What you can do for your country

Black Friday Shopping

This chart from BigResearch shows that less people are totally panicked about the economy (good) for this Black Friday, however the individuals are spending less (bad for the economy, good for the individuals).  Overall, this is actually a good sign.  This generally goes along with the idea that people are saving more than they ever have in the past (or perhaps, the lack of consumer credit is forcing them to spend less?).  Now if we can only get our government to have the same fiscal discipline..

What I want in our Next President #45 in 2012

As I dream about our next president, I have an outline of who I want.  I have been generally disappointed with our last 4 presidents.  Each has had positive qualities, but more negative then positive.  I would rather make a shopping list of what I want and see if someone can raise to the occasion to get my vote.  What do you have from your list of qualities?  I want a President.....

1. With real executive experience
2. Who has negotiated with legislators, but does not grovel like a legislator
3. Who has had to make decisions and take responsibility for the consequences
4. Who is a principled defender of constitutional government
5. Who recognizes public sector success depends on growth in the private sector
6. Who can say why he loves America, without a teleprompter
7. Who wants to kill terrorists rather than try them
8. Who sees their role in the international arena as the guardian of American interests
9. Who has real business experience
10. Who attracts a diverse set of the best talent, not zealots
11. Who listens to those that create jobs when thinking about job growth
12. Who listens to those that provide care when reforming health care
13. Who implements domestic reform that has proven success at a state level
14. Who does not refer to himself in every speech
15. Who says we, us, our instead of I and me
16. Who can control the special interests in their party
17. Who has a cabinet of people with private sector and public sector experience

Please leave your comments......

Dubai: What does it mean?

The big news over the Thanksgiving holiday was the "default" of Dubai.  Technically, it was a missed interest payment on $60 Billion debt of a fund ("World Fund" or something like that) which is supposed to be backstopped by the Dubai government.  This would be like Freddie Mac missing a bond payment after it has been explicitly backstopped by the US Government (which it should never have been).

So the question is what risk, if any, does this pose to the US taxpayers?  Is it possible that once again, the US taxpayers will be called upon to bail out the world bankers?

From:  http://harveyorgan.blogspot.com/2009/11/nov-2809-commentary.html

"I have been reporting now for over a year that Dubai and its flagship state owned real estate Dubai World was in deep trouble.  We reported on empty buildings and bridges leading to nowhere.

"There were reports on buildings abandoned and many expatriates leaving their cars at the airport never to return.The losses to the banking sector will be huge.  The citizens of the UK are now the proud owner of much real estate in Dubai courtesy of its ownership of Royal Bank of Scotland.It is rumoured that the credit default swap written on Dubai total around 600 billion dollars so this will again drive a nail through the heart of the banking industry.

"The big underwriters of this will be the insurers like AIG, and Ambac and  of course of favourite bank, JPMorgan. You will see a lot of cross contamination from this default in the days to come.I would also like to report that Dubai has little oil compared to its more conservative sister Abu Dhabi. Most of the oil in the United Emirates comes from Abu Dhabi."

Notice once again the role AIG, which is a funnel of funds directly from the US taxpayers to banking interests.  Who knows how this will play out, but we need to Audit the Federal Reserve and all funds being routed to US and non-US entities via AIG.

It's Beginning to Look a Lot More Riskless

Rick Santelli on Gold

US and China Meeting Half Way

The President Does Not See 9/11 as an Act of War

Attorney General Holder has announced that he intends to bring the 9/11 mastermind Khalid Sheikh Mohammed to trial in Federal Court in New York City.  AG Holder made this decision in part becasue he believes the 9/11 attacks were primarily against citizens, and therefore should be held in a federal court.

9/11 was an act of war by a non state actor, typically defined as terrorism.  The purpose of the attack was not to kill American citizens.  The attack was designed to weaken the United States ability to respond to the longer term efforts efforts by Osama bin Laden and Al-Qaeda to form a Caliphate in the Middle East.

