At the Corner of Central and Prime

Let us make you a meal..Pic courtesy of Central Market

Today

Today is a bright, 50 degree Sunday afternoon -- brisk and beautiful. Have already had my invigorating walk at White Rock. I had a cool blog topic about a Netflix movie, but a month went by and I’ve lost the impetus not to mention the relevant details on that. So today will be a combo of recent TV, streaming entertainment deals, and dining out. Probably enough to constitute a blog.

Golden Globes

I was annoyed by the Golden Globes last week.. Ricky Gervais was a bit of an ungracious arse in his insults toward Mel Gibson and Ben Affleck among others. I don’t see the point of creating antagonism where there was none before. You can be abrasive and fun without being a total snark.

Golden Globes also annoyed me by giving awards almost pointedly to new, unheard-of shows (Mozart in the Jungle, Wolf Hall, The Affair etc). I decided to watch some of these unknowns to see how well they deserved their Globes. It just happens that Showtime is offering a freebie special on Hulu-- first episode of several hit series for free. I took the bait and watched episode 1 of The Affair. I must say -- the Globes probably nailed it on this one.

The Affair

I watched episode 1 of The Affair this morning -- it’s about two married people cheating on their respective spouses. I figured it would be a one-dimensional soap, but it quickly unfolded into a neo-noir mystery. The story is in flashback form .. the man and woman are at a police station, separately giving their versions of something that happened. Their stories differ noticeably and the viewer is all agape -- what brought them to a police station? What happened? I’m on edge now to find out. It seems clear from their stories that they are no longer lovers or even friends to each other.

Amazon Prime

I have to say, we are in an age of entertainment overload. We have Time Warner, iTunes, Netflix, Hulu, Crackle, Vudu, etc, etc ad infintum. Now we can add Amazon Prime to that mix .. they have several exclusive offerings like Transparent and Mozart in the Jungle. This week they’re offering a year of Prime for only $76 (normally $99). A full season of a hit show can run $24 on Apple or non-prime Amazon. One movie rental is $5.99.. I figured it wouldn’t take much to run it up to $76. I’m now on Amazon Prime, God help my television addicted soul. I better watch my $76 worth.

Neighborhood Walmart and Central Market

About a year ago I praised the Neighborhood Walmart on Lower Greenville Avenue in Dallas. I thought it was a great remodel and a good alternative to pricier groceries in the area. Alas, I spoke too soon.. the store is being closed in 2 weeks. Apparently it underperformed. Am sorry to see that -- I liked their $4.99 deli chicken among other things. Some Greenville area snobs are glad to see Walmart go -- that attitude is also unfortunate. Now we lose tax base, local employment and we get a boarded up vacant building for weeks to come. Sounds like a lose-lose to me.

I decided to try out Central Market and see if they could address the void created by Walmart. My trial items were Starbucks Frappuccino 4-packs and 4-Way Nasal spray. Central Market carries mostly homeopathic type meds -- no 4-Way. They had only store-ground coffee and fancy specialty brands -- no Folgers or Starbucks. I was bummed that they couldn’t help on that, but decided to try their gourmet kitchen and cafe for lunch as a consolation for the failed scavenger hunt.

They offer weekly lunch specials in the 7-10 dollar range -- all prepared while you watch. They have a variety of items -- shrimp salad, ciabatta sandwiches and grilled pork. I had the ciabatta salami sandwich and fries -- while seated in their bright, modern sunlit cafe. I see why Central Market has been such a mainstay for these 15 years.. the experience was very enjoyable. I’ll be back.

Conclusion

I’ve stumbled upon some new things this past week, and am sorry to be losing Walmart. On the whole, it’s a week of positive discoveries. I have a show to binge watch, a cafe to frequent and $76 worth of benefits to squeeze from Amazon Prime. It could be better -- it could be a lot worse.

© 2016 Snillor Productions

The Holy Trinity of Hipster Capitalism

We keep coming back.. Picture courtesy of Wikipedia

TODAY

I’m in mourning that my two week Christmas vacation is over.. I love the time to be lazy and reflective. Today we have 55 chilly degrees under a bright blue sky – very invigorating. I’m sitting in new the Lakewood Starbucks, admiring the relaxed ambience. What a perfect segue to today’s topic..

THE TRIFECTA

If you think of “hipster capitalism”, many things spring to mind: Google, Facebook, Uber, Tesla.. and so forth and so on. The 3 companies I have in mind are noteworthy for being among the first of the hipsters and cementing themselves as part of our national identity and culture: Starbucks, Apple and Whole Foods Market. In 2015, I’d like to examine what we love now, what we loved then and if the dream is still alive. Let’s stroll thru our hipster places one by one...

Starbucks

EST: 1970
CLOSEST 1970 COMPETITOR: Dunkin Doughnuts

Starbucks had a slow build towards frenzied, Frappuccino success. Prior to Starbucks, coffee shops were more along the lines of greasy spoon hovels – with dirty ash trays and waitresses scuttling you along. Mavis needed to turn the tables. Starbucks gave us a trendy living room with comfy chairs and mood music. It brought unique coffee beverages into a pub-like atmosphere of convivial socializing. Who would’ve imagined? It wasn’t revolutionary per se, but revolutionary in the elements combined.

Apple

EST: 1976
CLOSEST 1976 COMPETITOR: Radio Shack

Computers for hobbyists had just been invented when Apple came along. They were hardly user friendly – they called for an engineering genius to put the pieces together and feed it programming instructions. For all its clunkiness, the Apple I gave the world an easy-to-use home computer. Osborn, IBM, Atari and others were asleep at the wheel. By the time they entered the market with their offerings, Apple had already entrenched itself with artists and educators. Macintosh was pretty far along on the drawing board.

WHOLE FOODS MARKET

EST: 1980
Closest 1980 competitor: Local delis, ethnic food marts

Whole Foods took food consciousness to a new level – with an emphasis on organics, purity of ingredients, local farm-sourcing and other wholesome factors. All of this was brought into a supermarket chain paradigm – one that gave customers a consistent feel-good experience from one store and city to the next. People seeking a special green tea didn’t have to do mail order or drive to Korea Town anymore – they could just go to a nearby Whole Foods Market. As with Starbucks, it wasn’t a revolution per se, but it was revolutionary presentation. This brings us now to a 2015 check-up... What have these guys done for us lately?

.. WHAT ABOUT NOW?

Starbucks has many competitors now.. The $4 Latte was too great of a boondoggle for others to ignore. Starbucks has hit a couple of bumps in an otherwise smooth ride. They closed a number of stores in the 2008 Recession and a few years later they made stores less luxuriant in an effort to turn tables faster. Some slackers were settling into the comfy chairs for an all-day visit. Overall, Starbucks is still true to its original concept: good coffee, good music, tolerable bench-like seating (now).

Apple has had an amazing trajectory. It was having a near-death experience in 1997 when Steve Jobs returned and brought his evangelical techno-wizardry back to the forefront. Apple is still riding high but with a couple of caveats (hinted at in a Simpson’s spoof)... It has a cult-like aspect both with employees and customers. A product's success should be based on intrinsic merit, not purely hipness or brand allegiance. There also appears to be an “Apple tax” paid for devices and accessories which is a monetary concern for people on a budget. Not surprisingly Samsung and Microsoft have wooed some people away with Galaxies and Surface Pro’s – you can’t sell to all of the people all of the time.

Whole Foods probably registers the biggest change from my own observations. Whole Foods Market was a fun, counterculture, quasi-hippie divergence in years gone by. Its parking lot had VW vans and cars plastered with provocative bumper stickers (“Eat brown rice” “Uppity Women Unite”). The whole shopping trip was like a reefer run to a hippie commune, or to an Austin health food emporium. It was fun and somewhat subversive. Stick it to the Man and buy cool stuff at the same time.

