The Staton Jones Report

December 19, 2006

Smash the Market Place

(Post title is a punk music reference)

Despite the languishing middle class, Republicans love to talk about how great the economy is doing. Their proof? Well, look at the fabulous stock market! The market is only part of the economic picture, but since it's the only really rosy part, that's what we're supposed to focus on.

OK, now that we're all focusing on the thriving stock market... omygawd!!!! It's choking on regulation! Oh no, we've got to save it! Never fear, Henry Paulson (Treasury Secretary) is here! Paulson will get rid of all that regulation that's keeping the market down! Oh, did we mention how well the market is doing?

Former Labor Secretary Robert Reich has more here.

Posted by Winston Smith at 10:45 AM | Comments (0)

April 14, 2006

$70 a Barrel

It's an open secret that the Iraq war was about oil. The pro-war wingnuts argued prior to the Iraq war that it wasn't — it was about disarming the non-armed Iraqi Republic and halting the secret WMD programs they turned out not to have. Some will still claim that the war was about bringing peace and democracy to Iraq despite the current debate on whether or not Iraq is engaged in a civil war or almost engaged in a civil war. Throughout all this, they were always willing to issue furtive admissions that, "Cheap oil would be OK, too."

Now the argument that Iraq was not about cheap oil is that it has had the opposite effect: oil when up. A lot. To me, that is evidence that Iraq is about cheap oil, because every other supposed objective has failed in a similarly reversed manner.

Before we invaded Iraq, Iran had become a country we hated, but didn't hear a lot about. Now it's National Enemy #1, and we're talking about military action. Of course, it's also a major oil exporter, so once, again, our meddling in the oil-rich region is destabilizing the oil market and driving prices through the roof.

Heckuva a job, Bush.

Posted by Winston Smith at 05:18 PM | Comments (0)

March 15, 2006

Better Get a Shredder

Check out this story about a fellow who deliberately tried to create an identity theft credit card application and who ... well, read it for the punch line.

Card issuers will respond with a card to any application that comes back with any signs of life -- and they'll deal with fraud later. That's how the credit industry works.

A certain number of high-risk applications will turn out to be fraudulent, but many won't, the thinking goes. And the banks can afford to play those percentages. To them, identity theft is just a cost of doing business, another line item like paper and postage and electricity. If there's a person behind that hastily approved application who must deal with credit report black marks, well, so be it.

The mind-set appears entrenched. Cockerham said he got an anonymous e-mail in response to his blog from a credit card industry worker with a confession: His employer tells him to approve literally everything -- even applications that come in with the words "stop sending me these." The issuer figures the consumers might change their minds once they have their hands on the plastic, Cockerham relayed from the e-mail.

Don't think the ripped-up application scenario is far-fetched. While I was researching the book "Your Evil Twin: Behind the Identity Theft Epidemic," many police officers in the western half of the United States told me there is a tight connection between identity theft and methamphetamine addiction. Meth addicts, who can stay awake for 30 hours or more, have been known to obsessively stitch together shredded documents to commit crimes.

For years, I've been quoting experts who say banks don't do a very good job verifying credit card applications. They often don't even check to see if basic information like birthday or street address is correct.

So each of those 5 billion pre-approved applications that carpet bomb American consumers every year is an identity theft ticking time bomb. Cockerham drives this point home with a sledgehammer. An application stitched together with Scotch tape? With a cell phone listed under phone number, and a change-of-address request?

At a time when ID thieves are unrelenting, when thousands of consumers around the country are reporting thousands of dollars mysteriously missing from their bank accounts, withdrawn via the magic plastic from places like Russia and Canada -- this is no time for banks like Chase to approve credit card applications that have been taped together. What more proof is necessary that the system is broken?

And get a shredder. Better yet, I may just BBQ (in my gas grill) all my credit card apps from now on.

Posted by Steven at 11:26 PM | Comments (0)

January 27, 2006

The Sounds of Schadenfreüde

There's an IT workforce gap looming, according to eWeek magazine.

Now that students are avoiding IT studies like the plague, it's not only safe to study IT again, it's also the smart thing to do. That, at least, is according to one of the most eminent professors in the field of IT education, John Rockart of MIT.

"There is a drop in IT enrollments. We are not turning out enough people to meet the needs," said Rockart during a panel discussion titled "The Changing IT Workforce" at the recent Forrester Research Executive Strategy Forum in Boston. From the maximum point of the dot-com bubble, Washington State University's IT enrollment is down 60 percent; the University of Virginia's is down 50 percent, said Rockart.

Why are students blind to this golden opportunity? Two reasons, said Rockart: the dot-com bust and offshore outsourcing. But, Rockart countered, "less than 2 percent of IT jobs are outsourced, and IT salaries are actually terrific."

Forrester analyst Laurie Orlov said in the same discussion that not only are young people not entering the IT field, but older workers, laden with knowledge, are retiring. "Business is at risk. Workers are retiring and will leave unfilled openings. Old people with knowledge are leaving, and new people without knowledge are coming in," Orlov said.

Lisa Tondreau, a partner in IBM Business Consulting Services, said one step that can help plug the looming gap is to encourage baby boomers to stay in the work force rather than retire en masse. Companies should also put solid succession plans in place, she said.

But already, the problem is serious. "One utility company has 460 vacancies they can't fill. It's a business-risk issue," said panelist Connie Moore, also a Forrester analyst.

One seemingly obvious response would be to reopen the H-1B floodgates. But the panelists said that won't be enough. H-1Bs, after all, are intended to be temporary, and the looming gap appears to be ongoing.

How should academia respond to the looming shortfall? "A new curriculum is needed," said Rockart, "a business-technology curriculum." More project management is needed, along with systems analysis, systems design, architecture and security, he said.

I still think it's fiscal suicide to drop $40 - $100K on an IT degree in this world. The U.S. is not doing spit to retain IT talent, and would outsource 100% of it tomorrow if the Bush Administration had it's way with the industry. Unfortunately, that means military IT goes with it, and when nations send their defense industry offshore, they tend to lose the next major war.

In the meantime, it's nice to see some stability in the IT job market.

Posted by Steven at 02:25 PM | Comments (2)

September 28, 2005

Vindicated, At Last

Over two years ago, I dumped my VW Passat Wagon for a VW Golf TDI. I surrendered what little equity I had in the Passat because I was certain that Bush's war in Iraq would catapult energy costs, and the 40+ MPG fuel efficency of the Golf (plus the fact that biodeisel can be made from food wastes) meant that I would be driving my diesel car long after the dinoSUVs weren't. Eventually, the price of fuel alone would justify the purchase.

Weeks into the war, I was proven wrong. I watched in bafflement as the price of oil went down, down, DOWN. It made no sense, until the longer picture came into focus. $28/bbl. oil couldn't, didn't last. Now, it may be that there will be another near or even longer term reduction in fuel costs, but by now, another generation of Americans have felt the oil shock and reacted accordingly.

John Mathews of Universal Toyota in San Antonio has witnessed the day that auto industry executives in Detroit said would never come.

"We are seeing people who are driving $40,000 Suburbans trading them in on $15,000 Corollas," said Mathews, who manages a dealership in a state where big trucks and sport-utility vehicles rule the roads. "The last 30 days have been unlike anything I've ever seen in the automotive industry."

Toyota dealers in the D.C. area say they also are seeing an uptick in demand for the smaller vehicles. But the trend isn't as pronounced as in truck-dominated Texas where people who have been buying trucks for years are rushing to get out of them. "Most of the time you come in here and you might have 80 Corollas to choose from," said Dave Reynolds, general sales manager of Jack Taylor's Alexandria Toyota. "Now you come in and you have 20 to choose from."

While small car sales are helping to lift the Japanese automakers, Detroit's General Motors Corp. and Ford Motor Co. are sinking under the weight of large sport-utility vehicles, once the industry's cash cows. The two automakers have reported substantial slides in profits in their North American operations this year, and their bonds have junk status on Wall Street. The interest in small cars has caught the two automakers unprepared, said Dave Healy, an auto industry analyst at Burnham Securities Inc. in New York.

To hear Detroit say they were completely unprepared for this is astonishing. Certainly this scenario has been played out at the highest levels at GM, to admit otherwise is criminal neglect of a publically traded company. If I was a GM shareholder with a large portfolio, I'd be demanding these joker's heads. But they have been betting on Bush to keep oil's price down. And the fiasco in Iraq isn't going to work. We've been in there long enough to show that the oil infrastructure isn't going to come roaring back on line -- the Iraqis will not be paying for their reconstruction with oil dollars (or worse yet, oil euros).

So Detroit bet on the wrong horse, and the Japanese, forced by geography to import all their oil, have gone the hard road of developing better fuel economy. The rest of the world drives small cars, and while they have not abandoned America as a market, the Japanese don't make all their design choices based on the driving habits of suburbanites (the Honda "Ridgeline" not withstanding).

It's the second coming of the Small Car Revolution (the first happened in the mid-Seventies) and once again, the Big Three are not ready. The feds may not be able to bail them out this time ...

Posted by Steven at 10:44 AM | Comments (1)

August 07, 2005

Drivers Shunning Premium Fuels

Owners of high performance cars are shunning "premium" fuel to save a couple of dollars at the gas station. The spread in price is around twenty to thirty cents, which results in a few dollars difference at the gas pump, but it's enough for many owner's of performance cars to try the "cheap stuff".

Turns out it doesn't hurt the engine, thanks to twenty-five years of improvements in automobile engines and computers, but it does lower the high end power the engine can produce.

For some people, it's hitting the big five-oh that really hurts -- that is, dropping $50 on a tank of gas. For others, it's just that relentless upward creep in prices that gets their attention.

Whatever the trigger, drivers pulling up to the pump in vehicles that ostensibly require high-grade gas are wondering if they really need the more expensive fuel or whether it's okay just to fill it up with regular. As gas prices soar, car owners increasingly are going for the cheaper stuff -- no matter how fancy their wheels. And station owners and oil companies are seeing the impact: Sales of premium and mid-grade gasoline are tumbling.

It's an age-old response, industry experts say, for drivers to switch from pricey, higher-octane formulations of gas to cheaper alternatives whenever gasoline prices rise substantially. Now, with prices stuck stubbornly high, oil experts wonder whether high-grade gas will go the way of the Studebaker.

"I foresee no serious decline in prices anytime soon, so the question is, will consumers' buying habits change permanently if the higher prices stay as they are," said Daniel F. Gilligan, president of the Petroleum Marketers Association, which represents independent filling stations. "Will it be more difficult to attract consumers back to the higher-octane fuels? I don't know."

Automotive experts say using regular gas in most vehicles does no damage and makes no discernible difference in performance. Cars made in the past 15 years have such highly refined computer controls that the engine will adjust to the grade of octane in the gasoline, even in cars sold as requiring premium gasoline. Some drivers -- in some cars under some driving conditions -- may notice a drop in horsepower, but for most people behind the wheel, it wouldn't be enough to notice, the experts say.

