The Debt Conundrum, Part 2 84 comments
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If there is one chart that tells the tale of the U.S. economic demise, it is the graphic below. It illustrates the transformation of a country that saved and invested to a country that borrowed and spent. In 1981 consumer expenditures accounted for 62% of GDP and private investment accounted for 19% of GDP. Consumer expenditures soared to 70% of GDP while private investment plunged to 11% of GDP. The American economy needs to revert back to the healthier percentages of 1981. Essentially, American households need to spend $1 trillion less per year and use this money to pay down debt and increase savings.
The Personal Savings rate as a percentage of disposable income dropped below 0% in 2006. Over the last 50 years, the average has been 7.2%. The rate has been below this average since 1992. The rate has recently reached 4% as delusional Boomers are beginning to grasp their bleak future. Boomers always seem to go too far. They will eventually wear the badge of frugality as proudly as they wore the badge of over-consumption. Robert Rodriguez sees an 8% savings rate on the horizon.
“A dramatic rise in the U.S. personal savings rate will be required to begin the mending process of the consumer’s balance sheet. I expect the U.S. personal savings rate will rise from 2% to 8% this year and remain at an elevated level for the foreseeable future. This process should increase savings by approximately $650 billion annually. An increase of this magnitude, in such a brief period, is unprecedented, other than during WW2, when it rose from 12% to 24% between 1941 and 1942. Assuming some earnings on this incremental savings and a partial recovery in the stock and real-estate markets, it will likely take ten years for the consumer’s net worth to return to its pre-crisis level.”
Anyone anticipating a consumer-led recovery is counting on consumers who have been whacked in the head with a 2 by 4 to stagger to their feet and say, thank you sir may I have another? Even with interest rates at extremely low levels, household debt service is 14% of disposable income, versus the 30 year average of 12.1%. As interest rates rise, this burden will break the consumer’s back. The only way to avoid this fate is a substantial pay down of debt.
The only difficulty with paying down debt is you need cash to pay it down. For decades, from the 1940s until 2000, Americans were cautious about debt. They always had an emergency fund for those unexpected expenses that always pop up. If your washer broke, a TV crapped out, or your lawn mower stopped working you had the cash on hand to buy a new one. This attitude became passé as we entered a new century. Who needed cash when you received three credit card offers per day in the mail? Today, not only do most Americans not have cash to cover unexpected expenses, they don’t have cash for milk and bread. A vast swath of America pays for their cigarettes, lunch meat, and morning coffee with a credit card. This has resulted in a net $4 trillion deficit of household cash versus household liabilities. Is this normal or abnormal?
Now that Americans have used up all the equity in their houses, and some, they have turned to their last resort – credit cards. The government has handed billions of taxpayer funds to the biggest credit card issuers in the world (Bank of America, JP Morgan, Citicorp, Wells Fargo, Capital One, and American Express) so they will continue to give grossly overly indebted Americans more rope to hang themselves. This ridiculous solution will destroy the National balance sheet and the people who continue to spend more than they make. We are running up the National credit card balance and passing the bill to future generations. Credit card delinquencies are already at the highest level in history. With 25 million (U6 – 16.4%) people unemployed, out of a work force of 155 million, another 2 to 3 million likely to lose their jobs, house prices still falling, and foreclosures likely to top 2 million in 2009, credit card delinquencies will surge to unprecedented levels in 2010. Does anyone really believe our biggest banks are solvent?
The New Normal
“Loading up the nation with debt and leaving it for the following generations to pay is morally irresponsible. To preserve independence, we must not let our rulers load us with perpetual debt.” - Thomas Jefferson
The last three decades have not been normal. They’ve been Abby Normal. When a society chooses to spend more than it produces, the only people who get rich are the bankers lending out the money. For a society to progress, its citizens must save more than they spend. The excess savings can then be utilized to invest in long-term assets that will increase the wealth of the nation. A society needs to produce more than it consumes, or it will eventually wither away. Debt keeps Americans enslaved to the corrupt bankers and clueless government bureaucrats who run our fair country.
"Debt is an ingenious substitute for the chain and whip of the slave driver."- Ambrose Bierce
When this debt binge began in 1982, the profits of financial companies accounted for 7% of all U.S. company profits. At the peak in 2006, they accounted for more than 30% of all U.S. company profits. This is why the money managers own the yachts, not the customers. The banking industry, backed by its sugar daddy the Federal Reserve, has enslaved most of America in their web of debt. They have sucked the vitality and creativity from the nation through the distribution of easy credit. In the last nine years these whoring bankers went completely mad in their greed induced search for outrageous levels of compensation by granting credit to anyone with a breath and creating fraudulent products to perpetuate ever increasing levels of debt. When this blew up in their faces these banks should have gone bankrupt and many bank executives should have gone to jail. Instead, Dr. John Hussman explains what has happened:
“Rather than following policies that would have allowed for a sustainable recovery, our policy makers opted for a stunningly unethical strategy of making bank bondholders whole with well over a trillion dollars in public funds, watering down accounting rules to allow banks to go quietly insolvent while reporting encouraging “operating profits,” looking beyond the continued shortfall of loan loss reserves in relation to loan defaults, and doing nothing meaningful with regard to foreclosures, whose rates continue to soar and which face a fresh wave later this year and well into 2010 and 2011. These policy responses have more than doubled the U.S. monetary base within a period of months, added a trillion more in outstanding Treasury debt, and virtually assure that the value of those government liabilities will be re-priced in relation to goods and services over the coming decade. A range of different methodologies suggest a doubling in U.S. consumer prices over the coming decade, though with the majority of this pressure occurring 3-4 years out and beyond.”
Sometimes I feel like Dr. Frankenstein pointing out to Igor that we need to fix his hump, when I talk about the huge amount of debt on our backs.
Dr. Frederick Frankenstein: You know I'm a rather brilliant surgeon. Perhaps I can help you with that hump.
Igor: What hump?
The current amount of debt accumulated by our citizens and government is mind boggling. We are in a filthy mess. But it is about to get worse. A major storm is on the horizon.
[Frederick and Igor are exhuming a dead criminal]
Dr. Frederick Frankenstein: What a filthy job.
Igor: Could be worse.
Dr. Frederick Frankenstein: How?
Igor: Could be raining.