Whole Foods is now a snobby, pretentious experience – a gluten-free, cage-free, wine tasting affair with major appeal to law partners, CPA’s and soccer moms. The parking lot has mostly Mercedes, Porsche, and Lexus cars with a couple of reserved spaces for “eco-friendly” electric cars. Whole Foods’ 1980 concern over the ecosystem played well into the 2015 boomer fixation around global warming, recycling and carbon footprints. An obnoxious PwC Sr. Manager can assuage his capitalist conscience by knowing he just ate cage-free chicken and purchased a greeting card made from 100% recycled paper. Absolution never came so easily.

I might be judging these things in a harsh light and maybe not. I still patronize all these places in 2015. For Whole Foods, it might just be more of a people watching experience – but I must admit that their chocolate-toffee wafer cookies keep me coming back too.

© 2016 Snillor Productions

Roundabout with H-1B

Are we being underbid? - Pic courtesy of Wikipedia

by Trebor Snillor

Today I’m in Starbucks, during a holiday week. The temperature is plummeting outside and the throng has moved indoors.. I’m composing this in an easy chair next to the front door. Burrr! Today’s blog topic is one I’ve touched on in other blog entries (“Oink!”, “Stratus World”). I’m speaking specifically this time of the controversy surrounding H-1B visas granted to immigrants in the United States. Most of such immigrants come from India and China though many other countries also indulge. H-1B visas were conceived as a way to fill specialty US jobs (in science, medicine, engineering, accounting) with foreign brain power. The idea was that the jobs were unfilled – why not answer the call with 3-year visas?

This Road to Hell was paved with good intentions; limits were placed on duration and number of people. Politicians didn’t want to horn in on American jobs did they? (Or did they have something else in mind?).. The law is now a labyrinth of codas, exceptions and dangling participles – it makes the tax code look simple. The Fortune 500 companies of America were smitten with this mother lode of cheap white collar labor – how could they not exploit it? The issue has been conflated into a political issue, but I have to say it’s one that mostly pits populist Republicans (anti H-1B) against rich, patrician Republicans who are vested in the Fortune 500 (pro H-1B).

LOSE-LOSE SITUATION

Note -- the following discussion uses software engineering as an example, but it is equally applicable to accounting, medicine and other areas.

I have a good friend in human resources at a large accounting firm. He tells me that a newly minted American computer science graduate programming java commands $90K/year nowadays. That same job can be filled by H-1B Outsourcing firms for $65K/year. Software engineering isn’t controlled by organized labor – it responds directly to market pressures. Indians and Pakistanis have effectively underbid Americans for the same work assignments.

The cost to American citizens: We shrink the “specialty employment” pool dramatically. The only American grads commanding $90K will be the top 2% of the class. Otherwise the form letter reads “all jobs are filled at this time – thank you for your interest”. A question to Americans might be: have we bid the price too high for what we do?

The cost to employers: In treating software design as a generic commodity you get high turnover, buggy code and a serious lack of standards or continuity in your whole operation. A permanent employee can better understand history, strategy, business rules and overall company direction. A contractor is less likely to feel like a stake holder when a 3-year egg timer ticking away in the background. Throw in some language and cultural barriers – you have a situation that evokes the Neiman Marcus slogan: “Quality is remembered long after price is forgotten”..

The cost to the United States of America: The list of “specialty fields” has expanded to include basically any middle class occupation that is heavily dependent on computers or internet connections. Doctors’ jobs are even at risk as it becomes easier to farm out tests and x-rays to a Pakistani clinic halfway around the world. America’s middle class is hit by a wrecking ball of “friendly” outsourcing.

Where do we go from here? Some of the same people vehemently opposed to H-1B are also free market apostles who would be mortified by wage controls, hiring restrictions or unionization. Politicians tend to engage in double-talk and leave the status as quo.

CONCLUSION

If we do nothing, we will end up with an odd sort of America. Sanjay and Priya will make $65K a year which is still enough to live a middle class lifestyle. They will have a new Toyota Camry and a nice starter home. American-born John and Karen will be struggling to drive a used Yaris and will live in a dumpy apartment. It seems they can only find work as a car wash manager and a restaurant hostess. The America I describe isn’t so far away or ridiculous – it’s already under way. Something needs to be done, the question is “what?”

© 2014 Snillor Productions

Dream Deferred

Not a universal dream? - Pic courtesy of Wikipedia

by blogSpotter
CABIN FEVER

Dallas has had a bizarre ice storm across the last 3 days -- we’ve been dealing with downed trees and power outages. Today is Sunday and we’re blessed with a 38 degree heat wave. There are still plenty of ice patches to avoid but the major streets are driveable. The whole city has come alive at 3PM, as we discover it’s OK to come back outdoors. Now that I’ve made it out, I’ll tackle today’s topic -- the middle class American Dream.

PLEASANT VALLEY SUNDAY

There is a popular myth about the free market economy -- probably as old as Adam Smith. It certainly was entrenched by the time Hoover’s 1928 campaign promised “a chicken in every pot and a car in every garage”.. The notion is very appealing -- it says that anyone with energy, gumption and a little dose of the protestant work ethic should be able to achieve a middle class lifestyle. It’s the American Dream -- we've had it dangled before us by parents, teachers, Madison Avenue or cable TV. We even have whole government infrastructures in place (Fannie Mae, Freddie Mac) to ensure that hard-working people everywhere can have a cozy bungalow with a picket fence.

No matter if you’re low on the economic totem pole -- hard work and perseverance will carry you forward to your manifest, material happiness. You might not achieve a mansion but you’ll have a humble home and maybe a car. This idea stuck with me for so many years until I looked around and realized how far off the mark it is. It makes sweeping assumptions about the human condition -- assumptions that are mistaken. The resounding optimism of it (most frequently voiced by affluent conservatives and uber-politically correct liberals) should be tempered by the reality at hand.

I have a concept of people who in virtually any society (socialist, capitalist) would be renting a property or otherwise living in in quarters that are not owned personally. I'll dub it the "Mobile" class..

MOBILE CLASS

o Artists and artisans -- People who make jewelry or paint watercolors as an avocation. This may be unrealistic to a bean counter, but there are people who pour heart and soul into something that doesn't pay a livable wage.
o Financially unfortunate people who have made unlucky investments or lost their money.
o People who don’t want to work. There are people who truly do not conform to a work or office ethic. They're happy to live sparingly and not work for "the man". Labor cannot be forced.
o People of earnest good intentions who are learning disabled -- They aren’t lazy but have diminished capacities.
o Mentally ill / seriously disabled / incarcerated -- These people will have a dependency on overseers and care givers -- They will live in institutions or relatives' homes. Some mentally ill may even be homeless.

There are also hermits and iconoclasts -- people who want to live simply, live in communes or live off the land. This might include religious sects that are separatist or minimalist. They may not even be enough a part of the mainstream to rent a residence, but neither do they pursue the American Way.

The above categories include people who might have trouble scraping by even with food stamps and housing subsidies. The boomers among us were steeped in a consumer society offering material rewards. I'm in that subset, which frequently sees success in life as something that is monetized and certifiable with stuff. But there are so many other people who by choice or happenstance do not measure their lives that way. Young millennials are one group which by choice sees another passage to fulfillment -- a passage that embraces relationships and time spent with travels or self-discovery.

Universal, middle class capitalism is a myth. Much like extreme feminism and communism (blog topics for another day), the middle class myth arises out of misconceptions about who we actually are. I have a friend who falls somewhat into the inactive, indolent category. I thought I was doing him a favor by telling him about job training, Pocket Quicken, and cheap tuition. The irritation in his eyes suggested that my neo-Republican pearls of wisdom were not welcome. My ideas fell onto the floor -- like shattered pieces of home-finance platitudes. My friend doesn’t mind living in a down-scale area, driving an old car and accepting money from his relatives. I was attempting to fix what wasn’t broken.

And there we have it -- a whole band of people who don’t want the "American Dream". Maybe everybody’s dreams aren’t concentric. Whatever the case may be, there will always be a broad category of people for whom Hoover’s 1928 promise remains unfulfilled, even unsought. And for so many of them, it’s not a big deal, it just is how it is.