"It's not going to hurt anything," said Peter Gregori, service manager for EuroMotorcars, a Mercedes-Benz dealer in Bethesda. In fact, Gregori has been using regular gas in one of his own Mercedes cars for two years, and "it's perfect," he said -- even though Mercedes-Benz says owners should use only premium.

All of this begs the question, why? Why buy the "premium gas" if it doesn't actually do better for the car owner? Have we been bamboozled all these years?

Posted by Steven at 12:34 PM | Comments (0)

July 28, 2005

Costco, the Anti-Walmart

The New York Times has a fascinating essay on Costco, calling it "the anti-Wal-Mart".

Read the essay here.

Combining high quality with stunningly low prices, the shirts appeal to upscale customers - and epitomize why some retail analysts say Mr. Sinegal just might be America's shrewdest merchant since Sam Walton.

But not everyone is happy with Costco's business strategy. Some Wall Street analysts assert that Mr. Sinegal is overly generous not only to Costco's customers but to its workers as well.

Costco's average pay, for example, is $17 an hour, 42 percent higher than its fiercest rival, Sam's Club. And Costco's health plan makes those at many other retailers look Scroogish. One analyst, Bill Dreher of Deutsche Bank, complained last year that at Costco "it's better to be an employee or a customer than a shareholder."

Mr. Sinegal begs to differ. He rejects Wall Street's assumption that to succeed in discount retailing, companies must pay poorly and skimp on benefits, or must ratchet up prices to meet Wall Street's profit demands.

Good wages and benefits are why Costco has extremely low rates of turnover and theft by employees, he said. And Costco's customers, who are more affluent than other warehouse store shoppers, stay loyal because they like that low prices do not come at the workers' expense. "This is not altruistic," he said. "This is good business."

He also dismisses calls to increase Costco's product markups. Mr. Sinegal, who has been in the retailing business for more than a half-century, said that heeding Wall Street's advice to raise some prices would bring Costco's downfall.

"When I started, Sears, Roebuck was the Costco of the country, but they allowed someone else to come in under them," he said. "We don't want to be one of the casualties. We don't want to turn around and say, 'We got so fancy we've raised our prices,' and all of a sudden a new competitor comes in and beats our prices."

Posted by Steven at 01:39 PM | Comments (0)

July 26, 2005

China Taking Science Lead From U.S.

This article details new findings with respect to China's enormous advantage in maturing and training scientists and engineers, and how this will impact the United States.

According to a working paper of the National Bureau of Economic Research, rapid development of a science and technology base by populous Asian countries soon may threaten the economic position of the United States. Not only is the U.S. losing ground in high technology exports, but its very capacity to develop new technologies is declining rapidly with respect to the rest of the world. According to Richard Freeman, the paper's author, the sheer population of Asian countries may allow them to train more scientists and engineers than the U.S. while devoting a smaller share of their economy to science and technology.

Are you sure you wanna teach Scripture over Science?

Posted by Steven at 04:03 PM | Comments (0)

July 03, 2005

Still More Jobless Recovery

The New York Times published a story about boom times in Silicon Valley -- profit boom that is. No one is actually hiring in this country, mind you, for high tech employment.

Things are looking up at Wyse Technology, a venerable maker of computer terminals. Unless, that is, you happen to want to work for the company here in Silicon Valley.

Responding to booming demand in Asia and in Europe, Wyse is adding new development teams in India and China and expanding its worldwide work force to about 380, from 260. Its profits are recorded here - but almost none of its new jobs.

Amid widespread signs of economic recovery in the region, Wyse is emblematic of its economy, in which demand, sales and profits are rising quickly while job growth continues to stagnate.

In the last three years, profits at the seven largest companies in Silicon Valley by market value have increased by an average of more than 500 percent while Santa Clara County employment has declined to 767,600, from 787,200. During the previous economic recovery, between 1995 and 1997, the county, which is the heart of Silicon Valley, added more than 82,800 jobs.

Changes in technology and business strategy are raising fundamental questions about the future of the valley, the nation's high technology heartland. In part, the change is driven by the very automation that Silicon Valley has largely made possible, allowing companies to create more value with fewer workers.

Some economists are wondering if a larger transformation is at work - accelerating a trend in which the region's big employers keep a brain trust of creative people and engineers here but hire workers for lower-level tasks elsewhere.

"What has changed is that Silicon Valley has continued to move up the value chain," said AnnaLee Saxenian, dean of the School of Information Management and Systems and professor of city and regional planning at the University of California, Berkeley. That has meant that just as low-skilled manufacturing jobs fled the region starting in the 1970's, now software jobs are also leaving.

This is the case even with the small telco firm I work with. We're owned by Norwegians but they use only a few American workers with high experience and farm out the actual coding work to Ukranian and Romanian and Indian coders. How can the United States sustain itself like this?

Posted by Steven at 11:22 AM | Comments (0)

May 30, 2005

Foreclosure Rates Increasing

The Washington Post reports that mortgage foreclosures are increasing dramatically in the U.S., and particularly in Texas and Florida.

Philadelphia, its suburbs and indeed much of Pennsylvania have experienced a foreclosure epidemic as low-income homeowners take on mortgage debt they cannot afford. In 2000, the Philadelphia sheriff auctioned 300 to 400 foreclosed properties a month; now he handles more than 1,000 a month. Allegheny County, which includes Pittsburgh, had record auctions of foreclosed homes, and officials speak of a "Depression-era" problem. The foreclosures fall particularly hard on black and Latino families.

For some American homeowners, the greatest housing boom in U.S. history has delivered riches. They repeatedly tap their homes for equity and use the cash to purchase granite countertops, a BMW, even a trip to the Super Bowl. But there's a dark side -- a sharp rise in foreclosures that is destroying the single greatest generator of personal wealth for most Americans.

Foreclosure rates rose in 47 states in March, according to Foreclosure.com, an online foreclosure listing service. The rates in Florida, Texas and Colorado are more than twice the national average. Even in New York City and Boston, where real estate markets are white-hot, foreclosures are rising in working-class neighborhoods.

As the housing market bubble collapses, all this debt, backed by nothing but inflated equity, will come crashing down around us and with the new GOP bankruptcy bill in place, no one will be able to escape the wave of disaster it will spread across the economy. It won't be a recession; it's a full-court depression waiting to happen. Buying a house today is insanity.

Posted by Steven at 04:36 PM | Comments (0)

May 28, 2005

Retirement Is For The Wealthy

Because they don't want anyone else enjoying it. Bad enough the GOP is trying to deep-six Social Security, using a concept ("plan"? hah!) that would load a few trillion to the national debt. Now the government is letting employers off the hook for pension plans (yay, more federal debt load), starting with United Airlines. What, the post-attacks handout these bozos got wasn't enough?

A bankruptcy judge in Chicago ruled Tuesday (May 11) that a federal agency can take over United Airlines' pension plans, allowing the carrier to walk away from nearly $10 billion in unfunded liabilities, the largest pension default in U.S. history.

It helps United clear one of the biggest financial hurdles in its 29-month effort to exit bankruptcy protection. The airline's pension funds are short $9.8 billion, but the Pension Benefit Guaranty Corp. will pick up only $6.6 billion of that, meaning current and former employees will lose more than $3 billion in retirement benefits.

My former employer would, on occasion, impose mandatory vacation usage over a quarter or two; this helped drain the vacation bank, which from the company's point of view is a huge liability. Not a terrible approach in general, though it could be a nuisance. Pfft; amateurs. United has now unloaded a $10 billion liability. Other major employers will sit up, take notice, and figure out how they can also exploit this. Olde-style pension plans are dying anyway -- I've never been near one -- but this will simply hasten the process. And whatever team of lawyers and executives at United managed to craft this plan, and get it through the courts, probably landed some huge bonuses for themselves.

Posted by at 11:54 PM | Comments (0)

Mortgage Madness

How do you lease a home but get to call it a "mortgage"? Get a interest only loan from your friendly neighborhood mortgage bubble bank.

More than a third of the mortgages written in the Washington area this year are a risky new kind of loan that lets borrowers pay back only the interest, delaying for years repayment of any loan principal. Economists warn that the new loans are essentially a gamble that home prices will continue to rise at a brisk pace, allowing the borrower to either sell the home at a profit or refinance before the principal payments come due.

The loans are attractive because their initial monthly payments are tantalizingly low -- about $1,367 a month for a $320,000 mortgage, compared with about $1,842 a month for a traditional 30-year, fixed-rate loan. If home prices fall, though, borrowers could lose big.

"It's a game of musical chairs," said Allen J. Fishbein, director of housing and credit policy at the Consumer Federation of America. "Somebody is going to have the chair pulled out from under them when they find prices have leveled out and they try to sell, only to find they can't sell for what they paid for it."

Mark Zandi, chief economist of Economy.com, said buyers are turning to interest-only loans because real estate has become so expensive -- but that real estate is becoming so expensive partially because of the use of these new products.

"It largely reflects the inability of families to afford a home with a plain-vanilla mortgage," Zandi said. "This is a way for people to get into what are extremely expensive homes."

He said it also reflects "increasing speculation" that is occurring in the real estate market, as investors pursue interest-only loans "because they need to devote less resources to servicing this debt."

This is such an obvious indicator of a housing price bubble, it should be a required warning on the mortgage application.

"Warning: the financial product you are using will cause irreparable harm to your credit rating and the financial stablity of our nation. Close cover before striking."

Housing is too expensive for people to afford to live near work, to the point where they have to borrow yet never make a dent in the principal of the mortgage. In effect, they are renting from Fannie Mae and other mortgage banks. That's not the business these institutions should be in, and the borrowing against these inflated values means the debt that is "paid off" from them isn't really paid off.

In other words, our pooch is screwed the minute there is a panic selloff. Expect it soon.

Posted by Steven at 12:01 AM | Comments (0)

May 18, 2005

Cry For Us Argentina

What happens when the right and left wing stop arguing about the economy and agree? No one pays any attention whatsoever. Bush is driving us deeper into debt and he's doing it faster than even Reagan. This is bad.

The timing could not have been more apt. On the eve of a titanic partisan clash in the Senate, eggheads of the left and right got together yesterday to warn both parties that they are ignoring the country's most pressing problem: that the United States is turning into Argentina.

Read more here.

Posted by Winston Smith at 11:41 AM | Comments (0)

Living In A Car Nation

America's love affair with the motor vehicle continues unabated. And, eventually, it will "progress" to unrequited. For all the resources put into making cars and trucks and such -- and to be certain, affordable personal transportation (powered by cheap energy) was one of the defining influences of the 20th century -- we sure do a miserable and wretched job of engineering the flow of traffic.

Sitting in traffic, an annoying part of life in many big cities, is becoming a major headache in places not usually lumped in with New York, Washington and Los Angeles.

Take Omaha, Neb. Each year, motorists in one of the country's most wide-open states spend the equivalent of nearly a full day in highway gridlock, according to the annual Urban Mobility Report released ... by the Texas Transportation Institute.