Caliphate (from the Arabic خلافة or khilāfa) refers to the first form of government inspired by Islam. It was initially led by Muhammad's disciples as a continuation of the political authority the prophet established, known as the 'rashidun caliphates'. It represented the political unity of the Muslim Ummah, and was the world's first major welfare state.

Al-Qaeda and its affiliates are on a 50+ year journey, perhaps even longer if you follow Professor Bernard Lewis, to establish radical Islamic philosophy's into the world.  Their goal is to do this in the Middle East first, and then over decades (if not centuries) expand the reach of Islamic teachings and government through out the world.

Al-Qaeda believes that the West is weak.  They learned from Russia's invasion in Afghanistan, that a small force of warriors can take on a great army.  They believed that getting the United States to fight a battle in Afghanistan would result in a defeat of the Americans and power for Al-Qaeda.  Power that could be used for Osama bin Laden to drive the over throw of Saudi Arabia through Civil War.  Saudi Arabia is a teetering state.  The Royal family has been in power for too long.  Saudi Arabia is running out of oil.  My guess is that the secret Oil "Cheney meeting" in 2002 was really about Saudi's declining oil reserves, not some other collusion. Economic instability is a great basis for revolution.  Osama bin Laden sees Saudi as his target, not the United States.

Economic stability in the Middle East is a big concern.  The population in the Middle East is booming due significant reductions in infant mortality and elements of economic gain.  The problem however is there will be a lot of young adults in the 2018 time frame, without enough jobs.  So, if Saudi has less oil revenue and there are more young adults without jobs in 2018, the foundation of civil war in Saudi Arabia is set.

On 9/9/2001, Al-Qaeda killed the head of the Northern Alliance (Ahmad Shah Massoud ) in a decapitation maneuver.  Why would Al-Qaeda do this?  Because Al-Qaeda knew the United States would retaliate by invading Afghanistan.  A military strategy.  Killing Massoud would weaken a US counter attack.

Many have criticized the Bush Administration for not sending more troops and not being more aggressive in Afghanistan.  Beyond the fact that Afghanistan has never been effectively conquered (so why try), Al-Qaeda was positioning for a massive invasion of regular army troops from the US.  Instead, we attacked with Special Forces and other covert operations.  We attacked with these limited but highly effective forces to disrupt Al-Qaeda's strategy.

I personally believe that our invasion of Iraq was a counter maneuver to disrupt Al-Qaeda's further plan to cause revolution in Saudi Arabia, and Al-Qaeda's desire to begin the process of a Middle East revolution towards a Caliphate.  In the 2000-2002 time frame we moved military resources out of Saudi Arabia to Qatar.  Bringing down Iraq, eliminated Saddam Hussein as a resources for Al-Qaeda in a future step of the Caliphate strategy.  Near term it gives us a place to base forces to enter Saudi Arabia or any Gulf state that Al-Qaeda trys to drive to Civil war.  Iraq as a free state also opens up, over time, another mature oil economy in the Middle East that has an economic interest in stability.

Al-Qaeda, stalled in Afghanistan and blocked in Saudi Arabi due to Iraq, and the immense US force structure there, reset their strategy to weaken Pakistan and maybe get a Nuclear bomb.  It also gets them out of Afghanistan, which is a looser to begin with.

I am not sure what is going on with the current Afghanistan strategy.  It is unclear there is any reason to send troops there, other than its hard to let it fall into chaos.  It has little strategic benefit.  Obama was a fool to suggest it did.  Now he does not know how to unravel his position.