© 2013 blogSpotter

Stratus World

Must-drive SUV - Pic courtesy of Wikipedia

by blogSpotter
SHUT-DOWN REDUX

Ex-senator Kay Bailey Hutchison was asked this week what she thought about the government shut-down and threat of default we just experienced. She praised the Senate for giving adult guidance in a situation fraught with childish impulses. Hutchison didn’t mention Ted Cruz by name but his name was fairly implied. I think Mr. Cruz did an act of economic vandalism on the American people by his bullying, hot-headed, ego-driven behavior. Am hoping that he is duly chastised by the GOP and I hope that the Tea Party learns to act more with dignity and restraint. Their ideas may not go away, but their strategies could stand a huge overhaul.

SPOTLIGHT ON TEXAS

This week’s TIME cover story gives praise to Texas -- it has a vibrant economy, low taxes, low unemployment and something like 5 of the 10 fastest growing cities in the nation. The author is a self-admitted Libertarian and he showered mostly praise on the free-wheeling aspects of the Lone Star state. He didn’t mention that Texas just closed all but a handful of abortion clinics, disallows gay marriage, turned down Medicaid and elected Ted Cruz as one of its senators. The author’s economic analysis was pretty accurate and credit should be given where it’s due even if a wild band of GOP wingnuts oversees it.

One interesting fact of the Texas economy is that we’re adding jobs -- at the upper and lower ends of the salary spectrum. We’re adding lots of jobs in service, construction, retail and other hourly-wage areas. We’re also adding to the list of millionaires and billionaires. What seems to be suffering are the middle class white-collar jobs that are supposed to be the backbone of a healthy, unified society. Texas is not unique here -- the middle class evaporation is everywhere; it’s more noticeable here because of our job volume.

NEW WORLD

We’re entering into a strange “Stratus” world where a large group of blue collar tradesmen bolster a small cadre of rich people. Globalization, automation and the Internet have all made it so. When I was in high school, it would’ve been unthinkable for me to turn down college. I was an honor student and tuitions were low. Nowadays there’s nearly a reversal -- young adults may opt to stay home, serve yogurt or walk dogs. And their parents hardly argue the point; they don’t want to hollow out their savings for exorbitant tuition. Even a Dean’s List graduate may face a long slog finding a job so what’s the point?

Stirring the pot even more is that we’ve fallen back into the “gotta have it” materialism of the 1950’s -- where we long for high style condos, Range Rovers, designer clothes and 5 star hotels. Our craving for material bling has oddly peaked in a period of lesser financial fitness. How might young people making $10/hour pimp and prostrate themselves to drive an Audi or wear Prada shoes? I don’t have a ready answer for that, although I see such incongruities around me. With lower interest rates, there might be a lot of credit card debt to explain it. I don't think we've fallen so far into the chasm that we sell our bodies but I wouldn't rule it out in a dystopian future.

“In my day” to sound like an old granddad, we bought our clothes at JCPenney or Beall’s. We drove Chevy Impalas and wore Timex watches. Our kitchens had formica - not granite counters. Somehow we survived and even managed to have self-esteem. I wish that the world would return to simpler objectives and less pretentious ways. It would probably smooth things a bit for our coming Stratus World where middle class values could help the newly enlarged service class -- that “swirling mass of gray and black and white” to keep their heads above water financially.

© 2013 blogSpotter

Occupying Wall Street

When the rain comes ... - Picture courtesy of Lionsgate

by blogSpotter
I’m sitting in Starbucks on my 54th birthday...yes, I’m 54 years young. There has been so much weirdness in my life lately, I’ve fallen behind on my blog entries again. Will try to do a system reboot here at Starbucks ….

Quick Update on Android

After 6 months, I lost my LG Optimus V phone. Think it fell off my belt in a 7-11 parking lot on Harry Hines Blvd. To be honest, I wasn’t loving that phone … it had some issues. The 3G was slow and often unavailable. The pop-up keyboard had tiny little keys. The screen had lots of glare and the contrast was poor. Worst of all, the Android operating system has a rigidness to it that I never mastered – I kept exiting an app when I wanted to look at its menu options. Esthetically, Android OS reminds me of the spare Linux Ubuntu compared to the lush and beautiful Mac OS X. It was a prepaid, pay-as-you-go phone so the separation shouldn't be too traumatic. OK, enough about phones, let’s talk about Wall Street Occupation…

Margin Call

I just watched Margin Call with Kevin Spacey and Demi Moore. The movie is loosely based on actual events that transpired on Wall Street in 2008, just prior to the epic meltdown of September 14, 2008. My initial prejudice was that the movie might be wonkie and dull, appealing mainly to bean counters and political science majors. It wasn’t like that at all – it was a gripping, financial thrill ride that moved at a good pace. Nobody in the whole cast of characters is blameless but the shades of moral slippage go from light indiscretion (junior analysts following orders) to pure, vile nastiness (Jeremy Irons as CEO using people as collateral blame objects). A warning – there are aspects of this movie that may remind you of things still on-going. You may walk away feeling like you need to occupy Wall Street yourself. This leads me to me next topic…

Occupying Wall Street

Ann Coulter who is my favorite mean-mouthed conservative wench wrote a hilarious piece recently about the Occupy Wall Street movement. Though I’m from the opposite side of the political aisle from her, I have to agree with Ann. Occupy Wall Street (OWS) is without a leader and is without a manifesto. Its members are all over the map in their opinions – sometimes at odds with each other. Some are staunch pro-Obama liberals and some are libertarians angry about Obamacare. When I saw their profiles in Newsweek, I saw jobs like performance artist, life coach and unemployed actor. These don’t sound like people who would ever be working at anything resembling an office job in the concrete jungle.

I like the idea of OWS in general, but am an overly practical, middle-aged guy. I think OWS should have structure, goals and leadership. I know that rains on the parade of 20-something potheads who are mad at …the men who did … that thing… that was really bad. I totally support their right for civil disobedience – carry on. But do it with some semblance of knowledge and direction. I have my own thoughts about Wall Street and why it’s so discouraging…

Nobody went to jail – The only people who have done time are over-the-top con artists like Bernie Madoff. Where is anyone being held accountable for the largest loss of national net worth in history?

The insiders were recycled back into the Bush/Obama Administrations – What of people like Ben Bernanke, Larry Summers, Tim Geithner and Henry Paulson. These men weren’t necessarily directly involved in the 2008 debacle but their fingerprints are all around it. Why do we keep having the foxes watch the hen house? What was clear from the 2008 events (and made clear in Margin Call) is that many people in business and government saw the disaster coming. The insiders’ last 2-3 months were spent with damage control, blame mitigation, and how to break it to the public.

There were already laws on the books – My first impulse in 2008 was to say, “There ought to be a law!”. There were and are a host of laws – there should’ve been 3 layers of protection. But when SEC, Federal Reserve, Attorneys General and so many others turn a collusive blind eye, it doesn’t matter what laws were on the books. Why weren’t the laws enforced?

This is late 2011, and basically nothing has been done to rescue or mend the situation of 2008. The only reason it hasn’t happened again is that the American public has a newly cynical attitude – American’s are actually in a mode of frugality right now, much like Japan in its "lost decade".

I’ll close by saying to Occupy Wall Street – Keep it up! Wall Street needs to be occupied. But academia, the White House and Congress might also need occupy themselves – with a greater sense of what “doing the right thing” means in the aftermath of 2008.

© 2011 blogSpotter

One-Two Punch

Obama and Cantor in unholy alliance -- Picture courtesy of Wikipedia

by blogSpotter
Today’s blog entry might meander a little but there’s actually a couple of underlying themes. One of them is our President who seems to be losing altitude by the minute. I’ve been referring to him as President Feather Duster for a time now. The Faustian bargain he just made with House Republicans concerning tax breaks for the wealthy is maddening … no wonder that the Liberal Dems are looking to body block it. We could use some tax breaks for the little guy – the rich man doesn’t need it.