Omaha is among a growing list of metropolitan areas where drivers are delayed at least 20 hours a year. There are 51 such places now, compared to just five in 1982. Among some of the newer entries: Colorado Springs, Colo.; Virginia Beach, Va.; Charleston, S.C.; New Haven, Conn.; Raleigh-Durham, N.C.; Salt Lake City; and Cincinnati.

"That's where the growth is," said Tim Lomax, one of the report's co-authors. "The medium cities are about 10-15 years behind the big cities."

And 10-15 years is about how long it takes to complete transportation projects that reduce congestion, Lomax said.

I've lived in Austin for 15 years, and have watched the major thoroughfares grow in a futile attempt to meet traffic demand. Where once there was only one huge, flyover-style interchange, there are now four, with a fifth on the verge of opening (the one people have waited for the longest and with the greatest anticipation). The airport has moved, the economy boomed and busted, and traffic continues to increase. By the time many huge projects are finished (if ever), they'll be outdated; the major flow vectors will have changed. Traffic is like gas; it expands to fill the space available. Now the city council is proposing toll roads, including placing tolls on existing, paid-for roads, though that concept isn't getting much happy response.

We don't just need more and bigger roads; we need a national and cultural change in attitude, and better planning and traffic engineering.

The numbers, from 2003 data, reflect a long-established trend of people moving to the suburbs for more affordable housing and space. The report concluded that urban areas aren't adding enough roads, improving traffic operations or managing demand well enough to keep pace with the societal changes.

The result is clogged highways, and the king of that road nightmare is Los Angeles, where motorists are delayed an average of 93 hours a year. San Francisco was next with 72 hours, followed by Washington (69 hours), Atlanta (67 hours) and Houston (63 hours).

In the 85 urban areas studied, rush-hour drivers spent three times as much time stuck in traffic in 2003 — 47 hours — than they did in 1982, the study found.

...

Overall in 2003, there were 3.7 billion hours of travel delay and 2.3 billion gallons of wasted fuel for a total cost of more than $63 billion. Congestion delayed travelers 79 million more hours and wasted 69 million more gallons of fuel in 2003 than in 2002.

Lomax offered a gloomy forecast for relieving congestion: lots more money or a weak economy that takes people off the roads.

Yeah, how's that national energy policy working out for everyone?

Posted by at 08:40 AM | Comments (0)

May 16, 2005

Kevin Drum on Income Mobility

Kevin Drum summarizes the state of "moving up", and it's not good. I urge all to read The Washington Monthly's summary of upward mobility in America. Frankly, it's worse than I thought.

Ever since World War II, the United States has done a phenomenal job of sorting people by talent. Not a perfect job, but an astonishingly good one nonetheless. All four of my grandparents, for example, would almost certainly have gone to college if they had turned 18 in the 1960s, but that just wasn't in the cards for any of them a century ago. Today, though, as a matter of deliberate policy, the vast majority of people who have the talent to succeed in college get the chance to try. As a result, they moved upward into the middle and upper classes decades ago, and their children have followed them.

But there's only a moderate amount of sorting left to be done. Random chance, both in nature and nurture, will always play a role in life outcomes, but that role has gotten smaller and smaller as the sorting has progressed. The result is that life roles have become more hardened. While incomes of the well-off have skyrocketed over the past 30 years, working and middle class incomes have stagnated. At the same time, the incomes — and jobs — they do have are far more unstable than they were a few decades ago. And as recent research indicates, most of them are increasingly stuck in these grim circumstances: every decade, fewer and fewer of them — and fewer and fewer of their children — have any realistic chance of moving up the income ladder.

I fear for my kids, I really do.

Posted by Steven at 02:15 PM | Comments (0)

April 21, 2005

The Real Bush Social Security Agenda

Fill the tax cut hole with the Social Security surplus. John Snow spoke today at the Bond Market Association, and made comments that elude to a solution for the deficit caused by Bush's tax cut for the rich.

In remarks yesterday before the Bond Market Association -- one of the hardest partying groups on the street -- Treasury Secretary John Snow explicitly linked the administration's efforts to cut the deficit to the push to partially phase-out Social Security. The logic of that statement points to only one conclusion: the deficits the administration has run up with upper-income tax cuts will be reduced by benefit cuts in Social Security.

It's not about strengthening Social Security; it's about cleaning up the mess created by the president's tax cuts.

Those Bastards! They killed Social Security to pay for their tax cut!

Posted by Steven at 12:49 PM | Comments (0)

Rip Van Greenspan

Well, it looks like the old man has woken up from his stupor just as the house is becoming engulfed in flames:

Greenspan: U.S. deficits imperil economy

WASHINGTON - Bloated budget deficits pose a danger to the nation’s long-term economic health, Federal Reserve Chairman Alan Greenspan warned anew Thursday. He issued a fresh call to policy-makers to move swiftly to put the government’s fiscal house in order.

The obvious answer to this problem is to cut taxes! Wait a minute....wouldn't that actually make the problem worse?

Posted by at 12:20 PM | Comments (0)

April 16, 2005

Citibank Helps Customers With Offshore Banking

Sixteen Citibank employees helped customers move their money into offshore accounts... without their permission.

Several times a week, I receive scam email from some supposed Nigerian official appealing for my help moving millions of dollars out of his country. These offers can be fun to answer (this one is really good), but only an idiot would actually give their personal banking details to an unidentified stranger from a foreign land. Well, only an idiot or a Citibank customer.

In the latest episode of "why offshoring is an ill-conceived idea," sixteen phone-support workers in Pune, India, helped themselves to $350,000 worth of Citibank customers' money. These guys were stoopid amateurs and transferred the cash into their own accounts. Since they netted 20-30 times their annual salaries, you'd think that this would be a pretty attractive scam for other offshore phone operators to attempt. The question is, will they get caught?

This begs the question: why would domenstic call-center personnel be any less suspect? Simply put, most Americans, particularly the ones who get call-center jobs, can't name a foreign country, much less find one. Most likely, they would transfer the money to a U.S. account, leaving a paper-trail you could see from space. Had the Indian theives been a little smarter, they could have seen to it that the stolen funds vanished untracably into fog of corrupt foreign banking and law enforcement.

Posted by at 10:21 AM | Comments (0)

April 15, 2005

Wall Street Suffers Worst Day in Two Years

It's not a crash, it's more like the sound of air leaking out of our inflatable reality.

Details from AP Newswire.

I don't have much else to say except, I wish there had been a fair vote count in Ohio.

Posted by at 06:40 PM | Comments (1)

April 12, 2005

Disproving Lincoln

Just repeat until enough people agree, mainly to shut you up. For a party that proudly claims Lincoln as an icon (despite having nothing meaningful to do with that great man except the "Republican" label), they sure don't pay attention to his well-known (if usually slightly misquoted) aphorism, "You may fool all the people some of the time, you can even fool some of the people all of the time, but you cannot fool all of the people all the time." Karl Rove is the latest to try and disprove the conclusion, as he once again got out the message, this time to a business-oriented site. He doesn't add a damn thing to the discourse, naturally, but rehashing this stuff to the faithful is always good for filler.

Private accounts must be part of any permanent Social Security fix, said Karl Rove, President George W. Bush's deputy chief of staff, expressing optimism Congress will end a partisan standoff and pass such a measure this year.

Read the whole thing if you want, but nowhere does Rove detail why private accounts must be included. But, then, faith is built on belief, not evidence.

"The personal retirement account has to be part of the long- term solution,'' Rove, Bush's chief political and policy adviser, said in an interview in Washington yesterday. "The public and Congress are becoming aware that it's a serious problem.''

No, Karl, the public is being told it's a serious problem, and even the Social Security Administration is being co-opted into spewing the political spin. There's lots of ways in which SS can be tweaked to keep it going, but that's not what the GOP wants. They want it demolished. End. Of. Story.

Bush wants Congress to pass legislation allowing workers younger than 55 to invest in stocks and bonds as much as a third of the 12.4 percent tax they and their employers pay into the Social Security program. Bush and Republican congressional leaders acknowledge that it's politically impossible to pass sweeping legislation without some bipartisan support.

Remember that the GOP controls the Senate, the House, and the White House; they probably could do it, but SS remains the Third Rail of American politics, and 2006 isn't that far off. They only need some Dem support so they can use "bipartisan support" as a shield during the next two election cycles.

Almost all Democrats have rejected accounts created with a portion of Social Security funds. The only Democrat to back a personal account is Representative Allen Boyd, a Florida Democrat. And lately, congressional Republicans have indicated they're skittish about private accounts.

Democrats, under new leader Harry Reid, have been very solid on this issue, as they should be. Social Security is one of the most enduring crown jewels in the party's history, and the most popular (and cost-effective) government program ever. Any Dem who strays should be utterly, totally abandoned during his or her next primary season. That some Repugs (actually many, but remember that 82% of people polled thought the federal government should butt out of the Terri Schiavo matter meant the country was "divided", so spin-controlling is very much in fashion these days) don't want to get near this is indicative both of the Third Rail recognition and, to a lesser but still real degree, acknowledgement that the entire Bush concept (it's still not yet a plan) stinks to high heaven.

Some Republican leaders, including House Speaker Dennis Hastert of Illinois and Senate Finance Committee Chairman Charles Grassley of Iowa, also have sounded pessimistic about the prospects for Social Security overhaul this year. One bipartisan worry: Private accounts would add to the federal budget deficit, at least in the short term.

Let's run the popular figure again: this disastrous concept, if executed, would require an additional two trillion dollars, give or take a few, to realize. More proof that the GOP's claims to be the party of fiscal responsibility are purest bullshit. The government is at the point where billions are no big deal, but trillions -- yeah, that still commands attention.

Rove denied that Republican apprehension was any cause for serious concern. "This is a big issue,'' he said. "It's a big fundamental reform. It's vital to the country, and nothing ever comes easy.'' He pointed to initial reluctance in Congress to pass Bush's tax cuts, an education bill and a resolution authorizing the U.S. to invade Iraq.

Too funny, Karl. Aside from again dodging putting forth any rationale for the need to tank SS, the three examples he cites are pathetic. The tax cuts have yet to show any meaningful impact on stimulating the economy at large; the education bill (Every Child Left Behind) is federally unfunded and putting painful strain on state education programs; and Iraq -- well, really, Iraq has reached the point, rarified but possible in popular culture, that it resonates the full spectrum of a situation, part and parcel, neutral to bad to worst, with the barest mention of the word. "Iraq." Total, unconditional screwup.

(Lest anyone think I'm condemning the troops serving there, not so. My thoughts for them run directly to, and stop at, "come home safely". The authors of "Iraq" should hang, though.)

Rove suggested that a middle ground, preferred by Democratic Senators Ben Nelson of Nebraska, Kent Conrad of North Dakota and Ron Wyden of Oregon, that includes adding private accounts created with funds outside the Social Security program, isn't acceptable as a long-term solution.

Of course not. Nothing short of total capitulation to the Bush agenda is permitted. Kneel, dogs!