[It starts to pour]
The $56 trillion of unfunded liabilities for Medicare, Medicaid, and Social Security are a debt that must be paid. This is an unfunded $183,000 debt for every man, woman and child living in the country today. The only way to pay the current and future debts is to increase savings dramatically, reduce consumption dramatically, and increase investment in things that will create real wealth. Real energy self sufficiency projects such as nuclear power plants, coal powered plants, wind farms, natural gas pipelines, liquid natural gas facilities, electrical grid upgrades, replacement of crumbling water and sewer pipes, and upgrading of our public transportation and road networks are what is needed. Is this being done? No. We fiddle while Rome burns. Instead, grand healthcare schemes are being dreamed up that will add trillions more to our crushing debt and the government takes over the car industry. This will end no better than a rear end collision with a Ford Pinto.
The great deniers of our plight assure us that our best and brightest will discover or create some new invention to save the day. Based on the rankings of our 10th graders in math and science, the new discoveries are not likely to occur in this country. We effectively graduate mostly functionally illiterate dullards from our school system every year.
The time has come to accept the bitter medicine of a lower standard of living for the foreseeable future. Saving not spending, will save this country. Until most Americans realize the insidious web of debt that they have been trapped into by the poisonous banking cartel, they will never emancipate themselves from their state of slavery. Who is to blame for this catastrophic state of affairs? We the people are. As citizens, if we do not endeavor to exercise control and discipline over our own spending or government spending, who will? Only we can choose to save rather than consume. Only we can elect officials who will spend our tax dollars responsibly. Only we can bring the banking cartel to its knees by not borrowing and no longer accepting less than 1% on our deposits. The choice is ours.
“America traditionally represents the greatest possibility of someone's going from nothing to something. Why? In theory, if not practice, the government stays out of the way and lets individuals take risks and reap rewards or accept the consequences of failure. We call this capitalism - or, at least, we used to.” - Larry Elder
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This article has 84 comments:
On the economic front there is no foreseeable way in which the United States can work off the $4 trillion it owes foreign governments, their central banks and the sovereign wealth funds set up to dispose of the global dollar glut. America has become a deadbeat – and indeed, a militarily aggressive one as it seeks to hold onto the unique power it once earned by economic means. The problem is how to constrain its behavior. Yu Yongding, a former Chinese central bank advisor now with China’s Academy of Sciences, suggested that US Treasury Secretary Tim Geithner be advised that the United States should “save” first and foremost by cutting back its military budget. “U.S. tax revenue is not likely to increase in the short term because of low economic growth, inflexible expenditures and the cost of ‘fighting two wars.’
Challenging America will be the prime focus of extended meetings in Yekaterinburg, Russia (formerly Sverdlovsk) today and tomorrow (June 15-16) for Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai Cooperation Organization (SCO). The alliance is comprised of Russia, China, Kazakhstan, Tajikistan, Kyrghyzstan and Uzbekistan, with observer status for Iran, India, Pakistan and Mongolia. It will be joined on Tuesday by Brazil for trade discussions among the BRIC nations (Brazil, Russia, India and China).
Time is running out for the US dollar.
(as unfortuate as that is for us)
But still, well said.
(notice - from bad music do good movies)
"An average is created by prices being above average for a period of time and then below average for a period of time." - this is the point that is missed by all. People are too quick to point everything is OK, even the new normal is redefined to suit whatever newest bullish theory being propounded.
Home Prices- I will simply stick with Peter Schiff's forecast of 37% more downside. With Alt-A and prime loans, commercial and rest of the stuff still to hit. The worst is yet to come.
Commodities- Commodity prices are sending the wrong signal or it is being interpreted misconstrued wrongly by the speculators on Wall Street. It simply is China hoarding, it has its reasons and rationale - none of it has anything to do with economic revival in China or rest of the world. China is too export dependent to have meaningful growth without exports - last month its imports and exports both plunged 25%+ YOY. So nothing much is going on there at all.
The China decoupling/commodity story was completely debunked with the last crash - it has no basis for revival - but here we are. You think people would have learnt their lessons, no, fools never learn - when the Pied Piper come calling all are ready to follow all over again.
Wall Street business model is making commission out of investors - so they have to be bullish. All economists and commentators are paid for directly/indirectly by the Wall Street banks, they are all paid to say bullish things, and that is what they do. Just remember all these guys got it completely wrong every step of the way - how do you expect them to be right now. No way.
Fed- their adverse case scenario for the stress-free stress tests was- 9.2 -9.6% job losses for 2009, max 10.3% for '010. We already have exceeded the '09 number, and in a few short months targets for '010 would be exceeded. So much about the forecasting ability of our wonderful Fed.
Obama had pitched the stimulus to prevent unemployment exceeding 9% will we had the largest ever stimulus and we are beyond 9% and counting.
As long as US keeps losing jobs and home prices keep falling - no recovery is possible - even a jobless recovery. Green shoots etc are the greatest propaganda since Goebbels, if you are falling for it good luck to you.
Got it in one!
As usual, a well constructed set of arguments with plenty of good supporting data.
I particularly want to comment on the education discussion. From the data you present it is obvious that we do a mediocre to poor job of education K-8 (9th and 15th out of 45). We follow that up with secondary education that is non-existent. Two years later the rankings are (22nd and 28th out of 39). The 10th grade performance is probably achieved with only the poor material assimilated two years earlier.
In two years (8th to 19th grades) we go from 67th percentile to 28th percentile (using math performance). We need to stop no child left behind and start allowing more children to get ahead. How about starting with the 3Rs? Little else should be taught until functional reading, writing and math skills are learned. We have somehow lost the basics.
We risk the New Normal being 50% functional illiteracy (3Rs). When I was a youngster, magazines like Popular Science talked about the future having high levels of automation, allowing great amounts of leisure for the populace. This leisure would permit people to have greater time for recreation and intellectual activities. The presumption was that the intellectual activities would add value to the economy and provide a source of income for the "leisure class". What has happened is that we are at close to 50% leisure class (unemployed or not in the work force), but the vast majority of these are at subsistence levels in or near poverty, or dependant on the employed 50%, and many have not received the education necessary to engage in any intellectual activity more complex than peeling bananas and opening beer cans.
Sorry for the long rant, but education is a hot button with me.