Now along similar lines, there is talk of reducing the deficit by eliminating the mortgage interest deduction – across the board, for everyone. So what we have friends, is a one-two punch to the middle class. Obama’s devil deal will assure that wealthy people aren’t on line to help out with the deficit via tax. Mortgage interest elimination will assure that the middle (and lower middle) class will be roped in, hogtied and branded for “deficit reduction”. Why is it that politics reminds me of a rowdy game of crack-the-whip? People think they know what they want and vote accordingly. But the result is horrible and bears no resemblance to whatever was offered. It would be like mixing the ingredients for fudge and coming out with lemon tarts.

Now let’s move the discussion along to earmarks and pork barrel spending. Several strident Tea Party candidates lambasted earmarks during the mid-terms and prominent “next generation” Republicans came along for the ride. Representative Eric Cantor made earmarks his campaign centerpiece as did Speaker John Boehner. Now both have suggested Hal Rogers, Kentucky’s notorious Pork Barrel King as the head of the Appropriations committee. Rogers would even like to bring along a Lockheed lobbyist as the committee coordinator. If these guys really care about reducing the deficit, would they be heading their committee with the King of Pork?

And speaking of the Tea Party above, they’ve been cited by Citizens Against Government Waste. It appears that Tea Party candidates have now received over 1 billion dollars in earmarks. Republicans everywhere, did you get what you voted for? It looks like several initiatives are adding to our tax bill and taking away tax revenue. The only people being billed are middle class home owners so far. This has all developed during our lame duck session at yearend 2010. We haven’t even let the dogs out yet.

It turns out (surprise, surprise) that people want what they want, never mind the cheap rhetoric. Politicians of both parties want to fund home district projects and would prefer that someone else pay for it. To be rigorously consistent with any idealistic goal is political suicide – the case of being dead right. What I have to offer is that there are comparatively fair and less painful ways of doing deficit reduction but it involves help from all corners – no one group gets stuck with the tab. Obama shouldn’t cave to Republicans bearing “gifts”. There won’t be a double dip recession here – just a double dose of regrets about who we elected, and who gets saddled with reining in the budget.

© 2010 blogSpotter

In Search of a Lost Decade

Japan in better days (1856) -- Picture courtesy of Wikipedia

by blogSpotter
For an American looking at 1990’s Japan, it’s a little like looking into a reflective pond, with a few minor details changed. Japan of 1989 was on a massive borrowing binge, fueled by easy credit and a powerful yen. Land speculation pumped Tokyo’s residential prices to thousands per square foot. The Nikkei index broke an all-time record in December 1989, reaching 38,957.44. Stocks and real estate were puffed into an unsustainable bubble that burst, leading to a market crash as well as a credit crisis. Does any of this sound familiar?

The events that followed created what I call a “sloth market” -- neither bull nor bear. It was (and is) more a moss-covered, sleepwalking mammal clinging to a branch. The Finance Ministry bailed out companies “too big to fail”; some of these propped-up enterprises were called “zombies” as they became the walking dead, never to regain profitability. The cautious Japanese also fell into a deflationary liquidity trap caused in part by their own frugality. There was retrenchment all around as businesses and families tightened their budgets. The Finance Ministry tried to finagle a recovery with 0% interest rates, to no avail.

Now we fast-forward to 2010 and what can we say? Japan never really recovered. The Nikkei only reached half its former height in 2007 before being knocked asunder by the same worldwide tsunami that took down Wall Street and most of Europe. As of this writing (and 21 years into Japan’s greed-induced coma), Japan is still laid low by insolvent banks that can’t issue loans while waiting for bad risks to turn around. Insolvent companies hire foreign contractors and fund any paltry improvements from their savings, not from loans.

All of this makes an American wonder if President Obama was right in suggesting that we might be headed to the same place. Japan’s crisis is not precisely a crisis -- their unemployment has never been as high as ours is now. It’s more like an Epstein-Barr virus that has given them (and us) a dull malaise that will neither kill us nor energize us. It will just take us down for an interminable nap time where factories and able-bodied men develop rusty joints and faulty wires.

I find it sad that purely capitalistic systems can only engage forward gear if someone is hitting a financial jackpot. Speaking as an unrepentant, Krugman-loving Keynesian, I can’t help but think that a Works Progress Program (a la FDR) could set us back on the right path. While Dow and Nikkei basically flatline, the Chinese are building airports, bridges and miles of new highway. Is any of China’s output pegged to a financial market index? Does it matter?

We in the USA have a Barnum and Bailey system that’s been based on gluttons who dream of getting rich quickly, be it with blue chip stocks, blue chips on a poker table or a 7-11 lottery ticket. The engine of work and progress is geared towards cranking out plasma TV’s and stainless steel appliances -- the material contrivances of the bored and the terminally uninspired. How tragic, ironic and altogether fitting it will be when somewhere down the road, the Chinese have bridges and plasma TV's to boot.

Can it be that forethought, fairness and sensible assessment might actually give you what you need? Fairness and forethought smack of socialism, it's true. I’m not recommending socialism outright -- it's possible to strike a balance between a command economy and one that's purely capitalistic. Harrah’s Casino is certainly not a model to admire. When the gamblers get wise and realize that probability and house rules don’t work to their advantage, they’ll quit placing bets.

Capitalism sputters and stalls when high rollers switch over to the slot machines. That looks like what happened in 1990's Japan and it bears an eerie resemblence to what we have here.

© 2010 blogSpotter

Obamanomics in the Great Recession

Building a Dam -- Picture courtesy of Wikipedia

by blogSpotter
Pundits have made many comparisons between the Great Recession of 2008-2010 and the Great Depression of the 1930’s. While recent events have been scary and unsettling, 2010 doesn’t even approach the gravity of 1932. From 1929 to 1932, industrial production fell 45%. 5,000 banks folded and 25% of all workers (37% of all nonfarm workers) were unemployed. 2010 is a walk in the park compared to that.

There are similarities – in 2008, the machinery of capitalism did slip into near-neutral. Several major investment banks failed; GM and Chrysler had to be bailed out by Uncle Sam and unemployment flirted with the 10% mark. The Obama administration took a page from Franklin Roosevelt and attempted to right the situation with Keynesian pump-priming – a nearly $1 trillion stimulus package. The results seem middling to poor on recent review; it might be good to take a look back at FDR’s New Deal, particularly its largest agency, the Works Progress Administration (WPA) to see how that model worked out.

The WPA was created in 1935 as part of the Emergency Relief Appropriation – enacted overwhelmingly by a House vote of 329 to 78. Across 8 years (1935-1943) WPA provided jobs to 8 million Americans and at one point was the largest employer in America. WPA created bridges, school buildings, utility infrastructure, lodges, libraries, theaters and many other public works throughout the nation. Nearly every town and hamlet in America enjoys the WPA legacy. Some national landmarks (LA’s Griffith Observatory and Oregon’s famous Timberline Lodge) owe their existence to WPA. The University of Texas at Austin has many beautiful Spanish-Mediterranean classroom buildings built by WPA. White Rock Lake here in Dallas has distinctive docks, bridges, gazebos, expanded Lawther Drive and a Bath House all created by either WPA or its companion program, Civiilian Conservation Corps (for teens and young adults).

WPA had limitations built into it. Employees could not work more than 30 hours/week, and only one member of a household could be an employee. Average annual wage was $1,200 (decent money for an otherwise unemployed, depression-era family). Despite these impositions, WPA lifted many people out of poverty and despair. 17% of the national black population was employed by WPA; in Mississippi, 60% of the WPA female employees had no husbands (they were divorced, separated, widowed or deserted); they were helped enormously by WPA.

By 1937, John Keynes’ economic theory had worked much of its magic – production, profit and wages were restored to 1929 levels. The government’s largesse gave dispossessed people spending money and indirectly created demand in the private economy. This pleasant state was oddly short-lived -- there was a Great Recession in 1937 which would compare to our 2010 debacle. Republicans in 1937 were hoping to wield the downturn as a weapon against FDR in the 1940 Presidential Election. Economists felt at the time (and more so since) that Congress was too quick in declaring success – a series of program cuts and tax increases had been implemented @ 1936 to curtail the growing deficit. A recovery was brought about in mid-1938 with farm subsidies and newly funded WPA projects. Full recovery to employment wasn’t achieved until war-time spending of 1941, but that’s not an indictment against FDR or the New Deal. Most of FDR’s programs struggled for Congressional passage and funding following 1936, despite his personal popularity.