"We've already got add-ons; they're called IRAs and 401(k)s,'' Rove said. "What we face is, we need to do something for the working man who's living from paycheck to paycheck and doesn't have extra money to put aside for retirement. That's the person for whom a personal retirement account is most important and most vital.''

Then give these people some real fucking tax relief, Karl. You like tax cuts, don't you? The dribble they got in the 2001 and 2003 No Billionaire Left Behind cut-fest was negligible, and the increases in fuel costs (how's that domestic energy policy working out?) have long since eaten up any measurable gains.

Rove doesn't give a shit about these people, though. Not unless he somehow needs to scoop up their votes (in districts where Diebold machines aren't used) again sometime.

Bush has offered few limits on the scope of the debate, and lawmakers such as Graham who've advocated raising the $90,000 limit on income taxed to fund Social Security shouldn't be chided for such suggestions, Rove said.

Oh God yes, Bush wants a debate! He and his flunkies are out there, selling their 60 Complacent Crowds In 60 Days talking points, and finding no buyers. And the Dems (keep it up!) aren't countering; they're letting the GOP twist in the wind. Bush has not offered his "plan" yet, but he wants the Dems to counteroffer -- and they won't, because they don't need to. Bush doesn't want to frame this one, doesn't want to send the opening salvo, because it's a loser, and they know it, and cratering this top agenda item will likely cripple the rest of the adminstration's term. Bring it on.

"The president has said he's going to provide cover for anybody who want to discuss the issues and people have a right to discuss them,'' Rove said.

That's nice. Who cares? Who's still stupid enough to believe this? Bush likes nothing better than to make nice, then turn, stab, and twist the knife at the first opportunity. His word is worth its weight in vacuum.

I hope I outlive some of these wretched fractions of men just so I can piss on selected graves.

Still waiting for one, just one, example of a historical Karl-with-a-K whom is looked back upon with some measure of fondness from any significant portion of humanity.

Posted by at 11:01 PM | Comments (0)

April 02, 2005

Job Growth Heading

And while everyone was grieving Terri ... Turns out the economy is sputtering. Job growth is dropping like a rock, and inflation is looming (especially in the energy sector).

The nation's unemployment rate dipped slightly in March, the government said on Friday, but job creation was weaker than most analysts had expected.

The nation added about 110,000 jobs last month, about half the number that Wall Street analysts had predicted, and the unemployment rate declined to 5.2 percent from 5.4 percent in February.

The pace of job creation was much slower than in February, when the economy added 243,000 jobs, and it was the smallest increase in employment since last July.

Over all, the Labor Department report suggested a continuation of the unusually slow job recovery that has been under way over the last two years.

The markets initially rose Friday after reports of the unexpectedly weak job report, which was potentially good news for investors because it eased fears that inflationary pressures would force the Federal Reserve to raise interest rates more quickly in the months ahead. But stocks turned sharply lower after an increase in oil prices and a manufacturing report, which indicated high prices, fanned fears of inflation.

The nation lost about 2.7 million jobs during and after the recession of 2001, and employment has recovered in fits and starts in the last two years. About 3.1 million jobs have been added since May 2003, and the unemployment rate has declined from a high of 6.3 percent.

But wages have not kept up with inflation, suggesting that workers still have little bargaining power even as corporate profits have soared.

Hourly wages and average weekly earnings climbed 2.6 percent over the last year, while consumer prices climbed 3 percent.

The high price of oil will starve any recovery currently underway. It's as simple as that. And with the Fed (aka "Greenspan") raising rates again, we'll have stagflation before we know it.

Posted by Steven at 01:17 PM | Comments (1)

April 01, 2005

The New High Is A New Low

This is NOT an April's Fools joke. Hewlett-Packard gets a new CEO today, taking over from the justifiably-ousted Carly Fiorina, whose lasting legacy is the ill-advised and so far disastrous purchase of (and failed integration with) Compaq. The new guy, Mark Hurd, comes with a reputation for aggressive cost-cutting. Obviously, though, he doesn't wield his scythe on the executive floor; check out the golden handshake he's getting just for walking in the door.

According to the employment agreement, Hurd will receive cash, stock and perks worth at least $20 million for simply walking in the door at HP's Palo Alto, Calif., headquarters.

Paul Hodgson, senior analyst at the Corporate Library, a research organization, called Hurd's deal a prime example of the kind of "golden hello" package now commonly handed out by large public companies.

"This is exactly the same kind of contract they made for Carly when she started, and we saw what the result of that was," Hodgson said. "Hurd is getting so much up front that is absolutely unrelated to his performance."

Hurd's package includes a $2 million signing bonus, a $2.75 million cash "relocation allowance," 1.15 million stock options valued by the company at $6.9 million and 400,000 restricted HP shares worth about $8 million.

In addition to the relocation allowance, Hurd will also receive free housing for a year and a four-year "mortgage interest subsidy." There will also be "no limit on the weight of household goods" he chooses to ship to California, according to the agreement.

In addition, the contract calls for HP to reimburse Hurd for up to a 20 percent decline in the value of 850,184 shares he owns in the firm he is leaving behind, Dayton, Ohio-based NCR Corp.

In addition to the signing money, Hurd's contract calls for an annual salary of $1.4 million, an annual bonus of at least $2.8 million and as much as $8.4 million, and long-term incentive payments of between $4.2 million and $12.6 million per year. HP spokeswoman Monica Sarkar said the long-term incentive payments are not guaranteed.

In the employment agreement, HP said 450,000 of the stock options, valued at $2.7 million, and the 400,000 restricted shares were awarded "to make up for compensation forfeited from" Hurd's previous employer. HP spokeswoman Sarkar said the amounts were based on what Hurd was "leaving on the table" at NCR.

I don't really begrudge Hurd this jaw-dropping package; if his team was smart enough to negotiate this from the HP board, more power to them. But HP's board not only forked over this massive pile of loot fast on the heels of a similar deal to the previous, failed CEO, they did it with negligible accountability. Hurd gets all of this regardless of how HP does under his tenure. Yes, the stock options introduce some variability in how much he collects, but the total range goes from "large fortune" to "huge fortune" so the Hurd family will be in green clover no matter what.

I think the HP board is nuts, but let me provide more context. I used to work for a semiconductor consortium, of which HP was one member. The particular division in which I worked, advanced lithography, was of no apparent interest to HP; their representatives never showed up at regular strategic planning and review meetings. At last note HP was still a member of the consortium, and so apparently considered some of the technology transfer of the entire organization to be of value; but, HP only had one assignee in the consortium (whereas other member companies had a half-dozen or more), so clearly wasn't too concerned with wielding influence upon the directions of research.

One of the favorite activities of the member companies (not all of them, but some; I don't know where HP stood on this matter), well above my project manager station, was to demand that the annual dues be lowered. Broadly speaking, this is a reasonable request, but so very painful to the organization and limiting -- severely limiting, in many cases -- to the research. I won't talk numbers and I'm no longer privy to them anyway, but for a fraction of what new CEO Mark Hurd will be taking home, HP could increase its dues paid by a single-digit integer factor and not even blink. Hurd certainly wouldn't miss it.

HP, even crawling from Carly's wreckage, is still a heavyweight technology company, and could be pursuing interesting research and putting engineers and technologists into well-paying positions. Today, they decided to buy another reputed superstar CEO and dump a mountain of lucre into his pocket. From my little perspective, it's not a very sound proposition.

And what the hell kind of relo requires $2.75M? What is he going to be moving, a home museum? Of all the line items, that's the one that most strikes me as a purely-for-profit boondoggle.

Posted by at 09:05 AM | Comments (1)

March 24, 2005

It's Great To Be The King

You just cannot do wrong in the driver's seat. No smack-down for CEOs who screw up. Golden parachutes abound. Catch up on the benefits of CEO-dom in this Washington Post piece.

High-profile meltdowns aside, it still pays to be the boss.

Hewlett-Packard Co.'s Carly Fiorina, recently muscled out of her job over lackluster performance, walked away with an exit package worth $42 million. Boeing Co.'s Harry C. Stonecipher, pushed out over an affair with a female employee, nonetheless is eligible for retirement benefits of about $600,000 per year. Franklin D. Raines bowed out under heavy pressure in December following accounting problems at Fannie Mae. But the firm says he is now owed $114,393 per month in pension benefits.

At many other corporations untouched by scandal, pay continues to climb whether performance is great, lousy or middling.

"Even though the escalation of pay has often been justified as necessary, when you look at the details, that is not the case, because much of the pay is not all that sensitive to performance," said Harvard Law School professor Lucian A. Bebchuk, author of the new book "Pay Without Performance."

"Our view is that pay is much less connected to performance than investors commonly recognize," he said.

Between 1993 and 2002, total compensation paid by all public companies to their top five executives was $260 billion, according to a study by Bebchuk and Cornell University professor Yaniv Grinstein.

From 1993 to 1997, executive pay amounted to 6 percent of total corporate profit, the study said. That number increased to 10 percent of aggregate corporate profit from 1998 to 2002. At companies whose shares are part of the Standard and Poor's 500-stock index, average chief executive pay rose from $3.7 million in 1993 to $10.3 million in 2002, a hike of 178 percent, the study said.

Posted by Steven at 05:25 PM | Comments (0)

More and More Backscratching

Most. Corrupt. Administration. Ever. Shrub's burr-headed, burly bonehead from Oklahoma (a state regularly derided by Texas), Joe Allbaugh, has registered himself to lobby for ... wait for it ... KBR (the subsidiary of Halliburton that is ripping off the U.S. public in the Iraq War). Joe left Bush's White House after the election, and now can claim a contract renewal for his new (old?) masters in Halliburton.

You know, I wonder if the bunker Cheney hides in is just the basement of Halliburton in Dallas?

Joe Allbaugh, the Oklahoman known for his flat-top haircut and loyalty to President Bush, has a new client: Halliburton, the Houston-based company once led by Vice President Cheney.

Allbaugh, a close adviser to Bush during his Texas days, registered to lobby on behalf of Kellogg Brown & Root (KBR), Halliburton's construction and engineering subsidiary. Allbaugh's wife and partner at the Allbaugh Company, Diane Allbaugh, is also listed on the registration, which was filed last week with the Senate Office of Public Records.

In a statement, a spokeswoman for Halliburton said Allbaugh had not been commissioned to do any direct lobbying.

"KBR hired Joe Allbaugh as a consultant to provide strategy support for our Government and Infrastructure business," the statement read. "Mr. Allbaugh has not been tasked with any lobbying responsibilities."

But Allbaugh's lobbying disclosure form says the company will "educate the congressional and executive branch on defense, disaster relief and homeland security issues."

A spokesperson for the Allbaugh Co. said Allbaugh was traveling on vacation. The spokesperson said the firm was tapped to advise KBR solely on homeland security issues.

Allbaugh's close ties to the White House give him contacts throughout the administration, Congress and the private sector. As director of the Federal Emergency Management Agency (FEMA) during the first two years of the Bush administration, Allbaugh was charged with overseeing the federal government's disaster preparedness and relief programs.

This administration is the most corrupt in American history.