Not "lost them".. we sold them down the river by letting the NEA unionize our public education. And we continue to relentlessly throw more money at the schools even in the face of declining test scores.
If I were the parent of a primary or secondary school child, I would either home school them or move the kids to a private institution. Anything less than that is sentencing the child to a sad life of mediocrity or failure.
Millions upon millions of Americans are now classified as long-term unemployed.
The first ones to lose their jobs and qualifying for the benefit extensions (22 to 33 extra weeks) it will be these people who's benefits become exhausted around this Christmas.
This will be the start of an immediate economic/society whirlwind. The unemployed are spending down whatever savings they have and maxing out their credit cards right now, paying only the minimum payment so as to keep some support in their lives.
After benefits are gone and people do not have the means to support themselves and their families - look out!
There is going to be a VERY large group of VERY angry people that are going to lash out. It will be a grassroots movement.
This slowly, inexorably moving mass of humanity is heading toward it's destination and will arrive in it's maturity this coming Spring of 2010.
Is no one planning ahead? Are the needs of the unemployed with expired benefits being addressed? What is the contingency plan? Is there anyone at the wheel? Where are we going? What is our destination? Do we have a goal? What is it?
These are all questions asked by the people - they need answers - both the questions and the people.
Mr. Lounsbury,
"Sorry for the long rant, but education is a hot button with me. "
Don't apologize for your patriotism. For years, we have been watching the decline of our country play out in our schools. The economic crisis is only the latest reason to dismantle what is left of education in our country.
The three best tools for gaining political power are fear, greed, and ignorance. Education is the only tool to combat the effectiveness of all three. Make the people dependent on government, then they will be easy to control. There is no democracy without education, let alone competitiveness in the new global economy.
Education isn't really something "received", it must be pursued. It's driven by an inner fire, a desire to learn, a fire that can be lit in most people by a good teacher.
The problem with the US public education system is that there are too few good teachers, because the system itself is horribly flawed and most smart people who enter it as teachers leave quickly after they discern it's flaws.
Here's how the system currently "works":
The federal government says there must be "accountability", and they force it's nature on state governments via NCLB, and the funding that accompanies that legislation.
Next, state governments define "Standards Of Learnings", (appropriately referred to as "SOLs") which provide course content road maps to local school divisions.
Finally, local public school divisions add the details to the SOL road maps, defining what will be taught at every grade level during every minute of every school day.
The students are then tested regularly, and decisions about the quality of the schools are made based on these test results.
Of course, just like much of what government tries to do, this system, while well intentioned, is horribly flawed.
1. In most cases, students aren't held accountable for their SOL test results. Some just draw patterns in the bubbles on the test sheets.
2. Holding individual teachers and even schools accountable for the performance of their students on these tests is incredibly unfair, not only because students aren't held accountable (and thus many don't care) but because there is no attempt to measure where the students were academically BEFORE the teacher (or school) received them. Only performance on the specific grade level tests are measured, not "value added" by the specific teachers and schools.
3. Measuring schools based on the performance of their students ignores the greater importance of parental influence. A school full of children of uneducated parents who don't value education is always going to perform more poorly than a school full of children of parents who do value education.
Now, imagine you're a teacher in this system and you see how your performance is going to be measured. It's just like being a manager whose performance is based on the performance of his charges, only that he is given no authority over his charges.
So, most good teachers leave the system after a year or two.
The only students who are going to succeed in this system are those who have their fires lit by the few good teachers who do stick it out, or by parents or others outside of the system.
Readers, take it from somebody who knows the system well... send your children to private schools or home school them.
That about says it all.
ie everyone except the top 10% has been in a recession for 30 years, but this was clouded by the property bubble.
There is no solution IMHO without systemic fiscal reform, and I advocate a switch from taxes on earned income - which should be cut to a low level - to taxes on privilege, such as a tax on land rental value, a levy on carbon use, and a levy on limited liability.
In the schools of America there should be a pledge of allegiance to the flag every morning by American citizens, prayer should be encouraged, gutter language, dope, and oddball clothing should be discouraged, and the sexes should be separated - though not perhaps permanently. I'm sure that that doesn't sound right to a lot of people, but then despite what they say a lot of people don't give beans about raising educational standards.
“Loading up the nation with debt and leaving it for the following generations to pay is morally irresponsible. To preserve independence, we must not let our rulers load us with perpetual debt.” - Thomas Jefferson
The CAUSE !
You forgot to mention the CAUSE.
A lot about the effects. And the symptoms.
Robert Hemphill, Credit Manager at the Atlanta Fed, when he realized how things actually work here:
""This is a staggering thought. We are completely dependent, on the Commercial Banks. Someone has to borrow every dollar, we have in circulation, cash or credit. If the Banks create ample synthetic money, we are prosperous; if not, we starve.
We are, absolutely, without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible. But there it is.
It is the most, important subject, intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse, unless it becomes widely understood, and the defects remedied very soon."
Feel that civilization collapsing, a.k.a. financial crisis?
The debt-money system is the CAUSE of our evolution into a debt-ridden society and nation.
We can blame it on the guvmint if it makes us all feel better.
But until we remedy that quintessential defect described by Mr. Hemphill, that ALL money MUST come into existence as a debt, the solution will evade even the most intelligent of people.
What is needed right now is the beginning of the discussion of the exit-strategy to replace our debt-money system.
If you REALLY want to transform debt into "equity", then start creating money(equity) without debt.