WPA was savaged in the 1930’s much as Obama’s Stimulus package is today. WPA was accused of being the ultimate socialistic Pork Barrel spending, a bodacious, out-of-control buying of votes. In the 1930’s it was also seen as entrenching the power of labor unions. The exact same critiques are leveled today, and frequently met with the same Keynesian reply of yesteryear – there’s actually not enough priming of the pump. Noted economist Paul Krugman maintains that the trillion dollar stimulus of 2008-2009 was a decent first volley, but not nearly enough to fix things. A spending retrenchment at this point might send us in precisely the wrong direction.

What to make of the WPA, historically? In general, it did much to restore personal pride and economic balance to our nation. 1920’s Capitalism had failed us utterly, and the only pre-FDR remedies were bread lines and charitable giving. WPA gave a constructive way out of a destructive situation. What’s more, WPA made something very clear – that people are more important than money, things or even hallowed institutions when said institutions are unfathomable failures. Let’s hope that the lucidity of that message stays with us in the 2010 mid-terms. We don’t want to relive the 1930’s.

© 2010 blogSpotter

DART Has Arrived

Look a-yonder comin'... -- Picture courtesy of Wikipedia

by blogSpotter
DART is the Dallas Area Rapid Transit – it came into existence in 1983 as a regional replacement to the more local Dallas Transit System. Featuring 45 miles of track (not counting another 45 miles under construction) and 115 Kinki Sharyo rail cars, DART is the nation’s largest and most rapidly expanding light rail project.

DART had a dodgy beginning; many Texans didn’t think that light rail would work for a Texas maverick state of mind. Coppell and Flower Mound even voted themselves out of the project early on. With the advent of the blue/red lines in the mid-1990’s and the green line in 2009, the rail system has proved the naysayers wrong – daily ridership is currently at 228,300 and going up as we speak.

I’ve already shared my feelings of civic appreciation and amazement in one of my earlier blogs (“Dallas Under the Wrecking Ball”). In that blog, I lamented the destruction of Dallas’s historical landmarks but held DART as a saving grace for an otherwise commercially oriented city. Also, I marveled at the fact that a Bush/Perry-loving red state could have such an exemplary mass transit project. Mass transit after all, is vaguely socialistic in its goals. It’s the ultimate democratization of transportation. The irony, the irony.

How do I love light rail? Let me count the ways….

ECOLOGY
Clearly, the fewer cars on the road, the less the air pollution. Even beyond that, you can reduce the need for highways, parking lots and parking garages. Also fewer unsightly auto-related enterprises – service stations and oil change shops. In Dallas, that should be no great loss to our suburb-oriented economy but a great boon to the visual appeal of the city proper.

ECONOMY
Transit oriented development is a fact in established Northern cities like NYC and Chicago. Dallas has had major transit development at Mockingbird Station, City Place and Eisemann Center in Richardson. To borrow from Kevin Costner: if you build it they will come. People who dread parking downtown or fear having their cars towed at the State Fair will now hop on a train.

TOURISM
I’ve traveled to Paris, France and Sydney, Australia. In both cities, I must confess that I didn’t do my homework and figure out a visitor itinerary. Each city’s subway map gave me an excellent start in spite of that. The city’s promoters make sure to put a stop at anything remotely interesting. Museums, parks, historical monuments, trendy bar areas and shopping districts will all get a stop as well as informative blurbs in the maps about what all to see at each station. People can get off at a station, explore the local ‘hood, and hop back on.

STRUCTURE
A transit system gives structure, even meaning to a city suffering from urban sprawl. A “what are we about” and “where are we going” discussion is the very literal precursor to any new track being laid. What’s that you say? There’s no DART train going to Lancaster Avenue or La Prada in Mesquite? Well, it could be that those areas lack the potential ridership or places of interest. Also, could be the member cities cheaped out on the DART tax. Planning, discussion and more discussion – all are required to put rail into place.

CONCLUSION
What to make of all this? It’s very nearly socialist in nature. Every committed DART rail user is flipping a finger at Ford, Audi or Shell Oil. Any opportunities lost to the auto or oil industry are gains to transit-oriented construction, general retail, the arts and tourism to name but a few. If you haven’t already, set aside one sunny afternoon to check out the exhibits at Fair Park in Dallas – and by all means take the Green Line to get there.


© 2009 blogSpotter

A Different Kind of Car Company

What happened? -- Picture courtesy of GM

by blogSpotter
In the new age of Obama, General Motors is valiantly fighting off bankruptcy -- trying to become solvent and relevant once more. Their new focus for 2009 is to:

o Improve quality & fuel economy
o Fight imports
o Forge a better relationship with Unions

Amazing, these goals, because they precisely match the 1982 goals which were stated for the then-nascent Saturn Division of GM.

In seeking to be "a different kind of car company", GM's CEO Roger Smith funneled $5 billion into Saturn. A new type of manager-union-dealer consortium was created for cooperation and communication all across the board. The trial ground was the Spring Hill, Tennessee plant and the changes were far-reaching -- probably helps to explain why Saturn took every bit of 8 years, from early 1982 concept to a 1990 reality with cars in show rooms.

The 1991 Saturn was greeted with great fanfare. It made the cover of TIME magazine as an American comeback story, and it won the hearts of quite a few Toyota and Honda fans. But all was not well in the land of Saturnalia -- sales (originally forecast at 500,000 units) peaked in 1994 at only 286,000 units. The Go-Go 90's became dominated by SUV's and Saturn lost out in that transition. The promised quality never quite materialized; Saturn is still behind Pontiac (an "old school" company) in car quality rankings.

Saturn became the source of satire as a "car cult" where the purchasers form a sort of bizarre clique -- the cult aspect was played up on an episode of the Ellen show. The product, until very recently, featured mostly bland, boxy cars -- in fact the "revolutionary" 1991 model showed a non-revolutionary resemblance to a 1983 Buick Skyhawk. Another curse, almost impossible to overcome, is that Saturn became branded as a "chick" vehicle -- something primarily appealing to women (who sexistly are considered to be unsophisticated in picking out cars).

So, whither the Saturn in 2009? Saturn has become more conventional now, with a smattering of SUV's and car models based on the German Opel Division. What of the heralded manager-union consortium? Well, it turns out that neither managers nor unions really liked it -- it made strange and uncomfortable bed fellows. In light of the 2008-2009 financial melt down and $4 gas prices, one has to ask if there might be motivation to try it all again.

My own crystal ball says that Chevrolet will be the small car division for any future experimentation -- no more consortiums. Saturn was an idealistic attempt to change "what is" with "what can never be". Let's hope that 2009 is a more practical, practiced approach -- let's replace "what is" with "what should and can be".

© 2009 blogSpotter

Bring Back Glass-Steagall

The Federal Reserve HDQ -- needs to be a Glass house -- Picture courtesy of Wikipedia

by blogSpotter
Barack Obama and our Democratic congress are doing a great deal toward pushing an economic stimulus package. This is a good move -- a tried-and-true Keynesian tonic (called "pump-priming") used in the 1930's. Some people are under the wrong impression that it took the logistical wheels of WWII to get us out of the Depression; noted economist Paul Krugman points out that the Roosevelt programs such as WPA were slow to give stimulus but were finally doing their magic by the end of the 1930's. Government has to step in as the consumer, if no one else will.

What I would now find appalling (given our new Depression) is granting $800 billion to known thieves (basically) while making no requirement toward a change in behavior. Giving AIG or Wells Fargo a bail-out with no behavioral therapy attached would be like giving paraldehyde and a sermonette to a bad alcoholic. The behaviors we witnessed in the last nine years border on criminal (and sometimes as in the Madoff, case cross that line handily). We CANNOT give the henhouse back over to the foxes that already raided it once – it would compound the theft and financial vandalism already committed. My own thought is that we should bring back the 1933 Glass-Steagall (GS) act in some form or fashion.