So, back to NYC.  The attack on 9/11 was a military strategy focused on weakening the United States.  Viewed over the arc of the last 8 years, it seems the strategy may be working.  Khalid Sheikh Mohammed is the key strategist is in that military attack.  For Holder to say 9/11 was primarily an attack on Citizens so KSM should be tried in a federal court, is to ignore:

• A frontal attack on the essence of our democracy
• 1000s of troops that have died
• Those that died in the pentagon
• The planned attack on the white house/congress
• The meaning of the Al-Qaeda threat in the long term

I guess we can try to hold a trial in Federal court for KSM.  Personally I think its stupid, difficult to pull off, and threatens key elements of secrecy.  In the broader sense, I can only hope Holder is doing this for some stupid political reason.  If he, and the administration, are doing this becasue they see 9/11 as a violation of federal law they are missing the bigger (very much bigger) picture.  Al-Qaeda, KSM, and the rest mean to limit the notion of democracy around the world.  They are making a direct attack on freedom and the stability of the Middle East.  Al-Qaeda made a military strike.  They did not break the law.  Holder and the President are acting either out of ignorance or political motivation.  Lets hope they understand the bigger picture because our democracy depends on it.

Jobs created or made up... Unprecedented level of transparency?

 
Stimulus job boost in state exaggerated, review finds
Errors, incomplete data, estimated positions go into federal report

Perpetual Majority Hidden as Health Care

By the time I was 30, I started to realize that when someone articulates an opposing view its best to assume they are right and I am wrong.  Introspection informs one argument.  So, I have been carefully listening to the Health care debate trying to understand how to cover more people, deal with pre-existing conditions, address rising costs, and assure Medicare does not go bankrupt.  I listened with the hope of addressing these issues while expanding innovation.

Despite the various erroneous statistics claiming deficiency in quality of care in our current system, the United States is the center of world wide health innovation.  Our market has created the new technologies that socialized program around the world use to deliver high quality care.  Our innovation  gives other nations a free ride. 

I hoped in the present debate over health care that we could fashion improvements in our system while protecting the innovation that has made it great.  I hoped that we could preserve our rights of choice, while expanding coverage.  I hoped that we could go beyond any other countries' success with a model that expands rather than constrains.  I listened between the noise of Right and Left to find real answers that could achieve wholehearted support across all demographics and political persuasions.

But alas, my deductive reasoning is taking over.  Having read many insightful articles on how to fix the health care problem and having read the bills before congress, I see no correlation.  For example:

• Health Savings Accounts (HSA) have reduced health care cost by 5%-15%, but they are essentially banned by the bill
• The core source of health care issues in the United States is poor preventive care, but there are few motivating provision for preventive care in the bill
• Innovation is a significant component of care to date but the bill increases taxes on companies that develop new technologies thus discouraging innovation
• Different people need different care but the bill implements new authorities that will regulate the scope of health care to limit variations
• The free market has rapidly reduced cost of elective procedures like lasix, but the bill attempts to reduce cost through unproven means like cost controls
• The bill says it will reduce costs but can only be afforded by increasing taxes on the rich by 5.4%

So, I am wondering how experts in the field of health care have views that differ so significantly from the bill in congress.  My conclusion is this is not a bill about health care. This is a bill about controlling 16% of the economy. 

It is interesting to note that the legislative branch was Republican dominated from 1861-1933.  Under the new Deal, and passage of Social Security (amongst other programs), Democrats laid ground work that gave them legislative power, reinforced with medicare and welfare under LBJ, through 1981.  Through a strong believe in the free market and freedom, Reagan laid the foundation to open markets and empower innovation.  Since then we have seen Republican legislative leadership for the almost the last 30 years, reformation of welfare and a range of other empowering steps that accelerated economic growth.

It appears that social programs help Democrats keep legislative control.  Overtime, as people get tired of government, eliminating social programs helps Republicans take legislative control.  So, if Pelosi is writing a health care bill that  does not fix health care, could She really be writing a bill to perpetuate a Democrat legislative majority?  What are the signs? 

• Increasing taxes on the rich who rarely vote democrat anyway
• Let young people remain covered under their parents
• Don't tax high value union health insurance programs
• Accept a narrow vote on a monumental piece of legislation

To add to my cynical view, add the notion of offering citizenship to illegal aliens.  If the Democrats can successfully pass the health care bill and then allow a large fraction of illegal aliens to become citizens, they lay the foundation for a democrat majority for the next 50-60 years.