Just a thought.
very good. very real. hard to face the truth sometimes.
on education- my pretty half has an 8 yr. old. first he was in a private school (kinder) then he was home schooled (1st). we decided to try public school because we had an opportunity to put him in one of the "very best". because he was number 1 as a student in the 2nd grade and so far ahead of his class. his teacher often told him, "you can skip your reading, or your spelling, or math, you are ahead of everyone." another sore spot was his writing was to neat. he was encouraged to be messy like everyone else. this was infuriating to us. we would not allow it. phonics is out-few kids can read. the multiplication tables are out-that isn't really learning. history is a tortured, twisted re-write of pc crap.
when it came to things like "achievment" tests that had a bearing on funding the children and parents were threatened and coerced. when he blurted out our displeasure to his teacher he was called to the office and interogated. luckily we had coached him some on what would be allowed. he was stubbornly silent. when we learned of the questioning without one of us we tried to meet with the principal. she hid and dodged for 4 months. he was given a cell phone to call us if ever taken in private by an adult again.
the last month of school was wasted. the children had extended recess, board games from home days, and watched movie after movie. they attended and the sorry nea teachers got their paychecks while the school got funding and the taxpayers got screwed, again.
this is a smart high spirited little "wild pony". he has been coached by us never to answer anything personal on any written or oral "test". also never to allow a dna swab or hair or anything that can be used by the state. we may try the public (conditioning, programming, brainwashing, dumbdown) schools again when hell freezes over.
one last sore spot. the green religion was pushed constantly, along with compliance to the state. because the child is intelligent these were fairly easy to de-program.
i am not sure how he will fare in the "brave new world" because we mean to keep him thinking , to excel, and to never take his soma.
lincoln (greenbacks) jfk (united states notes)
ferdinand banks.
first time i've given you a thumb in a long time. glad it was up.
maybe you are at least a smart teacher.
"..... reported a delinquency rate of 9.12% on all mortgage loans ..... but not loans in foreclosure. In the first quarter, the percentage of loans in foreclosure was 3.85%, ...... The combined percentage of loans in foreclosure and at least one payment late is 12.07%,..."
Seems like the last number be 12.97%, i.e. sour loans have essentially reached 13%.
This suggests that any recovery of the banking sector is unlikely, and that nationalisation will eventually become the only option. Our policymakers should realise that the bank's stock and bond holders should bear the banks' losses before the US taxpayer is asked to foot the remainder of the bill.
Mr. Quinn repeats the canard that one cannot borrow one's way to prosperity. This is a lie. Most new businesses are started with borrowing. The stories of maxxed out credit cards and second mortgages in the early stages of businesses that made it big are both legion and legendary. Those guys borrowed thousands and made millions, even billions. Who says you cannot borrow your way out of trouble?
The distinction is what you do with the money acquired. Mr. Quinn wants us to invest in an energy overhaul; so do I. If we had to borrow half a trillion from China to do it, wouldn't it be worth it to get us off oil and on to electric cars and trains fueled by geothermal, wind, solar and ocean energy?
Also, borrowing at one rate to pay down a higher rate is actually a reduction in expense. The US government can borrow at a real rate of less than 2%. If our government borrows at its low rate in order to reduce consumer interest rates that are running at 24%, (say through some legislative trick or another) wouldn't that cut consumer expense and improve their prosperity? Expenses do matter in economics.
Then on to vilifying health care! (I worked in a large hospital for three years as a consultant, and my wife works in one still): Health care is the only for profit industry in which the majority of "customers" are presented with the choice of imminent pain and death or agreeing to the sticker price. Hospital administrators know this, and that is why you pay $15 per tablet for Tylenol.
Mr. Quinn and others may not have made this connection yet, but let me point something out: We have government do jobs that we do not WANT done at a profit. We don't want our police force to be a for-profit organization, we don't want our health inspectors to be either, nor our safety inspectors, or our garbage collectors, or any of our consumer protection agencies like the FDA, FAA or SEC. A profit motive would create too much potential for corruption in these jobs, and that is why we have the government do them. For all that the US Postal service gets dissed, they deliver a letter cross country for 50 cents, while the same delivery by a for-profit carrier like FedEx costs at least $10, twenty times as much.
Well, health care is in the same boat. In the last forty years the non-profit wing has failed, and no longer provides competition for the for-profit wing. The for-profit wing has won, by cutting costs, cutting quality, carefully following the borderline of the absolute minimum legally required effort and oversight, and exploiting their captive relationship with patients by literally extorting them. Your money or or life, buddy.
And that is the point when we as a society can and should stand up and say, "This is a job for the government." Not so they can make a profit, not so they can dictate our health care or force us to exercise, and not so they can eliminate the for-profit trade: So they can provide a counter-balance and competition for the profit-at-any-cost boards of corporations.
There are services we do not want the public sector to provide, even if that can be done at a profit. In recent decades, health care has become one of them; the profit motives of hospitals and pharma is now bankrupting people, endangering their health, or just plain killing them by withholding care and medication they cannot afford. That is not good for society.
Although I agree with the points made by Mr. Quinn, his arguments are weakened when he does not understand basic entrepreneurial economics (you CAN borrow your way to prosperity, just look at FedEx), or basic political philosophy.
The American consumer is exhausted - financially, mentally, psychologically. He is like an alcoholic coming off of a 30 year binge of excesses - the body is alive, barely, but he will need years, not months, of physical, mental and spiritual recovery to regain his former strength and optimism. His spirit is, for the time being, broken, and that is as it should be, for until the addict can admit complete defeat, and surrender, he/she will never find true recovery and the chance for a healthy, balanced and spiritually satisfying existence.
I believe the American consumer is now in the capitulation stage, well past denial, as the horrible consequences of his decades long spending orgy is becoming clear, and recovery is beginning in the form of increased savings and a new-found sense of financial conservatism. As others have posited, I too believe there is a chance that he will overshoot on the savings rate side, and that too is as it should be, because a new dynamic may be entering into the consumer's mindset, and that dynamic is humility, and that is the singularly most important step in the road to recovery for any addict.
It may be that the recession will "officially" end by the 3rd or 4th Q this year, for there are powerful interests at work to make it so, but I doubt we will come surging back to anywhere near former output or consumption levels anytime soon, maybe 5 or more years of fits and starts, as 30 years of excess is wrung painfully out of the system. After all, the road to recovery for any type of true addict is long, humbling and spiritually daunting, and there is always the chance of a relapse along the road to final salvation.
My name is America.... and I'm a credit addict.
America is not an entrepreneurial economy. it refuses to give up any of the benefits it currently enjoys. it is a mature economy. it does not have the growth curves to support a widening and deepening debt load.
we are not investing in our future. we are investing in providing a social network for the disadvantaged and a nice big military machine. instead of creating an environment where the strong flourish, we are weakening the strong to help the weak.
1. Barney Frank and his ilk in Congress who wanted to roll the dice on sub prime acting in collusion with the bankers. We lost. Bush actually proposed and warned about this several times. Read the Wall Street Journal editorial page over the years. Our lovely Congress was right in there helping.