What is the GS Act? It’s depression era legislation enacted by two Congressional Democrats at the most desperate low-point of 1933. The main accomplishment of GS was to separate commercial banking from investment banking, yielding two great advantages: (1) Preventing conflicts of interest that accompany a single entity that both lends and uses credit. And (2) Encouraging safe and conservative investment policies for Depository institutions whose primary purpose is to preserve the value of customers’ deposits. It should be noted that other countries adopted this same financial firewall from our example (most notably China), and reap the benefits even now.

Unfortunately, in the Internet Boom of the Go-Go 90’s, the Congressional Democrats allowed Republican free market proselytizers to talk them into going along with a repeal. The arguments were along these lines: "We’re losing market share to foreign companies that don’t have the restriction.” (We by the way refers to rich people, not you or me -- the money market investor). "Conflicts of interest could be managed by making the commercial and investment arms of the same company be separate subsidiaries" (And that helps how?). It’s now thought that repeal of GS led to our current bad situation. It’s to the everlasting shame of gung-ho Clinton Democrats that they went along with Phil Gramm on the repeal of such an important system safe-guard.

With all that is being spent, and all the gnashing of our teeth, it would be great to see that we’ve been restored to a nation of of laws. People are only human and the greed motive is ever-present – we need to structure our institutions so that peoples' greedy natures are met with other peoples' common sense and desire for self-preservation.

© 2009 blogSpotter

It's All a Ponzi Scheme

What Madoff Made Off with? -- Picture courtesy of Yahoo

by blogSpotter
America was shocked, simply shocked when 70 year old investment strategist Bernard Madoff was recently arrested. The genial, well-liked and well-connected businessman was charged by the FBI with the largest investment fraud ever perpetrated by a single individual -- 50 billion dollars. How could this pillar of society who formerly chaired the NASDAQ stock exchange do something so heinous? The grandfatherly Madoff headed his own well-regarded investment security firm from 1960 until his arrest this year; who would've dreamed it?

Madoff made off with money from some of the most prestigious (and usually financially savvy) people and groups; among those sucked in: HSBC Bank, Lappin Foundation (its 401K) and even several celebrities including Kevin Bacon. People who normally know better, knew worse. Consider the following "mommilies":

"If it seems too good to be true it probably is".
"Water doesn't flow up hill".
"There's no such thing as a free lunch".

Why do the platitudes of the wise seem to lose their influence when needed the most? I have more news for everyone so shocked; it's all a Ponzi scheme. Wall Street itself is a Ponzi scheme. I've often wondered why people of the early-21st century have been so eager to privatize Social Security -- thus using their retirement for a Day at the Races. Let's look at the definition of Ponzi Scheme from dictionary.com:

“Ponzi scheme - a pyramid investment swindle in which supposed profits are paid to early investors from money actually invested by later participants”

If you replace “swindle” with “arrangement”, that’s basically how all stocks and mutual funds behave. The investment houses can make no promises about what the returns will be, but they’re certainly glad to take your money, the money of a new investor, up front. Greater pyramids were never built in Egypt, and all of this is legal. It is the very definition of how it works.

In his defense, Madoff did nothing but add more blur to an already blurry line – he only did ‘what was in his nature’ and what is in the nature of unbridled capitalists everywhere.

In my quasi-socialistic, deterministic mind-set I like gains that are measured, modest and within reason. Fixed rates are preferable to variable rates. Low, guaranteed returns are preferable to speculative big returns. The tortoise predictably beats the hare, according to Aesop’s fable -- there's no disagreement there. And in the bullshit world of high finance, pyramids come tumbling down.

© 2009 blogSpotter

My Kingdom for a Navigator?

Yours for $26K -- Picture courtesy of CarMax

by blogSpotter
My 2001 Toyota RAV4 has served me well. It still looks pretty good and only has 53K miles on it. On the other hand, it does have slightly oxidized paint, and torn upholstery in the drivers seat. I’ve recently toyed with the idea of some new wheels. Have looked at 2009 Toyota RAV4, Toyota Highlander and Honda CRX. Brand new, these cars range in price from 25K to 40K depending on models and options.

Imagine my surprise when I looked at Lexus Certified Pre-Owned web site. I saw where a 2007 Lexus RX 350 (35K miles) with 2 years remaining on the warranty was only $28K. Its new listing price would hover at $43K. I went on another lark and looked at www.carmax.com. There, I found a 2007 Lincoln Navigator going for $26K. This car new would list @ 48K, even after our recent gasoline price brouhaha.

More thoughts flicker by … gasoline is back down to $1.69/gallon. Will it stay this reasonable in months to come? Consider the young ladies who’ve dated OJ Simpson in the last decade -- they might have to ask, “Have you gotten that knife-play out of your system?” I might be just as compelled to ask Shell Oil, “Any chance those gas prices will be rocketing back up to $4 anytime soon?”

Newsweek magazine ran a story last week about “luxaholic guilt”. In light of our recent financial meltdown, people who can afford luxury items have started to do it on the down-low. They feel guilty flashing bling and baubles in front of people less fortunate. I might also feel self-conscious in that regard, even though I fail to qualify as wealthy or luxaholic. I have no desire to let anyone “eat cake”.

But look at it this way. When you see a 2007 Lincoln Navigator driving down the street, did they pay $48K or $26K for it? $26K will buy a new Honda Accord and not even the fanciest trim level. When I pay homage to the wealth of the lux-o-mobile owner, it seems that times have changed the requirement. It is not nearly enough for him to park it next to my RAV4 and throw a Nordstrom’s bag in his Navigator’s storage compartment – nay. He needs to show me the purchase contract. Else, he might have bought it from CarMax for $26K and be paying it out at that.

Lux-a-holics – now is your dark, even darkest hour. You cannot hoodwink anyone into thinking you are rich unless you are driving the Yellow Rolls Royce of movie fame, or maybe a Maybach Limousine. Else what you’re driving is negligible degrees better than what I’m driving. Pretentiousness is after all, and in the final analysis, a bitch.

© 2008 blogSpotter

Saving General Motors

HHR on sale -- Picture courtesy of Wikipedia

by blogSpotter
"GM is really sort of a dinosaur", says Senator Richard Shelby with obvious derision. Shelby is the ranking Republican of the Committee for Banking, Housing and Urban Affairs. He is of the Marie Antoinette tradition -- he might as well say, "Let them eat cake". Shelby is not alone in thinking that the struggling auto giant should be allowed to lapse into Chapter 11. Michael Levine of WSJ writes in an Op-Ed that GM could cut itself loose from smothering relationships (unions, unprofitable dealerships, pension obligations) if only it were made to operate out of Chapter 11. If it went into Chapter 11, according to Levine, you would have the new GM Lite.

Jeff Sachs, writing for the Washington Post disagrees. Airlines can function under Chapter 11, because a customer purchasing an airline ticket isn't expecting a long term commitment. A car buyer will want parts and service for possibly a decade into the future -- they want to believe that their car company is a solid, going concern. Potential car buyers won't even initiate a relationship with a company that's on the ropes. Chapter 11 is not a viable option for large auto companies.

In an odd alignment of Jupiter with Mars, Eleanor Clift and Pat Buchanan were in strong agreement on The McLaughlin Group this past Sunday. Eleanor and Pat hold down opposite ends of the political continuum but they converge on this -- both see that allowing GM to fail would cause immediate unemployment to 3 million people. It would cause untold damage to the nation's supply chain and very possibly put us into a depression. On top of all that, we the tax payers would still be liable to handle health care, unemployment and pension default problems for the millions of workers displaced. It would create pure havoc. As one Op-Ed writer put it -- we can pay for a wedding or a funeral. Wouldn't you rather have a wedding?