Posted by Steven at 10:41 AM | Comments (0)

March 15, 2005

Finally, A Head On A Stick!

When will it be Enron's turn? One of the events that spurred Mr. Jones and Mr. Staton to start this blog was the financial meltdowns of 2000. Mr. Jones coined the phrase "Heads on Sticks" Corporation, to denote all the Enron wannabes.

Today, Bernie Ebbers takes his well deserved place on a stick after being found guilty of fraud. He lead WorldCom down the planet's largest bankruptcy, ever, in case you don't recall.

Former Worldcom chief executive Bernie Ebbers has been convicted of conspiracy and fraud in connection with the 2002 collapse of the telecoms giant.

Mr Ebbers, 63, who is to appeal against the verdict, was also found guilty of seven counts of filing false documents.

Shareholders lost about $180bn (£94bn) in Worldcom's collapse - the largest bankruptcy in US history - and 20,000 workers lost their jobs.

Mr Ebbers could face up to 85 years in prison when he is sentenced on 13 June.

Worldcom emerged from bankruptcy last year and is now known as MCI.

Now if only the conviction would stick after appeals ... Ebbers will be somebody's beotch before you can say "Thanks for using Heads on Sticks Telecom!"

Posted by Steven at 03:19 PM | Comments (0)

March 12, 2005

Trade Gap?

I see no trade gap here. More like trade Grand Canyon. Once again, America shot it's wad with overseas trading, hitting another record month, at nearly 60B$US. Way to go, team!

America's appetite for foreign imports broke all records in January, reaching $159.1 billion and contributing to a monthly trade deficit that is the second highest on record. The $58.3 billion trade deficit defied predictions that a weakened dollar and lower oil prices would narrow the United States' trade gap. Advertisement

Instead, the Commerce Department said on Friday that American consumers continued to buy foreign-made goods at an avid pace, raising the trade deficit 4.5 percent from $55.7 billion in December. January's trade figures included a 75 percent surge in Chinese textile and apparel shipments, reflecting the end to global quotas and the beginning of what some experts see as a future of China supplying as much as 70 percent of the United States textile and apparel market.

The Bush administration said on Friday that the latest trade figures should be seen as testimony to the strength of the American economy and its role as an engine of global growth.

"We view these figures as an affirmation that we're growing faster than our trading partners by as much as 2 percent, and we need them to take steps so they can grow and buy our products," Rob Nichols, the spokesman for Treasury Secretary John W. Snow, said in an interview.

And Bush, obviously, has no fucking idea how damaging this trade gap is, let alone the deficit and debt load it enhances. Could chimpanzees on LSD do worse?

Posted by Steven at 12:12 PM | Comments (0)

March 10, 2005

Wal-Mart Uses "Nuclear Option"

Mutual assured destruction, anyone? Wal-Mart Canada has closed a Quebecouis store rather than accept it's unionization. Clearly, this shows anti-Wal-Mart groups how to kill Wal-Mart: unionize your local store.

But Wal-Mart's announcement in February that it could no longer do business here because of skimpy store revenue and escalating union demands is having a much broader impact across Canada and even south of the border. The closing - the first of a Wal-Mart in Canada - is a strategic retreat for the retailer in its war with organized labor.

Since August 2004, when this store became the only unionized Wal-Mart in North America, Jonquière has become a rallying cry for retail union organizers who want to stop an erosion of membership in the grocery industry in both Canada and the United States.

At least three other Wal-Mart outlets in Quebec have received bomb threats since the Jonquière closing announcement, forcing evacuations and losses in sales. Bernard Landry, the leader of the separatist Parti Québécois and a former premier of the province, has announced that he is boycotting the chain. A Quebec television broadcaster compared Wal-Mart to Nazism, but later apologized.

What they failed to mention was that the apology was to the Nationalist Socialists. Being compared to Wal-Mart must have stung!

Posted by Steven at 01:15 PM | Comments (0)

March 08, 2005

Default on the Social Security Trust Fund?

From What We Now Know on 3-7-2005:

Summary: rumors have it the Bush Administration is considering defaulting on the Social Security Trust Fund. This could start an avalanche of T-bill selloffs that could trigger a currency crisis, and a world recession.

In the past, SSA actuaries have conservatively used the intermediate projections, even though they have almost always proven overly cautious (the optimistic has been closer to reality, while the worst case has been hugely pessimistic). Under the intermediate scenario, the Fund is projected to be fully depleted in 2042, though last summer the Congressional Budget Office pushed that back to 2052. Many economists from both sides of the aisle consider even that to be excessively gloomy, since it's based on projected annual economic growth of 1.8% through 2080, about half the growth rate the country has averaged since the Civil War. Ramp it up and the shortfalls go away.

It would be wise at this juncture to step back for a moment, and remind ourselves that Social Security's woes are just part of a much wider and more serious dilemma. The core problem is that government has been living beyond its means for decades, ever since Lyndon B. Johnson decided to wage a war for which he was unwilling to ask the American people to pay. There is a whole generation, if not two, that believes deficit spending is the normal way of life; that, as Vice President Cheney famously put it, "deficits don't matter."

Since LBJ, the government has ballooned the federal debt from almost nothing to over $7 trillion; a virtually inconceivable amount of money, and there isn't the slightest of plans in Washington for how we're going to pay it off (if that's even possible). In fact, it continues to increase on a daily basis. This is fiscal insanity. The only sure thing is that some day, there will come a reckoning. When it does, it won't be pretty, but that's a topic for another day.

Many believe that the unfunded liabilities projected for Social Security will be the straw that breaks the camel's back. (Though there are other equally or more viable candidates, such as Medicare.) Under SSA's intermediate scenario, the shortfall is estimated to be $3.7 trillion. The Bush Administration, using an infinite time frame rather than the 75-year standard, comes up with a figure of $10 trillion. Responding to the latter number, the American Academy of Actuaries wrote to SSA's trustees that infinite projections provide "little if any useful information about the program's long-range finances and indeed are likely to mislead any [non- expert] into believing that the program is in far worse financial condition than is actually indicated."

In other words, these are scare tactics. So, if we go with the lesser figure, what would it take to fix the system? Not much, as it turns out. As mentioned earlier, raising the cap on taxed earnings would do it. Or just adding a 1.9% surcharge to present tax rates would provide a sufficient cushion, much as was done in 1983, when surpluses were created in anticipation of the exact baby boomer problem we now face. Cutting benefits is another possibility. Under the intermediate scenario, the 2042 gap is about 30%. Scale back benefits by that much between now and then, and you get solvency.

There's no telling how it will all pan out, but one option that is being bandied about is for the Administration to default on the Treasuries held by SSA. Although the government hasn't defaulted on a bond throughout its entire history, the possibility is not as far-fetched as it might seem. Moody's Investor Services lent the idea credence when the head of its Risk Unit testified to the House Ways and Means Committee: "What we have concluded at Moody's is that almost every country will default on its pensions." Including the U.S.

Many people may think default is not such a terrible idea. After all, the government would merely be liquidating a debt that it owes itself, wouldn't it? Not exactly. For one thing, the Trust is a separate legal entity from which cash has been borrowed; default would set a dangerous precedent. And for another, those IOUs are markers for real money earned by real people, who allowed it to be taken from them in good faith and the belief that future workers would take responsibility for them. From this perspective, default would be of rather questionable morality.

Another issue is that the bonds in the Trust were bought with money raised by regressive taxes whose effect was felt more by low- and middle-income wage earners. Interest and redemption costs would be financed from general revenues, i.e. the broader income tax, which is more progressive (as are benefits). In the event of default, the government would revert to gathering revenue from its most regressive tax on present employees. For a detailed analysis of this aspect by the (liberal-leaning) Center for Economic and Policy Research, see www.cepr.net.

And then there's the ultimate horror. Default could lead to a drastic, more general loss of confidence in U.S. Treasuries, and it could spread worldwide. If the result was a universal run on bonds, we'd have an economic catastrophe worse than the Great Depression. Contemplating such an apocalyptic nightmare, we surely ought to ask whether the end could ever justify the means. If government officials are considering something as risky as default, we'd better be in a really terrible pickle. Or, to return to our original question, how critical is the crisis? Truthfully, not very. Despite all the Chicken Little talk of Social Security going "bankrupt" in 2042, the reality is far more tame.

Under the intermediate scenario, the only thing that will happen in 2042 is that the bonds will be gone, and all benefits will have to be paid out of current payroll taxes. That's hardly bankruptcy. The shortfall would be 27%, and if beneficiaries were receiving only 73% of what they'd been promised, their payments would still be above today's level, even after adjusting for inflation. Not so awful. Couple that with a knowledge of the relatively minor adjustments that would be necessary to achieve actual solvency 37 years down the road while preserving the present system, and an impartial observer might suspect that those calling for change most vigorously may have an agenda beyond--and more important to them than-- averting "disaster."

Posted by Steven at 01:36 PM | Comments (1)

Oil Prices Drop!

To a little over $53 a barrel. D'oh! E-Commerce Times ran the story here.

Posted by at 12:21 PM | Comments (1)

March 06, 2005

The Rich Are Different

For one thing, they have all the money. Ever had to pay a fine? Well, you don't if you're wealthy enough.

White-collar criminals routinely avoid hundreds of millions of dollars in court-ordered restitution by schemes such as transferring assets to relatives, a Government Accountability Office study said Thursday.

The GAO studied five unidentified federal cases in which executives and business owners found guilty of fraud were ordered to pay a total of $568 million to investors and shareholders. Only about $40 million, or 7% of what was owed, was ever collected, the study found.

The report follows a GAO study last year that said uncollected fines and restitution in federal criminal cases more than quadrupled in six years, from $6 billion in September 1996 to about $25 billion by September 2002.

The rise appeared to be driven at least in part by a 1996 law that significantly increased the amount of restitution that courts were required to order for those convicted of fraud, violent felonies or tampering with consumer products.

"Being tough on crime doesn't mean very much if we aren't serious about enforcing court-ordered fines and restitution," said Sen. Byron Dorgan (D-ND), who had asked GAO to study the issue. "We simply must do better."

Corporate perfidy knows no bounds. Except those imposed by regulations. Pity nearly all of them have been repealed.

Posted by at 01:11 PM | Comments (0)

March 02, 2005

Bush Mind-Altering Drugs No Longer Working on Greenspan

Like, woah, dude. That's a freaking huge deficit! The New York Times reports that Alan Greenspan, who recently endorsed two Bush tax cuts, has now come to his senses and no longer can endorse deficits ueber alles.

Alan Greenspan, the Federal Reserve chairman, warned today that federal budget deficits are "unsustainable" and urged Congress to consider both spending cuts and tax increases as possible solutions.

In his gloomiest assessment yet about the government's budget outlook, Mr. Greenspan warned that annual shortfalls were "unlikely to improve substantially in the coming years unless major deficit-reducing actions are taken."

The Fed chairman emphasized that his strong preference was to reduce the deficit through spending cuts rather than tax increases. But he insisted that Congress needed to offset the costs of making Mr. Bush's tax cuts permanent.