2. Our education system is set up to teach all to be mediocre and not excel as you pointed out. This produces ill prepared and ignorant people who do not know how to learn and who have not been challenged to ask questions to sort out the truth from facts.
3. Our society does not value discipline and hard work; everyone should have whatever they want with little effort. It is owed to them and if they do not get it, then it is someone else's fault. There is a weakened sense of personal accoutnability enhanced by our education system, pop culture as spread by the media and lack of otuhgness by the older generation.
4. Each individual makes his or her choices. There are many who made good choices who will now have to help pay for those who did not. As is pointed out, we are going to have a lower standard of living because the ration of those who make good choices and do work and save to those that do not is the wrong way. Unfortunately this also means we will keep electing idiots who want to have the government fix everything which will accellerate the downward spiral.
5. We as a society wasted too many resources on efforts that sounded good and yet did not give productive results that could return the investment. Social Security sounds good but is a Ponzi scheme that makes Madoff look like a piker as is Medicare and government pensions. The Great Society sounds good and costs trillion with poor returns. If a society wastes its resouces and does not invest in high return activities it ends up with competitors that take away the value. When a socity invests in activities that destroy it people capital base, it fails.
Until people start getting on with saying " I am going to take care of my own problems" and vote for people who have the appoach, we will keep going down hill and will not recover from the facts that were presented. I am not so optomistic about this happening.
I think Mr. Quinn has presented the problem but not the solution. Being humble is not going to help so much.
Real estate is my main focus and I've been "preaching" that there is a lot more pain to come for awhile. It's amazing though, how many people have their heads in the sand by choice!
Real estate is going through a generational shift, meaning it'll take a generation to "recover'. I use the word "recover" loosely as I have no idea what a recovery will look like when it takes 25 years to happen. The real estate bubble is being replaced by a real estate vacuum. One of the laws of physics states, For every action, there is an equal and opposite action." Applied to real estate, it makes for a scary future.
The Detroit area will be a leading indicator for the rest of the country. The area has been losing jobs since 2000, but the housing bubble masked much of it. That housing bubble popped here much earlier than the rest of the nation. The median sale price of a home in the city of Detroit is now $6k - much cheaper than a car! What will happen as more and more people lose their homes to foreclosure? Think third-world slums with 3 familes living in a house or squatters moving from vacant house to vacant house to stay ahead of demolition crews.
Of course, someone, somehow may find a "reset" button for our economy.
For every entrepreneur that "borrowed his way to prosperity" there are 9, at least, that tried that and failed. Besides, you're missing the point; Quinn is talking about the consumer, not the good luck or timing of individual business owners. In their case, borrowing is of course often necessary, but it must be balanced by good business sense, meticulous planning, and a timely paydown of debt in order to have a healthy economy. All three of those qualities are sadly lacking in the sickly consumer debt-driven economy of today's America.
"If we had to borrow half a trillion from China to do it, wouldn't it be worth it to get us off oil and on to electric cars and trains fueled by geothermal, wind, solar and ocean energy?"
NO! You obviously don't understand how completely the debt load is crippling America's ability to compete. And "investing" (at the point of a gun) in inefficient so-called "green" technologies is malinvestment at its very worst. To the extent that government has forced us down that path already (oil drilling restricitions, ethanol, banning nuclear power plants, restricting oil refineries, ad nauseum) it has done massive damage. Only the apolitical market should decide which energy sources are best.
"If our government borrows at its low rate in order to reduce consumer interest rates that are running at 24%, (say through some legislative trick or another) wouldn't that cut consumer expense and improve their prosperity? Expenses do matter in economics."
Pathetic. Don't you understand that "our government" is us? And that when you force productive people who are NOT in debt now to go into debt to subsidize the fools who ran up huge personal debts, you are punishing the prudent to benefit the imprudent? Socialization of debt is the very definition of moral hazard, a lesson that your public school education did not impart to you.
Likewise, you learned nothing about economics from you experience working at the hospital. I work in the medical billing field, and I know what I'm talking about: for-profit hospitals are all in danger of going out of business because of government intrusion in the medical marketplace; Medicare and, especially, Medicaid, force them to accept payments that don't even come close to paying their costs, so it should come as no surprise that they boost the price of everything else that doesn't have a price control slapped on it. The problem with healthcare prices in the US is driven entirely by the Byzantine third-party payer system, a much too complicated issue to discuss here, but rest assured it has nothing to do with free markets in medicine.
"We have government do jobs that we do not WANT done at a profit. We don't want our police force to be a for-profit organization, we don't want our health inspectors to be either, nor our safety inspectors, or our garbage collectors, or any of our consumer protection agencies like the FDA, FAA or SEC."
Well, you're obviously speaking for yourself, but you couldn't be more wrongheaded. Where I live there is private, for-profit garbage collection, and it is far, far better than the noisy, destructive, union-addled non-service I got when I endured big-city public garbage collection. And I would LOVE to see for-profit police agencies (which already guard many communities in this country, by the way, the public police being useless for basic protection). And if you can't see how dismally your alphabet-soup federal agencies have failed you over the years you are obviously blind to reality. Did the SEC protect the millions of Americans from the FED-induced stock market bubble that recently deflated, taking trillions of 401k dollars down with it? You must be joking, man.
"For all that the US Postal service gets dissed, they deliver a letter cross country for 50 cents, while the same delivery by a for-profit carrier like FedEx costs at least $10, twenty times as much."
FedEx is forbidden to compete in the first class letter carrying business! Don't you know that?! If it wasn't, one thing for sure it wouldn't be doing is RAISING it's postage rates because it is LOSING money. The only reason USPS can handle mail as cheaply as it does is Federal government monopoly and subsidy. Some business model to emulate!
"Although I agree with the points made by Mr. Quinn, his arguments are weakened when he does not understand basic entrepreneurial economics (you CAN borrow your way to prosperity, just look at FedEx), or basic political philosophy. "
You don't agree with any of his points, and your own complete lack of understanding of basic entrepreneurial economics must be embarassing to everyone who knows you. As for basic political philosophy, yours is straight from your government high school education. Now, there's an industry that desperately needs a for-profit competition model, considering its pathetic products.
On Jun 14 09:32 AM TonyCinTX wrote:
> Allow me to point out a logical inconsistency:
>
> Mr. Quinn repeats the canard that one cannot borrow one's way to
> prosperity. This is a lie. Most new businesses are started with borrowing.