Of course there would be strings attached to any government largesse. There would probably be reorganization, streamlining and product realignment -- very similar to behaviors imposed under Chapter 11, but not as limiting or destructive to parties involved. Many people have said of this, as they said of Lehman's and AIG, "They behaved foolishly. Let them die from their own stupid mistakes". In less frenetic times, these would be words to consider. Unfortunately, because of the market meltdown and credit crunch, we cannot exact such vengeance. We cannot take these companies to task without zeroing out every 401K account and sweeping every American into a major depression. To restore credibility to the marketplace we must also engage in an unseemly form of market forgiveness. To forgive in this case isn't so much an act of emotional altruism as it is an act of outright financial survival.

I must point out a certain irony. I drive through Highland Park, Texas each way to work and look at the beautiful mansions along Armstrong and Belfort Avenues. Guess what vehicles are popular here? Suburbans, Tahoes and Yukons -- the gas-guzzling progeny of General Motors. Are the free market evangelizers this ready and willing to say goodbye to their vehicles of choice? I would think for consistency's sake that they would at least switch to the "dinosaur" offerings of Toyota -- the Sequoia for example or maybe a Nissan Titan.

Another thought which attends all of this is our lame duck President. Usually this holiday interregnum between Election Day and Inauguration is lame and tame -- full of golf, valedictory speeches and sweet goodbyes. Who would imagine that we’d have a nail-biter where we have to wonder what legislation a voted-out government can bring to the table, to prevent economic collapse? Let's hope they can bring something for GM and for all of us. Everyone fasten your seat belts – it looks to be a very bumpy ride.

© 2008 blogSpotter

Taxing Issues

Oliver Wendell Homes, Jr., The great Justice -- Picture courtesy of Wikipedia

by blogSpotter
With only 3 days to the election, realclearpolitics.com is showing Obama with an average 6.8 lead, across all the major polls. With all the hullabaloo, I’m reminded of a 1990 Robin Williams movie, Awakenings. The movie isn’t particularly great or note-worthy except that the current election scene brings it to mind. In Awakenings, patients in long-term encephalitic comas are brought back to consciousness by a new miracle drug. They take up mentally where they left off when the disease robbed them of consciousness.

I feel as if the United States has been in such a coma since 1980. The Clinton years are a “one-off” – Clinton was a Southern bubba who actually kowtowed to a Republican congress by enacting such things as Don’t-ask-don’t-tell and the Defense of Marriage Act. To be fair, his Democratic administration was still good in that it was like a truly moderate Republican term – balancing the budget and engendering a financial boom period.

America is a political anomaly – the poor and lower middle class in the U.S. will actually vote against their economic interests to bolster social issues such as abortion or gay marriage. In Europe and Latin America, these issues receive separate treatment – social and financial conservatism are not commingled. Middle-class Europeans are more inclined to vote for social Democratic (big government) parties. It’s outrageous that so many wealthy American individuals and corporations are able to shelter their income so completely from taxation. This shield is provided by the great swirl of the middle class who vote as if they were in the shelter class.

This week’s TIME magazine has an Op Ed piece about the laughability of deriding taxes as the “redistribution of wealth”. In point of fact taxes are a redistribution of wealth – a healthy and necessary redistribution. As Oliver Wendell Homes said, “Taxes are the price we pay for a civilized society”. A favorite conservative argument is, “I should only be taxed for what I use, or what is of merit to me”. Well, that is pretty much roads, highways, airports, postal delivery, school, research & development, national defense and virtually every non-direct-market human activity. The wealth is indeed taken and redistributed – without this we would devolve to feudal states with toll roads, tariffs and jousting matches between Machiavellian city-states.

A tax must be levied, and a graduated income tax is the fairest way to assess the dues. As America loses ground to BRIC (Brazil, Russia, India and China), it may finally have another Great Awakening – it should awaken to the fact that great societies must sometimes engage in great collective enterprises, and taxes, fairly assessed and collected, are the only known way (here or anywhere) to accomplish that.

© 2008 blogSpotter

Ayn Rants

Atlas Shrugged or Atlas Shrunken? -- Picture courtesy of Wikipedia

by blogSpotter
Today's Dallas Morning News has an editorial about Alan Greenspan -- "When His Bubble Burst". In it, they talk about how Reaganomics has gotten some serious bumps and bruises in the recent melt-down. The article recounts how Greenspan presided over a big Reaganomic expansion as our Federal Reserve chairman from 1988 thru 2006. He most notably opposed raising interest rates and opposed regulating the financial derivatives market. Greenspan is said to be a strong deregulation advocate and fan of Ayn Rand. Rand is the champion of "rational selfishness" for those unfamiliar with her writings.

In his deposition to Congress last week, Greenspan had to admit "Mistakes were made". He couldn't believe how foolish and greedy the Wall Street titans were, in retrospect. I myself have several observations to make -- the first one fairly trivial. Self-regulation never works. I only have to think of my 5th grade teacher saying, "You're on your honor not to cheat." That would be the cue, as she left the room, for the unscrupulous to get out their notes. Cynical? yes indeed. If the honor system worked across the board, we would need no police, store detectives or security systems. As it turns out, we do need the police. At higher echelons, we need police in the form of the Securities and Exchange Commission, Sarbanes Oxley audits, state Attorneys General and the Federal Reserve Board among other monitoring agencies. That every one of these recently failed us, in tandem, is remarkable.

Now lets get back to Ayn Rand’s concept of rational selfishness. I will be the first to agree that our capitalistic engine has produced remarkable results. Here are 3 of my personal favorites: Apple, Google and Starbucks. These companies innovated bold new products and markets – sometimes out-of-the-blue things new like internet search engines. Sometimes the innovation was a clever twist on something old like boutique, upscale coffee houses. These businesses could only happen in America. One of the primetime magazine shows (maybe 60 Minutes) recently had a special on what’s involved with setting up a hotdog stand in India. It isn’t pretty – dozens of forms, interviews, fees and applications will stand between you and hotdog profits. America has relatively unfettered markets where newbies can invest, create and make the world a better place.

How do we keep the genie under control, performing good magic (less the bad magic)? How can we stay dynamic without the necessity of $700 billion bail-outs? I have some general (dare I say Marxist-influenced) explanations that center around monetary value. Money represents more than anything, the value of labor (either human or machine). It represents the transformation of raw materials into useable goods or artistic renderings. Ideas and inspiration count as much as hard work if the end result is a human-or-machine produced commodity for which there is demand.

Financial instruments which tie immediately back to labor have “true value”. Financial instruments that tie back to other financial instruments become shaky and speculative. Their worth is a shadow worth, much like a lottery or raffle ticket. The purchaser is getting more of a chance than anything else and the odds can be very long on the purchased asset. Presidential candidate John McCain said something with which I heartily agree – “Wall Street has developed a casino mentality”. That may be our only agreement, but we have that.

Overall wealth accumulation should rely far more on actual work accomplished – not compounded interest or stock run-ups. In a healthy society, interest and dividends should reflect no more than the productivity increase of the society. Wealth accumulation that derives from paper asset manipulation (hedge funds, derivatives, credit default swaps) becomes a poker game where very few players come out ahead. To keep the game safe, sane and sensible we need the white collar police (SEC et al) to be involved. In coming years, Wall Street’s not cheating will no longer be about the honor system, it will be about a system of serious financial governance.

© 2008 blogSpotter

Capitalism Takes a Hit

The Scene of the Crime -- Picture courtesy of Wikipedia

by blogSpotter

GREED IS NOT GOOD

Today, we are in the aftermath of the worst stock slide in history (the DOW lost 777 points yesterday). I was actually undecided through much of this election about my 2008 vote. I'm a centrist Democrat who supported Hillary in the primaries. Then the week of September 15th, our already-wounded economy was chopped to its knees by a credit crunch. Four investment banks and a major insurer defaulted on their debts and had to be rescued with a combination of penny-on-the-dollar buyouts and Federal intervention. This week, we've had two widely known commercial banks taken down, and a much-maligned $700 billion bipartisan bail-out vote fail in the House. Speaker of the House Nancy Pelosi fell to the occasion -- in a moment that called for grace, understanding and cooperation she chose to unleash a scorching partisan attack. I don't think her remarks are what torpedoed the bailout but they certainly didn't help. People on hand for the vote reported that Barney Frank hurried the roll call along at one point when the Republicans were scrounging up "Yes" votes. Were both parties trying to undermine the bailout for political ends? It's hard to say -- maybe Frank was afraid they were scrounging up "No" votes.

