:00

Oh well, the detention camp for terrorists in Cuba will be closed within a year. Guantanamo Bay (Gitmo) had become the lightening rod for all those who disagreed with the Bush approach to the War on Terror and so it must go.

Obviously, the US does not need Gitmo to fight terrorism, as there are many ways to accomplish its primary objectives; keeping captured Al Queda and Taliban operatives isolated and out of the US civilian court system.

Careful examination would show that the Bush administration has essentially been trying to undo Gitmo for years but there are two main problems:
1) Finding a home for the prisoners we want to release but no nation wants to receive. Afghanistan under the Taliban had become a new Mecca for extremists. The detainees at GB hail from many nations. These nations do not want these extremists back.
2) Either executing or keeping in custody the relatively small number of Gitmo detainees who actually planned and participated in attacks upon the United States. Much of the information needed to convict these detainees was obtained through potentially "illegal" means.

The big change so far is that the Obama administration has put a time frame upon itself. In the end, if the two points made above are not fully addressed, we are likely to see a couple of smaller Gitmo like facilities created elsewhere in the world.

A New Era Begins or History Repeats Itself

2009-01-22T11:48:00.001-08:00

This week, after the ceremonies are over, the democrats will be in control of the White House & both branches of Congress for the first time in fourteen years.

Let us hope that they do a better job than the Republicans did with their chance during the 108th & 109th Congresses (2003-2007) and a also a better job than the Democrats did the last time they were in this position (103rd Congress 1993-1995).

I wish President Obama well. Other than the Economy and the War in Iraq, what will be the first five things that the Obama administration will take up? My suggestions for what they should take up will follow.

Follow-up note: Executive Orders are rolling in as we speak.
repeal of withholding support for international groups who provide abortions and the repeal of executive orders that encumber the organizing efforts of Unions

Welcome to Right of Center

2009-01-18T09:44:00.000-08:00

While I have voted in every Presidential election since 1976 and most statewide and local elections since then, I have never supported the platform of any political party. (I must admit that I was a registered Republican till 1988, although it would have been hard to tell by my voting record which has always been a mixed bag.) My candidates have lost more than they have won across the board. I have only voted for three winners in my nine votes for President.

My father was a history teacher and taught US History and an elective called Comparative Governments. I grew up reading and had access to a lot of books both at home and in the library. My mother used to take us to the library once a week to exchange books. My education was liberal arts but in the sciences, my BS is in Paper Science & Engineering. I worked for five years and then returned to graduate school, my MS is in Applied & Mathematical Statistics. This gives you an idea of how I scrutinize data.

I was raised Catholic, but would not be considered to be practicing. I believe in God but acknowledge it is strictly a matter of faith. I have studied, to various extents, all of the major religions and many spiritual practices. I read scripture as poetry not history or science. Scripture is full of deeper truth but not required to be factually accurate.

I believe that the Declaration of Independence and the Constitution of the United States were enlightened gifts from our forefathers. Although the ideas expressed in those documents was profound and transforming, the people and institutions that have followed have often been flawed. Welcome to my thoughts and on occasion research as I explore the center-right path.