I am reminded of some key passages of the Gettysburg address:

...our fathers brought forth on this continent a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal.....The brave men, living and dead, who struggled here, have consecrated it, far above our poor power to add or detract. The world will little note, nor long remember what we say here, but it can never forget what they did here. It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us—that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion—that we here highly resolve that these dead shall not have died in vain—that this nation, under God, shall have a new birth of freedom—and that government: of the people, by the people, for the people, shall not perish from the earth.

Gettysburg reminds me that the United States has achieved greatness through freedom and individual exceptionalism.  As Andrew Jackson said, "One man with courage makes a majority".  I interpret Lincoln to say that we need to respect the mission of individual excellence and to be "...dedicated here to the unfinished work..." of others, dedicating ourselves to "The great tasks remaining before us".

Lincoln professed that freedom and equality are a function of the individual's ability to rise above all else and contribute in exceptional ways.  Lincoln did not mean "All men are created equal" so take from the rich and give to the poor, or have government displace personal freedom.  Freedom is equally challenged by wiretaps as by government driven social programs.

The fundamental reality is there are more than enough ways to streamline health care without a giant government program (See "Layman's guide to Health Care").  The more important message is that Pelosi and gang are attacking the notion of our democracy by driving the health care bill.  They say they are well meaning, but their failure to incorporate market proven solutions like Health Savings Accounts tell otherwise.

If its the case that the underlying purpose of the bill is to perfect the Democratic majority,  it is beyond disgraceful.  Government intervention to save money does not work.  Government intervention to protect a majority does work.  As citizens we need to dig in deeper to understand what is really going on with this bill, demanding real reform that reduces cost and expands care using the free market.  If the bill just protects the majority, it is immoral and cynical.

Economic Death Panels: Time to halt the assult on productivity and innovation

It makes more sense to me that our troubles come from low interest rates. Everyone wants to blame Big Banks. Big Banks behaved badly. Government also behaved badly. But persistent low interest rates are like leaving money in the open to attracts thieves. There is culpability in the decision even if the thieves were wrong to do so.  The Wall Street Journal today had a good piece on an economist who made some important observations on low interest rates before the depression (The Man who Predicted the Depression)

 
The Man who Predicted the Depression
Ludwig von Mises explained how government-induced credit expansions led to imbalances in the economy.

Frankly, persistent low interest rates are like life support for an ailing patient.  If we are going to have death panels, it would be nice to have them right now - so the weak industries are displaced.  I know that Obama wants to end the boom bust nature of our economy, but it is the boom bust that keeps our economy vital.  If wants to be a tree hugger, he should learn from the environment.  Forest fires are healthy for ecological balance.

On top of low interest rates, it does not help that now the strategy is to tax and burden productivity to death:

• Higher taxes on wealthy - the folks that fund new business
• Increase taxes on capital gains - the funding source for start ups
• Taxes against business innovation - i.e. Health care tax on drug companies that are too successful
• Higher wage costs via changes in minimum wage - leading entrepreneurs to hold back on hiring new talent to protect profits for growth and new taxes
• New 5.4% taxes on adjusted gross income to pay for Health care
• Regulatory uncertainty slowing investment

Easy money and these kinds of taxes discourage innovation and productivity enhancing endeavors. The only way to pay for all the people in retirement is to increase output per unit worker of those still working.  As people retire, they will keep moving investments to income producing, rather than growth oriented, investment.  This means there will be even less investment in innovation. But, innovation is the only way to do achieve the gains required to balance the economy.

Health care and Cap and Trade work to constrain the economy.   I guess the bright spots will be Bad universals healthcare will discourage immigration and reduce the number of people needing care.  Declining economies will reduce industrial output and CO2.  So if you love the environment and hate immigrants this might be your time to be happy.

I however think its a sad state of affairs when our government and our people give up on the prosperity that made us great.