"Addressing the government's own imbalances will require scrutiny of both spending and taxes," Mr. Greenspan told members of the House Budget Committee.

Though the Fed chairman has made similar pleas in the past, he spoke more urgently today and disagreed more adamantly with Republican lawmakers and President Bush who have steadfastly refused to put restrictions on new tax cuts.

"When you begin to do the arithmetic of what the rising debt level implied by the deficits tells you, and you add interest costs to that ever-rising debt, at ever-higher interest rates, the system becomes fiscally destabilizing," Mr. Greenspan said.

"Unless we do something to ameliorate it in a very significant manner, we will be in a state of stagnation."

Ok, so maybe, just maybe, Greenspan's Libertarian card is being threatened with shredding by his buds at the Cato Instutute. Or maybe Ayn Rand is communicating with him from the beyond through obscure messages on his RIM. Or maybe, just maybe, the Bush koolaid™ isn't strong enough to knock him stupid before Senate hearings.

In any case, this is starting to sound like the ole reliable Alan, who hates taxes but who hates deficits more. And he is a major player in the deficit disaster that The Staton Jones Report is convinced that Karl Rove cooked up to maintain control. He gave is Papal blessing to both Bush Tax Cuts and so is as much to blame for this cluster fuck as anyone else. His legacy is at stake here, and he's trying to salvage it.

Oh, and maybe he actually gives a damn about the future of this once great nation.

Posted by Steven at 07:09 PM | Comments (0)

March 01, 2005

Even the Endebted Rich Get To Feather Their Nests

Looks like you can take it with you, afterall. The New York Times has a story about how the rich are favored in new bankruptcy legislation that puts the screws to the middle class, but which allows the rich to hang on to most of their assets.

The bankruptcy legislation being debated by the Senate is intended to make it harder for people to walk away from their credit card and other debts. But legal specialists say the proposed law leaves open an increasingly popular loophole that lets wealthy people protect substantial assets from creditors even after filing for bankruptcy.

The loophole involves the use of so-called asset protection trusts. For years, wealthy people looking to keep their money out of the reach of domestic creditors have set up these trusts offshore. But since 1997, lawmakers in five states - Alaska, Delaware, Nevada, Rhode Island and Utah - have passed legislation exempting assets held domestically in such trusts from the federal bankruptcy code. People who want to establish trusts do not have to reside the five states; they need only set their trust up through an institution in one of them.

"If the bankruptcy legislation currently being rushed through the Senate gets enacted, debtors won't need to buy houses in Florida or Texas to keep their millions," said Elena Marty-Nelson, a law professor at Nova Southeastern University in Fort Lauderdale, Fla., referring to generous homestead exemptions in those states. "The millionaire's loophole that is the result of these trusts needs to be closed."

Yesterday in Washington, Republicans in the Senate beat back the first in a series of Democratic amendments aimed at softening the effects of the bankruptcy bill on military personnel, and the majority leader of the House vowed to get quick approval of the bill if the Senate did not significantly alter it.

"We will grab hold of it just like we did class action if it is a good and clean bankruptcy reform bill," said Representative Tom DeLay, a Texas Republican, referring to the quick action the House took last month on a measure limiting class-action lawsuits.

They are screwing you, America. When will you wake up and see this? They're piling debt upon debt, and changing the legal system so that you will have to pay it off yourself while the rich and ultra-rich feast on the flesh of your children. Do the math.

Posted by Steven at 11:43 PM | Comments (0)

All That You Buy, Beg, Borrow, Or Steal

Drowned in a bathtub of debt by the GOP. This is a long read... but a powerful, compelling, and impressively fearsome one. Do read it. It's a bigger Master Plan than expected. And it puts paid to the enduring bullshit that the GOP is the party of "fiscal responsibility" (snicker).

Rove knows that to force the reactionary order, Bush must borrow. He must place a millstone around the necks of the next generation of government, and then make it so that to make those payments, the Republicans must be in charge. If the Democrats take the presidency by accident, the Republican Congress will merely stop doing the behind the scenes financial juggling - of budget borrowing, shuffling of money between accounts, raising the debt ceiling, passing huge unfunded mandates - that keep the economy alive. There will, in such a case, be a massive recession, and the Republicans will take power again. The government will become a massive protection racket, with the public held hostage.

It was originally thought in Republican circles that the war on terrorism would be enough - that the invasion of Iraq and the GWOT would provide a powerful enough mandate for government that a new meaning, a police state meaning, would be established. "Everything is different now". How many people do you know have 911 on the brain. Very few, and most of them are like Spouting Thomas - people who think they are liberals but want to be friends with the conservatives.

With the failure of Iraq to produce the flood of oil that would have been the chain around every future Democrat's neck - a fact implicitly recognized by Kerry's repeated assertions that he would do the job in Iraq - it is absolutely essential for the Republicans to create a bigger, nastier, weight. The revenue reductions of 2001 don't do it, because there is no reason they can't be repealed, they are creating next to no economic activity.

Think about it, the government is borrowing more than a million dollars a minute - in order to produce hiring growth which is just keeping even with population growth. It's the Red Queen's Race. The Republicans are now building bridges to Europe, because it is Europe that will allow them to keep this up for a little while longer. And European leaders will be the biggest fools on the planet if they think that going along with Bush ends anywhere but their own ruin. The US played patsy to Europe in the 1920's - lending to fill the hole that Versailles and a foolish attempt at restoring the gold standard left. It meant the US was dragged down with Europe when the collapse finally hit.

The basis of Rove's Republic will be the massive debt, which can only be financed by back door agreements with Japan, China, Europe and Saudi Arabia. Since the money system won't actually work - merely present the illusion of working, as the real market will be what parts of America's future is being sold off this year in order to keep the money flowing from abroad.

We cannot give them enough rope in hopes that they'll hang themselves. We need to tie the knot. Whatever it takes to nail these bastards -- the human torture charges, the PropaGannon scandal, an actual exorcism to drive out the demonic beings whom are currently occupying the West Wing and the Cabinet -- it must needs be done.

These monsters are working to destroy the United States Of America and the next three generations of citizens and bring back a feudal system. There are fair ways and expedient ways to deal with them. I'm not sure I'd rule out anything. They haven't.

Posted by at 01:20 PM | Comments (0)

February 28, 2005

Homeland Security Depot?

Who could forget that reassuring feeling we all got when Homeland Security Spokesbot, Tom Ridge, advised America to stock up on duct tape and plastic sheeting? Certainly not one of America's pre-eminent places to buy duct tape and plastic sheeting!

Last Thurday, February 24th, Home Depot announced that former punchline Tom Ridge, will be joining their board of directors. I couldn't make this up.

So run out and buy some drywall to stop terrorism. Home Depot shares dropped 13 cents on the news.

Whoohoo! Post 500! 500 more posts and we get a free pup-tent!

Posted by at 12:23 PM | Comments (0)

February 22, 2005

Dollar Sagging

The incredible sinking currency. The dollar is sagging against world currencies. World banks are threatening to lower their dollar reserves in the coming weeks, futher eroding the dollar's value against the yen and euro.

The US dollar has dropped against major currencies on concerns that central banks may cut the amount of dollars they hold in their foreign reserves.

Comments by South Korea's central bank at the end of last week have sparked the recent round of dollar declines.

South Korea, which has about $200bn in foreign reserves, said it plans instead to boost holdings of currencies such as the Australian and Canadian dollar.

Analysts reckon that other nations may follow suit and now ditch the dollar.

At 1930 GMT, one euro was worth $1.325, up 1.46% on the day.

The British pound had added 0.76% to reach $1.91, while the dollar had fallen by 1.25% against the Japanese yen to trade at 104.2 yen.

Posted by Steven at 03:02 PM | Comments (0)

Consumer Confidence Slips in February

The Bush Administration is constantly announcing that "we've turned" a corner — and that's usually a cue to cover your ass. Although the economy is showing some marginal improvement, the rank and file in America don't seem to be drinking the cool-aid.

E-Commerce Times posted this cheerful AP Newswire story about a recent independent study.

Even with their worsening expectations about business conditions, consumers' views on labor conditions improved slightly in February. Those saying that jobs were hard to get fell to 22.6 percent from 24.3 percent, while those saying jobs were plentiful was essentially unchanged at 20.9 percent.

Go Bush!

Posted by at 12:38 PM | Comments (0)

Marriage Bought My Home

Money magazine reports that a Zurich economist team has calculated the benefit of marriage: $100,000. Hey, that's what I paid for my house! I tend to agree with the conservative analysis ... marriage provides "basic insurance against adverse life events and allows gains from economies of scale and specialization within the family".

Turns out the old song is right: If you want to be happy for the rest of your life, make an ugly woman your wife. Gorgeous women work too, as do (on the other side of the aisle) husbands of varying aesthetic quality.

Yep, while most of us devote much of our waking lives to careers we may or may not love, the true secret to a wonderful life may be as close as that ring on your finger. Wedded bliss (or a rough approximation of it) is a much better predictor of happiness than cold, hard cash.

The moral: Find that special someone, and then hang on for dear life.

Who can we thank for this insight? The unromantic souls populating the economics departments of the world.

An ever-growing body of research shows that most of us adapt quickly to improvements in our finances; we simply learn to covet a higher class of goods. But the happiness-inducing qualities of a solid marriage last and last. Granted, economists don't quite understand why this is, and the explanations they offer aren't exactly eloquent.

According to a paper by two University of Zurich economists, getting hitched provides "basic insurance against adverse life events and allows gains from economies of scale and specialization within the family." (Try putting this sort of thing on a valentine: "Dearest Wife, I treasure the opportunities you've given me to maximize my utility.")

How much money would it take to make you as happy as a married couple in love? No one can offer a precise number, of course, but that hasn't stopped economists David Blanchflower and Andrew Oswald from trying.

They figure a happy marriage is worth $100,000 a year.

But no matter how much you love money, it won't ever love you back. A survey by economists Ed Diener and Shigehiro Oishi reveals that those who place high importance on money are far more likely to be unsatisfied with their lives than those who love love. (While there's evidence that married people are happier because happier people marry more, marriage increases happiness even for the grumpy. The jury's still out on whether unwedded couples get the same benefits from lasting love.)

Now, love is messy, and love can be cruel (for details, consult the oeuvre of Tammy Wynette). D-I-V-O-R-C-E instantly erases the benefits of marriage, and then some, leaving ex-spouses considerably less happy than not only their married friends but also those who never married in the first place.

In other words, a seemingly overpriced Valentine's Day bouquet may be a better long-term investment than anything a hot stock picker can come up with.

Now if only gays could experience this without terror or harrasment.

Posted by Steven at 10:52 AM | Comments (1)

February 15, 2005

When a Deficit Isn't a Crisis

From the Zen Koan Dept. of the GOP. Paul Glastris, blogging at The Washington Monthly points out yet another glaring hypocricy of the GOP.

Just a thought... Maybe a lot of people have made this point and I just missed it. Or maybe it's so obvious it doesn't need to be made. But...