> The stories of maxxed out credit cards and second mortgages in the
> early stages of businesses that made it big are both legion and legendary.
> Those guys borrowed thousands and made millions, even billions. Who
> says you cannot borrow your way out of trouble?
>
> The distinction is what you do with the money acquired. Mr. Quinn
> wants us to invest in an energy overhaul; so do I. If we had to borrow
> half a trillion from China to do it, wouldn't it be worth it to get
> us off oil and on to electric cars and trains fueled by geothermal,
> wind, solar and ocean energy?
>
> Also, borrowing at one rate to pay down a higher rate is actually
> a reduction in expense. The US government can borrow at a real rate
> of less than 2%. If our government borrows at its low rate in order
> to reduce consumer interest rates that are running at 24%, (say through
> some legislative trick or another) wouldn't that cut consumer expense
> and improve their prosperity? Expenses do matter in economics.<br/>
>
> Then on to vilifying health care! (I worked in a large hospital for
> three years as a consultant, and my wife works in one still): Health
> care is the only for profit industry in which the majority of "customers"
> are presented with the choice of imminent pain and death or agreeing
> to the sticker price. Hospital administrators know this, and that
> is why you pay $15 per tablet for Tylenol.
>
> Mr. Quinn and others may not have made this connection yet, but let
> me point something out: We have government do jobs that we do not
> WANT done at a profit. We don't want our police force to be a for-profit
> organization, we don't want our health inspectors to be either, nor
> our safety inspectors, or our garbage collectors, or any of our consumer
> protection agencies like the FDA, FAA or SEC. A profit motive would
> create too much potential for corruption in these jobs, and that
> is why we have the government do them. For all that the US Postal
> service gets dissed, they deliver a letter cross country for 50 cents,
> while the same delivery by a for-profit carrier like FedEx costs
> at least $10, twenty times as much.
>
> Well, health care is in the same boat. In the last forty years the
> non-profit wing has failed, and no longer provides competition for
> the for-profit wing. The for-profit wing has won, by cutting costs,
> cutting quality, carefully following the borderline of the absolute
> minimum legally required effort and oversight, and exploiting their
> captive relationship with patients by literally extorting them. Your
> money or or life, buddy.
>
> And that is the point when we as a society can and should stand up
> and say, "This is a job for the government." Not so they can make
> a profit, not so they can dictate our health care or force us to
> exercise, and not so they can eliminate the for-profit trade: So
> they can provide a counter-balance and competition for the profit-at-any-cost
> boards of corporations.
>
> There are services we do not want the public sector to provide, even
> if that can be done at a profit. In recent decades, health care has
> become one of them; the profit motives of hospitals and pharma is
> now bankrupting people, endangering their health, or just plain killing
> them by withholding care and medication they cannot afford. That
> is not good for society.
>
> Although I agree with the points made by Mr. Quinn, his arguments
> are weakened when he does not understand basic entrepreneurial economics
> (you CAN borrow your way to prosperity, just look at FedEx), or basic
> political philosophy.
But of course, it's not politically correct to state the obvious. This administration will keep spending money like there's no tomorrow.
I am forever wondering what strengths this country has. Would someone give me a clue?
Thanks so much for organizing and recording my thoughts for me regarding TonyCinTx's comment! ;>)
I would briefly add a few examples that illustrate how we already know that management of healthcare by our government is not advisable. The Medicare prescription plan is intensely wasteful of taxpayer dollars paying drug companies at their "ask." In addition, people who are really sick and need substantial newer (i.e., brand name) medication are forced to stop taking it when they hit the "donut hole." To devise a worse "solution" to the problem or expensive prescription medication would have been difficult.
Medicare itself in the 60's was the camel's nose under the tent which initiated the healthcare bubble. Though currently "well managed" using the oft-quoted metric of overhead costs divided by dollars expended, it is arbitrary in its decisions over what services to cover and bundle, and it frequently fails to compensate healthcare providers sufficiently for covered services. I treat Medicare recipients on what amounts to a charity basis.
Medicaid coverage simply equates to second-tier healthcare. Two-tier healthcare may become commonplace in the US healthcare scene.
TonyCinTx seems to believe in utopian society where government functions purely for the equitable benefit of all of its constituents. Nice thought, but not here, not anywhere.
On Jun 14 11:09 AM Glen L. wrote:
> To TonCinTx: your comment is filled with so many errors it compels
> me to reply, even if to educate the gullible who might believe any
> part of what you're saying.
>
> For every entrepreneur that "borrowed his way to prosperity" there
> are 9, at least, that tried that and failed. Besides, you're missing
> the point; Quinn is talking about the consumer, not the good luck
> or timing of individual business owners. In their case, borrowing
> is of course often necessary, but it must be balanced by good business
> sense, meticulous planning, and a timely paydown of debt in order
> to have a healthy economy. All three of those qualities are sadly
> lacking in the sickly consumer debt-driven economy of today's America.
>
>
> "If we had to borrow half a trillion from China to do it, wouldn't
> it be worth it to get us off oil and on to electric cars and trains
> fueled by geothermal, wind, solar and ocean energy?"
>
> NO! You obviously don't understand how completely the debt load is
> crippling America's ability to compete. And "investing" (at the point
> of a gun) in inefficient so-called "green" technologies is malinvestment
> at its very worst. To the extent that government has forced us down
> that path already (oil drilling restricitions, ethanol, banning nuclear
> power plants, restricting oil refineries, ad nauseum) it has done
> massive damage. Only the apolitical market should decide which energy
> sources are best.
>
> "If our government borrows at its low rate in order to reduce consumer
> interest rates that are running at 24%, (say through some legislative
> trick or another) wouldn't that cut consumer expense and improve
> their prosperity? Expenses do matter in economics."
>
> Pathetic. Don't you understand that "our government" is us? And that
> when you force productive people who are NOT in debt now to go into
> debt to subsidize the fools who ran up huge personal debts, you are
> punishing the prudent to benefit the imprudent? Socialization of
> debt is the very definition of moral hazard, a lesson that your public
> school education did not impart to you.