I'm now voting for Obama. I still don't warm to him very well and wish that Hillary was the candidate, but I couldn't in good conscience contribute to four more years of Bushanomics. The Democrats could probably nominate a folding chair at this point, and have a good chance of winning.

THE END OF WILD WEST CAPITALISM

In war, a soldier might fall on a hand grenade to protect his fellows. In maritime travel, a captain goes down with his ship. In both cases, there is a since of stewardship and duty that says a person of authority in dire straits will suffer with those who suffer under his guidance. In an opposite analogy, imagine a Titanic that strikes an iceberg; before most passengers know there is danger, the captain has been airlifted to a tropic isle, suitcase in hand. His suitcase has the safe contents he raided before leaving. What I've just described is "Wild West" crony capitalism -- what we have on Wall Street. Our economic engine which determines all that we have and do is in the hands of greedy manipulators -- people whose every action is determined by profit. If the $700 billion bailout fails, we can probably look to a series of "mini-Enrons". Corporate officers will feast on the carcasses of dying corporations, leaving cartilage and bones for the minority shareholders and tax payers to scavenge. How have we constructed such a society, where greed is the primary motive? "Might makes right" and "Winner takes all" are mantras of the caveman era -- have we gone back to that? I think it's amusing that Republicans don't blame Republican principles in general for any of this -- it's just that crooked Republican over there.

TEMPERED CAPITALISM

Benjamin Franklin said something to the effect, "If only men wouldn't be such wolves to each other, we could have Heaven on earth right now". Ben was very prescient and one has to wonder now if capitalism can survive. I think that it will, albeit a reasonable man's capitalism. There will be government oversight in every economic activity and practical economic caps to prevent huge income disparity. Such systems already exist in a few places like Scandinavia and Western Europe. Someone might ask if this impedes creativity. Do we want to be so creative that we set our economic house on fire?

In Conan O'Brien’s monolog last night, he joked that Bush had one more thing to check off on his presidential "bucket list". Guest Bill Mahr opined that Bush wouldn't have a sense of completion until he saw the black smoke of America's banking system swirling in the air. I say that it's time for common sense, and yes, decency to return. It's time for both profit and principled stewardship to be the twin virtues of our economic enterprise.

© 2008 blogSpotter

Spotlight on Henry Paulson

Strange Fascination's Man of the Year? -- Picture courtesy of Wikipedia

by blogSpotter
In a recent column, op ed columnist Paul Krugman despaired that there are no adults present to handle our current banking crisis. In his article titled “Where are the Grownups?”, Krugman was dismissive and critical of Treasury Secretary Henry Paulson. He said that Paulson’s $700 billion bailout would benefit his cronies, and that Paulson is partly to blame for the current crisis.

I’m generally a liberal who concurs with other liberals – I might choose to close ranks with a liberal columnist in lambasting a conservative leader. However in this case, Krugman is way off-base. His reaction to the proposed bailout is fairly knee-jerk, like reactions we’ve had from both the far left and the far right. (More about that in a minute).

As a former CEO of Goldman Sachs and as a former staff assistant under the Nixon administration, Paulson’s conservative credentials are pretty substantial. But Paulson actually has some liberal credentials too. He as done work for the Nature Conservancy, and worked toward solving global warming and as well as saving endangered bird species. Other items in Pauson's mini-biography color in more details -- he is a serious, thoughtful and accomplished man. Pauslon is a devoted Christian Scientist; he distinguished himself early on in life as a Dartmouth Phi Beta Kappa and an All American offensive lineman.

Paulson isn’t proposing to make America socialistic – his personal ideals are not aligned that way. Also, he isn’t trying to give the store back to rich financiers who already “pissed it away” the first time. Rather, he is working toward a bipartisan solution that will save our banks from a credit crisis – a matter that affects every living American with a bank or retirement account.

Paulson is reaching across the aisle with such "intimidating" Democrats as Christopher Dodd and Barney Frank to help ensure that some of the debt can be recovered, struggling home owners can stay in their homes, and that nefarious tycoons get salary caps along with much-needed bank regulations. None of this sounds bad to me – it sounds pretty reasonable in fact. The solution will be painful and costly no matter what – that’s what we get for laissez-faire management and lax rules.

We’ve had many trials throughout American history. If we’re lucky someone steps into the role to steer the ship to a safe harbor. For the first few months of the Civil War, we had no Lincoln but one finally came to the fore. Paulson isn’t an elected official, nor is he running, but I think we have a captain nonetheless.

© 2008 blogSpotter

Socialism Brought to you by the GOP...

Lehman's HDQ the day the bomb was dropped -- Picture courtesy of Wikipedia

by blogSpotter

Socialism sans revolution?

As a centrist Democrat, the idea that government might be involved with the business world doesn’t bother me. Uncle Sam may regulate private enterprise, tax it, set bench marks for it, and sometimes even compete with it. Several areas of human endeavor are important enough that we don’t leave it to a pure “profit motive” to see that they get done – national defense, highway system and public education to name three. We should add national health care to that list on some future date. I’m intrigued that last week, Americans became 80% share holders in AIG, an insurance company. Uncle Sam is branching into new things. If plans carry thru for this weekend, Uncle Sam will pick up ½ a trillion dollars in mortgages. We’re quasi-socialistic now, and here’s the rub – extreme right-wing free-market ideologues are what brought us to this point.

Meltdown

On September 14, 2008, several business wires were murmuring that three companies were on the ropes: Lehman Brothers, Merrill Lynch and AIG. How these situations snuck up on us with such quiet ferocity is beyond me. Merrill Lynch eked out a deal to be purchased by Bank of America (at 30% of its 2007 valuation) the following day. Lehman Brothers was forced to declare Chapter 11, and after two days of begging, AIG was given a lifeline of 85 billion dollars from the federal government on September 16th. The financial devastation wrought over these two days was the worst we’ve had since the Great Depression, without any exaggeration or mincing of words.

Uncle Sam already has been expanding his role of “business savior” throughout the year of 2008. Since January, the federal government has bailed out Bear Stearns as well as mortgage giants Fannie Mae and Freddie Mac – all to the tune of $600 billion. And the meter is still running.

Political implications

John McCain lashed out at the titans of wall street – he said they were exhibiting a Casino mentality and gambling away other peoples’ money with little ill consequence to themselves. Columnist Froma Harrop points out a problem with this. McCain (who recently said the economy was “fundamentally sound”) also had Phil Gramm as his chief financial advisor until recently. Gramm is known as a deregulation zealot who personally put through legislation that deregulated “financial derivatives” – the TNT that ignited much of the current meltdown. Gramm’s wife was also on the Enron Board of Directors – why does it seem like these are all the wrong connections? In the space of 3 days, realclearpolitics.com showed McCain going from 6 points ahead to 2 points behind Obama. It’s a well-deserved shift.

Secretary of the Treasury, Henry Paulson, is the man saddled with the most strenuous weight of this magna-bailout. He recently worked in the private sector himself and was a “champion” for free market dynamics. Mr. Paulson said this week, “Pure capitalism is dead”. If pure capitalism is the unbridled, blood-lust greed, hubris and arrogance served in a pita wrap of macho egotism that we’ve seen, he is certainly right. Most Americans are hard-working people that want a square deal and a retirement savings. That the very foundation of our financial well-being would be placed in the hands of jackals and con artists is unbelievable. These men should not be turned loose with our money again – some should probably be serving prison time.

Both Presidential candidates have pledged to bring regulations back to the process – a necessary pledge given that this financial hurricane hit six weeks ahead of Election Day. Laissez-faire Republicans have had their run and one has to pose, “Who let the dogs out?” The perfect storm that hit last week confers an advantage to Obama and that is very much as it should be.

© 2008 blogSpotter