In 2018, Social Security will begin paying out more money than it takes in. This is what Dennis Hastert calls the "crisis point." But the entire federal government is paying out more money than it takes in right now. Indeed this has been the case for four years, thanks in no small measure to GOP tax-and-spending policies. And it will continue to be the case indefinitely under the president's own supposedly-tough budget. Why is it that a modest deficit in Social Security that won't begin for almost a decade and a half requires immediate radical action, while a vastly greater overall federal deficit occurring right now doesn't?

Posted by Steven at 12:27 AM | Comments (1)

February 14, 2005

NY Times Editorial To Bush: Fix Deficit Now

Today's New York Times editorial takes a strong position on Bush's insane budget.

For all its talk of deficit reduction, President Bush's 2006 budget is a map of reckless economic policies and shows how they have backed the United States into a precarious position in the global financial markets.

Mr. Bush needs to convince foreign investors that he's serious about cutting the budget deficit. Here's why: Each day, the United States must borrow billions of dollars from abroad to finance its enormous budget and trade deficits. Without a steady stream of huge loans, the country would face rising interest rates, higher inflation, a dropping dollar and slower economic growth. The lenders want to see less of a gap between what the government collects in taxes and what it spends, because a lower budget deficit always eases a trade deficit. A lower trade deficit also implies a stronger dollar. And a stronger dollar would reassure foreign investors that dollar-based assets remain their best choice.

As it is, their belief is being sorely tested: in 2003, the European Central Bank lost $625 million to the weak dollar and reportedly stands to lose $1.3 billion for 2004. Japan's central bank, which has the world's largest foreign stash of dollars - some $715 billion - could lose an estimated $40 billion if the dollar weakened to around 95 yen, a level many analysts expect to see this year. No wonder that a week before Mr. Bush released his budget, Japan's finance minister said that Japan had to be careful in managing those dollar-filled foreign currency reserves.

It's not hard to see what brought the United States to this juncture. Mr. Bush's first-term tax cuts were too expensive and too skewed toward top earners to work as effective, self-correcting economic stimulus. Instead, predictably, they've driven the nation deep into the red. Having reduced tax revenue to a share of the economy not seen since 1959, the cuts are a huge factor in the swing from a budget surplus to a $412 billion deficit.

The administration also erred big in deciding to deal with the ballooning trade imbalance by letting the dollar slide. That might have been a winning gambit if it had been paired with a commitment to cut the deficit. Theoretically, a weakening dollar would have begun the process of easing the trade imbalance, while deficit reduction, which takes longer to bring about, would have addressed the gap in a more lasting way. Instead, Mr. Bush has unceasingly pursued deficit-financed tax cuts, even as the weak dollar has failed to fix the trade imbalance. The result is that the country's deficits - and borrowing needs - remain enormous even as dollar-based investments are becoming less attractive.

Lately, Mr. Bush has been talking the deficit reduction talk, but there's no sign that he is willing to walk the walk. In his 2006 budget, he pledges to slash spending, but largely in areas that would have only a small impact on the deficit and where cuts would be politically difficult, not to mention cruel, such as food stamps, veterans' medical care, child care and low-income housing. Meanwhile, he is pounding the table for more deficit-bloating measures - making his first-term tax cuts permanent, at a 10-year cost of as much as $2.1 trillion; putting into effect two high-income tax breaks that were enacted in 2001 but have been on hold, at a 10-year cost of $115 billion; and introducing new tax incentives to allow high earners to shift even more cash into tax shelters, at a cost that would ultimately work out to more than $30 billion a year when investors cashed in their accounts tax-free.

Oh, yes. Mr. Bush also wants to borrow some $4.5 trillion over two decades to privatize Social Security, which is a bad idea even without the borrowing and a horrendous one with it.

The global financial community won't be fooled. The dollar may have bouts of relative strength, as it has recently. But these are due largely to currency traders' focus on short-term advantages, like Federal Reserve interest-rate hikes, which are perceived as a positive for the dollar, or the appearance of profit-taking opportunities. Inevitably, the budget and trade deficits will reassert their drag on the dollar, and then on Washington's ability to comfortably borrow money from abroad.

Congress can avert this crisis-in-waiting by forcing Mr. Bush to be serious about deficit reduction. The first-term tax cuts should be allowed to lapse. Cuts that are not yet in effect should not be allowed to begin. And no new programs should be started that require megaborrowing. If the president doesn't see that he has more important tasks than cutting taxes for the rich and undermining Social Security, Congress should set him straight.

Posted by Steven at 02:42 PM | Comments (0)

February 10, 2005

Your RFID Thumbprint

You are what you wear. The BBC is running a story about consumer unawareness about RFID tags and the implications thereof. I have predicted that these tags will form the backbone of a totalitarian state where your every move is tracked with staggering precision. Consider ... the combination of the underwear, shirt and pants you use daily is a unique ID that you, and only you, have. Everytime the RFID scanners see this grouping (and not a load of other IDs from your other clothes dropped off at the cleaners), they know it's YOU. Walk into a retail store with this capability, and you will be deluged with service offers aimed at you ... or the police will be called because you are a suspected shoplifter. Either way, your privacy, as the Constitution knows it, is DEAD.

At least once consumer group - Consumers Against Supermarket Privacy Invasion and Numbering (Caspian) - has claimed that RFID chips could be used to secretly identify people and the things they are carrying or wearing.

All kinds of personal belongings, including clothes, could constantly broadcast messages about their whereabouts and their owners, it warned.

Posted by Steven at 11:30 PM | Comments (0)

January 30, 2005

Cheezbrghhr, Lrjj Frzz, N A LJJ ARNJJ ZDA!!!

I like technology. However, this is an appallingly petty, and overkill, application of some pretty basic level stuff.

What's next, routing to Bangalore? Why stop at Grand Forks?

Posted by at 10:02 PM | Comments (0)

January 24, 2005

Foreigners Fear Dollar's Demise

The dollar is down 35%. Treasury Secretary Snow is pissing off the Europeans, and scaring the shit out of the Chinese. The New York Times has a story about our staggering decline.

After a first term in which terrorism and war dominated President Bush's foreign policy agenda, his allies in Europe and Asia suspect that his next confrontation with the world could take on a very different cast: a potential currency crisis, in which a steep plunge in the value of the dollar touches off economic waves around the world.

Already, the tensions over the dollar are becoming a recurring source of friction, a conflict that does not reverberate as loudly as the differences over Iraq but may be as deeply felt. At a meeting in Paris on Monday, the finance ministers of Germany and France complained that Europe had unjustly borne the brunt of the dollar's decline, and called for coordinated action to stop it.

"Europe has until now paid too big a share in this readjustment," Hervé Gaymard, the French finance minister, said. His German counterpart, Hans Eichel, said the United States needed to reduce its deficits, adding "each one has to play its role."

Two months ago, similar sentiments came from China's prime minister, Wen Jiabao, whose nation is at the center of a struggle with Washington over currency policy. He complained about the fall of the dollar, asking, "Shouldn't the relevant authorities be doing something about this?"

In an interview just before President Bush's inauguration, Treasury Secretary John W. Snow played down the tensions. "We understand that deficits matter," he said, insisting that the tight budget Mr. Bush is expected to send to Congress next month should give foreigners and the financial markets the solace they seek.

But should the dollar continue to fall - if, for example, global investors determined that Mr. Bush did not have the will to hold spending down - it would not only add to tensions, analysts said. It might also force up interest rates at home to keep foreigners interested in financing America's need to borrow more than $600 billion a year to cover its gap in the current account. The current account is the broadest measure of the trade and financial flows into and out of the country.

To be sure, the dollar's fall may never reach crisis levels, and in the last few weeks, after a more or less steady fall of almost 35 percent against the euro and 24 percent against the Japanese yen over the last three years, the dollar has stabilized a bit. Many experts argue that a further decline, if relatively modest and gradual, is entirely manageable.

Administration officials, along with a number of like-minded economists, contend that the nation's record trade and current account deficits are not particularly worrisome, a reflection more of strong foreign interest in investing in the American economy than any sign of global weakness.

But across Asia and Europe, a wide range of officials and analysts worry that Mr. Bush's economic team may not be up to the challenge of grappling with the issue. They contend that Washington has retreated from efforts to marshal the biggest economies of the world into a mutual effort at more robust and balanced growth.

Let's sum this up: the foreigners know that Bush's team is a bunch of incompetent boobs, otherwise known as CEOs. They know that they are trying to deep six the dollar to drive foreign investment into the drink in some weird suicide pact on the dollar.

Posted by Steven at 10:25 PM | Comments (0)

January 16, 2005

Social Security Agency Ordered to Slit Own Throat

Can the Bushistas do anything on the up and up? The Bush Administration is covertly compelling the Social Security Administration to publicize the financial problems it allegedly faces down the road, and to actively push for privatization of accounts.

Over the objections of many of its own employees, the Social Security Administration is gearing up for a major effort to publicize the financial problems of Social Security and to convince the public that private accounts are needed as part of any solution.

The agency's plans are set forth in internal documents, including a "tactical plan" for communications and marketing of the idea that Social Security faces dire financial problems requiring immediate action.

Social Security officials say the agency is carrying out its mission to educate the public, including more than 47 million beneficiaries, and to support President Bush's agenda.

"The system is broken, and promises are being made that Social Security cannot keep," Mr. Bush said in his Saturday radio address. He is expected to address the issue in his Inaugural Address.

But agency employees have complained to Social Security officials that they are being conscripted into a political battle over the future of the program. They question the accuracy of recent statements by the agency, and they say that money from the Social Security trust fund should not be used for such advocacy.

"Trust fund dollars should not be used to promote a political agenda," said Dana C. Duggins, a vice president of the Social Security Council of the American Federation of Government Employees, which represents more than 50,000 of the agency's 64,000 workers and has opposed private accounts.

Deborah C. Fredericksen of Minneapolis, who has worked for the Social Security Administration for 31 years, said, "Many employees believe that the president and this agency are using scare tactics to promote private accounts."

Social Security trustees say the program's financial problems will grow as baby boomers retire. The program will pay out more in benefits than it collects in revenue in 2018, they say. By 2042, they say, the trust fund will be exhausted, and tax income will be sufficient to pay only 73 percent of scheduled benefits.

In campaign-style speeches, Mr. Bush and other officials have said that Social Security is headed for bankruptcy, and that workers should be allowed to divert some of their payroll taxes into private accounts, as a way to build wealth for themselves and their heirs.

This is probably the final test of democracy in this nation. If Bush pushes this madness through Congress, he will have demonstrated that he can lie on camera to the people and get away with it. What's that you say? Weapons of Mass Distruction? Oh ...

On a more serious note ... if the Bush Administration continues to succeed in taking non-partisan government agencies and turning them into his propoganda machines, it won't be too much longer before any semblence of representative democracy will be in the shitter. And that is clearly a highly favored strategy.

The fact that they refer to this activity as "marketing" tells you a lot about the necessity and value of the effort. This is a wholesale effort to destroy the Social Security net, and to play one generation against another. If Americans buy into this, then they have doomed themselves to be a third world nation where the 1% at the top literally will own everything.