>
> Likewise, you learned nothing about economics from you experience
> working at the hospital. I work in the medical billing field, and
> I know what I'm talking about: for-profit hospitals are all in danger
> of going out of business because of government intrusion in the medical
> marketplace; Medicare and, especially, Medicaid, force them to accept
> payments that don't even come close to paying their costs, so it
> should come as no surprise that they boost the price of everything
> else that doesn't have a price control slapped on it. The problem
> with healthcare prices in the US is driven entirely by the Byzantine
> third-party payer system, a much too complicated issue to discuss
> here, but rest assured it has nothing to do with free markets in
> medicine.
>
> "We have government do jobs that we do not WANT done at a profit.
> We don't want our police force to be a for-profit organization, we
> don't want our health inspectors to be either, nor our safety inspectors,
> or our garbage collectors, or any of our consumer protection agencies
> like the FDA, FAA or SEC."
>
> Well, you're obviously speaking for yourself, but you couldn't be
> more wrongheaded. Where I live there is private, for-profit garbage
> collection, and it is far, far better than the noisy, destructive,
> union-addled non-service I got when I endured big-city public garbage
> collection. And I would LOVE to see for-profit police agencies (which
> already guard many communities in this country, by the way, the public
> police being useless for basic protection). And if you can't see
> how dismally your alphabet-soup federal agencies have failed you
> over the years you are obviously blind to reality. Did the SEC protect
> the millions of Americans from the FED-induced stock market bubble
> that recently deflated, taking trillions of 401k dollars down with
> it? You must be joking, man.
>
> "For all that the US Postal service gets dissed, they deliver a letter
> cross country for 50 cents, while the same delivery by a for-profit
> carrier like FedEx costs at least $10, twenty times as much."
>
> FedEx is forbidden to compete in the first class letter carrying
> business! Don't you know that?! If it wasn't, one thing for sure
> it wouldn't be doing is RAISING it's postage rates because it is
> LOSING money. The only reason USPS can handle mail as cheaply as
> it does is Federal government monopoly and subsidy. Some business
> model to emulate!
>
> "Although I agree with the points made by Mr. Quinn, his arguments
> are weakened when he does not understand basic entrepreneurial economics
> (you CAN borrow your way to prosperity, just look at FedEx), or basic
> political philosophy. "
>
> You don't agree with any of his points, and your own complete lack
> of understanding of basic entrepreneurial economics must be embarassing
> to everyone who knows you. As for basic political philosophy, yours
> is straight from your government high school education. Now, there's
> an industry that desperately needs a for-profit competition model,
> considering its pathetic products.
>
>
>
>
On Jun 14 08:45 AM Ferdinand E. Banks wrote:
> I must confess that I am not a good teacher. I am a great teacher,
> or as I prefer to describe myself, a brilliant teacher. Of course
> I haven't always been as successful as I wanted to be at a couple
> of the 15 universities where I have taught, but in those cases where
> I fell under A+ the explanation was simple: the students had too
> much freedom.
>
> In the schools of America there should be a pledge of allegiance
> to the flag every morning by American citizens, prayer should be
> encouraged, gutter language, dope, and oddball clothing should be
> discouraged, and the sexes should be separated - though not perhaps
> permanently. I'm sure that that doesn't sound right to a lot of people,
> but then despite what they say a lot of people don't give beans about
> raising educational standards.
I am trying to improve my kids' math skill in the summer. They are in 1st grade and third grade. It turned out that it's SO HARD to find good math materials for them in the United States. Interesting books are too expensive. $30 and above for less than 200 pages. Cheap books are a waste of time with no challenging materials. Useful information on the web are scattered and disorganized.
Then I turned to Chinese search engine and searched for math web sites in China. Oh boy, there are tons of organized math material, from text books, teacher materials, teacher comments, all the way to challenging Olympiad math problems. They are organized by grade levels and most with answers.
Now I am using the Chinese web sites and translation them from Chinese to English to meet my kids' math needs. From my experience, I have little faith that the current USA school students can compete in math with other countries now and in the future.
I've written several articles on Seeking Alpha in the last few months detailing how much trouble the dollar and other currencies are in. For those debtors who can hold out until the storm, their mortgages and credit card balances will be inflated away in a violent and rapid push. Unfortunately, although your analysis of the profligate and shocking mismanagement of debt is spot on, the government is only exacerbating the problem. One of the only bright spots will be the inflationary relief debtors will enjoy, but it will come at the expense of our economy and our nation as a whole.
We are in a lot of trouble. Thank you for an excellent article.
Our international banking system has a death grip on billions of people and their governments....especialy aging populations living in mature economies. It wasn't a 'sin" to age..it was a "sin" to not prepare to age.
I've been following Jim Quinn's writings & publications for a year.
His blog is theburningplatform.com and it is excellent.
This article was first class but doesn't address the root cause of our nations addiction to debt.
"The Hidden Beginning" by Bruce Wiseman.......
canadafreepress.com/in...
www.crisisbydesign.com.../
.......Should be required reading for every American regardless of political party who is concerned about his country's future and preparation for his own future.
I've read "The Hidden Beginning" several times now and completely concur with Mr Weisman who I have communicated with directly after he wrote "The Hidden Beginning".
It's all about bank capital and reserve requirements.
I would love to see Jim Quinn do a follow up piece addressing "The Hidden Beginning".
Unfortunately, I'd contend that the government bureaucrats are not at all clueless, they know exactly what's happening but because they are so political they simply follow the directives of the politicians, who are so obviously bought off.
There's only one real answer: REFUSE TO PAY YOUR TAXES!
1) Subtract the affluent top 20%, and everyone (else) in the U.S. has seen their incomes steadily falling for over 30 years (as is happening all over the world). Thus, the long-term equilibrium for U.S. home prices MUST retreat to a price-level LOWER than back in the 1980's. As you point out, markets over-shoot, thus (barring a REAL "fix" for the U.S. housing sector) total price-declines of 70% to 80% would not be a surprise.
2) You quote a net wealth for U.S. households of $40 trillion. However that doesn't count ONE PENNY of government debt (which is ultimately "owned" by taxpayers). Actual net, household worth is NEGATIVE when that debt is included.
3) The U.S. has incorporated $2 TRILLION per year of "statistical padding" into U.S. GDP. Subtract that fluff, and all debt-to-GDP ratios are roughly 25% worse.