Posted by Steven at 04:48 PM | Comments (0)

January 14, 2005

Getting Astroturfed

I got a call from the "Progress for America" group advocating Bush's Social Security "reform" plan. Before they could finish their spiel, I laid into the call about not wanting to support Bush's efforts to gut the system and hand over the cash to Wall Street. He hung up before I could finish.

If you get a call from them, lay into them. This is "astroturfing" at it's worst.

Posted by Steven at 04:54 PM | Comments (0)

January 10, 2005

2005 Bidness Predictions from The Street

Check out The Street's Ten Business Predictions for 2005:

1. Wal-Mart will fall down and go boom.
2. Texas will become an oil production state, again.
3. Water will be the new Oil.
4. the Housing Bubble will not pop -- this year.
5. Major drug companies will drown in lawsuits.
6. National IDs will become the law.
7. High fuel costs will kill all airlines except JetBlue and Southwest.
8. Bush will get SS reform passed thanks to millions in contributions from Wall St. employees.
9. Google will lead a (yet another) new Internet revolution.
10. The Chicago MERC will buy the NYSE aned NASDAQ to create one mega-market.

Not a single one of these predictions fills my heart with hope. I lick my lips with anticipation thinking about Wal-Mart's demise, but it will further erode retail in urban areas when it collapses. Expect the "Wal-Mart Riots" to start shortly afterwards. Someone has to take that product off the shelves.

Water and Oil will dominate this century, and likely will be the cause of the first half's worst wars. West Texas will blow the cash from this windfall just like the early eighties one. 'Nuff said there.

I think the housing bubble will pop and soon. It may precipitate the debt crisis in the U.S. or instead, may trigger it, but either way, we've spent our kids' futures already.

It's hard to come down firmly on either side of Big Drug. I feel terrible about the loss of those harmed by bad drugs, but I blame the Feds. (FDA) as much for letting bad drugs get through a system the Rethuglians have completely politicized. OTOH, the Big Drug firms have taken doctors so completely out of the picture (with self-diagnosis TV ads) that it's hard to hold them blameless for the mess they made. And isn't it ultimately more profitable to sell a product that doesn't kill customers than one that does?

Under Gonzales, anything can and will happen. From manditory ID to manditory DNA samples, we're going to slide far, far from the 1st, 4th and 5th Amendments in the next four years. Get your passport now, while you can.

All airlines gone except JetBlue and Southwest? What kind of crazy talk is that? Who knows is all I can say. With billions of air miles sitting out there, a huge blow back is inevitable.

Bush's SS "reform" has always been about enriching the rich. Bankrupting SS and handing billions in fees to Wall Street is the modus operandi of the CEO President. I hope against hope that some in the sparse, fiscally sane GOP camp will stand with the Dems. against this, but with all that Wall Street influence, I mean, lobbying, what hope does poor old Social Security stand?

Not another Internet boom.

One market to rule them, and one market to take their profits away. Didn't Middle Earth fight to end the rule of the One Market? Who thinks this is a good idea, besides the Masters of the MERC?

Posted by Steven at 03:01 PM | Comments (0)

January 04, 2005

Fake Solution to a Fake Crisis

Paul Krugman has some good insights on the Social Security non-crisis:

By law, Social Security has a budget independent of the rest of the U.S. government. That budget is currently running a surplus, thanks to an increase in the payroll tax two decades ago. As a result, Social Security has a large and growing trust fund.

When benefit payments start to exceed payroll tax revenues, Social Security will be able to draw on that trust fund. And the trust fund will last for a long time: until 2042, says the Social Security Administration; until 2052, says the Congressional Budget Office; quite possibly forever, say many economists, who point out that these projections assume that the economy will grow much more slowly in the future than it has in the past...

The bonds in the Social Security trust fund are obligations of the federal government's general fund, the budget outside Social Security. They have the same status as U.S. bonds owned by Japanese pension funds and the government of China. The general fund is legally obliged to pay the interest and principal on those bonds, and Social Security is legally obliged to pay full benefits as long as there is money in the trust fund.

There are only two things that could endanger Social Security's ability to pay benefits before the trust fund runs out. One would be a fiscal crisis that led the U.S. to default on all its debts. The other would be legislation specifically repudiating the general fund's debts to retirees.

That is, we can't have a Social Security crisis without a general fiscal crisis - unless Congress declares that debts to foreign bondholders must be honored, but that promises to older Americans, who have spent most of their working lives paying extra payroll taxes to build up the trust fund, don't count...

There are two serious threats to the federal government's solvency over the next couple of decades. One is the fact that the general fund has already plunged deeply into deficit, largely because of President Bush's unprecedented insistence on cutting taxes in the face of a war. The other is the rising cost of Medicare and Medicaid.

As a budget concern, Social Security isn't remotely in the same league. The long-term cost of the Bush tax cuts is five times the budget office's estimate of Social Security's deficit over the next 75 years. The botched prescription drug bill passed in 2003 does more, all by itself, to increase the long-run budget deficit than the projected rise in Social Security expenses.

That doesn't mean nothing should be done to improve Social Security's finances. But privatization is a fake solution to a fake crisis.

Posted by at 09:43 AM | Comments (0)

Sign Of The Times

Parking spaces are getting bigger.

When the Bernardsville, N.J., borough council voted last month to widen parking spaces, it may have put itself at the vanguard of communities that are trying to accommodate sport-utility vehicles, minivans and other larger vehicles.

"I had anticipated this would start to happen because you could see the SUVs occupied more space than an ordinary sedan," says Martin Robins, director of the Alan M. Voorhees Transportation Center at New Jersey's Rutgers University. Robins expects other towns to follow Bernardsville's lead. "I think they're responding to a real issue."

Already, Honolulu has eliminated parking slots designated for compact cars. Concord, Calif., population 122,000, will consider a similar move this year, along with increasing the minimum width of parking spaces.

...

Mary Smith of Walker Parking Consultants in Kalamazoo, Mich., says, "With the increasing use of SUVs and those other vehicles, as well as the fact there just aren't as many small cars being sold, it's become ineffective to have those (compact) stalls."

As a small-car driver, I don't find compact spaces to be at all ineffective. Make the SUV drivers hike a little further to get to the mall entrance. The size of their vehicle was a real factor they should have considered before acquiring it.

sigh... this is more a reaction than a response, because it's years late and probably not enough even now, but that's government. Since same or greater quantities of parking spaces will be needed in the future, urban sprawl will either be increased, or areas of natural reserves will be decreased. This will be a small but real factor.

Know what's a real waste of parking spaces? The handicapped access slots. There's too damn many of them, and those people never show up. (joke! joke!)

(Nice to see the Voorhees bequests have been spread around.)

Posted by at 12:14 AM | Comments (0)

December 30, 2004

Canada Beef Cannot Get a Break!

Oh no, not again! Canada has announced the discovery of a "mad cow" infected animal the day after the U.S. re-opened its borders to Canada beef.

Canada has found what may be a second case of mad cow disease, officials said Thursday, just a day after the United States said it planned to reopen its border to Canadian beef.

The border was closed 19 months ago when a cow in northern Alberta tested positive for mad cow disease, or bovine spongiform encephalopathy (BSE). The U.S. Department of Agriculture said Wednesday the border could be opened in March.

The Canadian Food Inspection Agency released few details on the new suspect case, except to identify it as a 10-year-old dairy cow.

The preliminary testing results were completed on Wednesday, said the agency, adding that the testing was conducted after the cow was identified as a ``downer'' -- unable to walk.

The finding is not definitive, but the CFIA says multiple screening tests have yielded positive results. No part of the animal entered the human food or animal feed systems, said the agency.

Samples are currently being analyzed at the Canadian Science Center for Human and Animal Health in Winnipeg, Manitoba and confirmation is expected in three to five days.

The CFIA said U.S. authorities have been notified of the tests and added that the government's normal policy is to report only confirmed results.

``However, given the unique situation created by the United States' border announcement . . . it was decided that the most prudent action would be to publicly announce the available information and provide stakeholders with a full understanding of the current situation,'' said the CFIA.

For Canada's sake, I hope this turns out to be a false positive. The loss of the U.S. market is a huge blow to the nation.

Posted by Steven at 11:34 AM | Comments (0)

"Goodhair" Aide Worked for Corridor Bidder

Texas Gov. Rick "Goodhair" Perry's aide worked for the Spanish firm that won the $7.2B bid for a huge state road project.

As a government affairs consultant for Cintra, Dan Shelley was to be paid if the road deal went through, a spokesman for the governor said. But Mr. Shelley agreed to give up all rights to that money – an amount the governor's office could not detail – when he joined Mr. Perry's staff as legislative director.

The spokesman, Robert Black, said Mr. Shelley was never paid any money by Cintra. After joining the governor's office, he said, Mr. Shelley had no contact about the project with Cintra or the Texas Transportation Commission, the Perry-appointed board that picked the company.

"The governor's office had no influence at all over who won the contract for the Trans-Texas Corridor," Mr. Black said.

Mr. Perry has made the Trans-Texas Corridor, a network of tollways and rail lines across the state projected to cost $175 billion, the centerpiece of his transportation policy. An opponent of the plan said Mr. Shelley's previous employment for Cintra added to questions about the project.

"From the very beginning, this was going to be a railroaded project," said Corridor Watch founder David Stall. His group opposes the governor's proposal and wants to ensure that the development process is open to public input. "The governor had an agenda. It's all predetermined."

A spokeswoman for Cintra, which is based in Madrid, Spain, confirmed Mr. Shelley had worked for the company but declined to comment, referring further questions to the governor's office. Mr. Shelley's office also referred calls to Mr. Perry's press office.

Mr. Shelley, a lobbyist at the time, began consulting for the company in December 2003, roughly three months after Cintra was named to a list of three possible Trans-Texas Corridor contractors, the governor's office said. When Mr. Shelley joined the governor's staff nine months later, his lobbying firm – which includes his daughter and son-in-law – did not take over the Cintra contract or the promised pay, Mr. Black said.

Influence Denied

State records show Mr. Shelley – a lawyer and former state legislator who serves as Mr. Perry's liaison to lawmakers – and his firm were not registered with the state as lobbyists for Cintra, as required for individuals who have contact with state officials that's intended to influence government decisions.

"Dan Shelley gave advice to Cintra" about doing business in Texas, Mr. Black said. "He didn't lobby, nor did he try to influence anyone else's decisions, other than Cintra's."

Texas Transportation Commission Chairman Ric Williamson said Mr. Shelley approached Texas Department of Transportation officials about a year ago, seeking a meeting about his work for Cintra and possibly other Spanish companies. The visit was brief, and it was the only known business contact between Mr. Shelley and the transportation department, Mr. Williamson said.

"The visit he made to TxDOT was not in the nature of a specific project," Mr. Williamson said. "It was along the lines of, 'These guys may want to do business in Texas. Can you spend some time with them?' "

Seve