4) The one element missing from this fine analysis was the "demographic effect" as retiring baby-boomers MUST liquidate trillions in "assets" (i.e real estate) to fund their retirements. Thus, downward pressure on the U.S. housing market will likely last at least a GENERATION.
On Jun 14 02:44 PM Jeff Nielson wrote:
> This is a superb commentary, but still too optimistic.
>
> 1) Subtract the affluent top 20%, and everyone (else) in the U.S.
> has seen their incomes steadily falling for over 30 years (as is
> happening all over the world). Thus, the long-term equilibrium for
> U.S. home prices MUST retreat to a price-level LOWER than back in
> the 1980's. As you point out, markets over-shoot, thus (barring a
> REAL "fix" for the U.S. housing sector) total price-declines of 70%
> to 80% would not be a surprise.
>
> 2) You quote a net wealth for U.S. households of $40 trillion. However
> that doesn't count ONE PENNY of government debt (which is ultimately
> "owned" by taxpayers). Actual net, household worth is NEGATIVE when
> that debt is included.
>
> 3) The U.S. has incorporated $2 TRILLION per year of "statistical
> padding" into U.S. GDP. Subtract that fluff, and all debt-to-GDP
> ratios are roughly 25% worse.
>
> 4) The one element missing from this fine analysis was the "demographic
> effect" as retiring baby-boomers MUST liquidate trillions in "assets"
> (i.e real estate) to fund their retirements. Thus, downward pressure
> on the U.S. housing market will likely last at least a GENERATION.
For example, while the US average result is not good, nobody publishes the distribution of results. It turns out the the US has an exceptionally broad distribution of results, and the top 10% of US students perform as well if not better than the top 10% of other top countries.
Another interesting thing to note is that the variations between countries are far less than those within a country. As much as ten times. The difference between the US and South Korea is one tenth the difference between a poor student in a poor performing district in the US and a good student in a good performing district in the US.
So in reality the idea of not leaving children behind is a pretty good one. Nothing else is likely to improve the average quality of education as well since the top performers are already getting good results.
The problem of course is in the implementation of the idea, something we are failing miserably at.
Another interesting question that arises frequently is if our education system is so poor, why are our workers so productive? Many think the answer lies in the post-secondary education system we have. No other nation comes close to the percentage of students we put through post-secondary education. Of course the results of that investment would be better if students were further along when graduating high schools, but it is important to realize that the US is not as vulnerable to this issue as a lot of people write.
On Jun 14 01:48 AM John Lounsbury wrote:
> Jim - - -
>
> As usual, a well constructed set of arguments with plenty of good
> supporting data.
>
> I particularly want to comment on the education discussion. From
> the data you present it is obvious that we do a mediocre to poor
> job of education K-8 (9th and 15th out of 45). We follow that up
> with secondary education that is non-existent. Two years later the
> rankings are (22nd and 28th out of 39). The 10th grade performance
> is probably achieved with only the poor material assimilated two
> years earlier.
>
> In two years (8th to 19th grades) we go from 67th percentile to 28th
> percentile (using math performance). We need to stop no child left
> behind and start allowing more children to get ahead. How about
> starting with the 3Rs? Little else should be taught until functional
> reading, writing and math skills are learned. We have somehow lost
> the basics.
>
> We risk the New Normal being 50% functional illiteracy (3Rs). When
> I was a youngster, magazines like Popular Science talked about the
> future having high levels of automation, allowing great amounts of
> leisure for the populace. This leisure would permit people to have
> greater time for recreation and intellectual activities. The presumption
> was that the intellectual activities would add value to the economy
> and provide a source of income for the "leisure class". What has
> happened is that we are at close to 50% leisure class (unemployed
> or not in the work force), but the vast majority of these are at
> subsistence levels in or near poverty, or dependant on the employed
> 50%, and many have not received the education necessary to engage
> in any intellectual activity more complex than peeling bananas and
> opening beer cans.
>
> Sorry for the long rant, but education is a hot button with me.
Apparently you didn't read what I wrote; the difference is in how you spend it. If I borrow $100K to buy an 18-wheeler so I can become an independent trucker, I am investing. If I borrow $100K so I can spend six months on a world tour, I am not investing. The truck can (hopefully) pay for itself in time, the world tour cannot.
Likewise, the interstate highway system has paid for itself a thousand times over in reduced costs for businesses and consumers; it was an investment that is still worth maintaining. It would also be an investment to borrow and spend money on energy research and building energy producing facilities in wind, geothermal and thermal solar. They, and what we learn from doing them, will pay for themselves in time. There are several reasons to think so.
Your basic analogy is flawed; when it comes to money the poison is not in the dosage, the poison is in the intent and use of the money acquired. So yeah, the government may have borrowed money and blown it on pointless stuff, those are sunk costs. But if there is a way to borrow money and invest it, the investment may payoff not only itself but the sunk costs and more. Again, look at the Interstate Highway system: A few hundred billion invested, a few trillion returned in the pockets of businesses and consumers when their trading ranges and access to markets got expanded by the existence of highways where there were none before.
> For every entrepreneur that "borrowed his way to prosperity" there are 9, at least, that tried that and failed.
Because you say so, I presume? Besides, my point was that it is possible, and you don't seem to argue that point.
> NO! You obviously don't understand how completely the debt load is crippling America's ability to compete.
What a crock of crap; YOU obviously don't understand how completely our dependence on middle east oil is crippling our security and our economy, how completely held hostage we are to the price of oil. We cannot work, cannot produce our food, cannot ship our food, cannot frikkin' LIVE without oil, and WE DON'T HAVE IT. Investing in green energy is NOT investing at the point of a gun, we are AT the point of a gun held by monarchs and dictators that don't much like us and can throw us into chaos at a whim, if we don't pay. Investing in alternatives, even if they are more expensive, is the way out. Even if it costs more, at least we'd have something, and if they want they can reduce us to nothing.
> Pathetic. ... you are punishing the prudent to benefit the imprudent ...
I said no such thing. What I said is the government can borrow money at a low rate, and basically loan it to citizens at a low rate so they could pay off high rate debt. That isn't punishing anybody or anything, it is reducing the cost of consumer credit so consumers can get out from under crippling usurious interest rates. There is no moral hazard involved, I never said a word about socializing debt or bailing anybody out. You can't read.
> Likewise, you learned nothing about economics from you experience working at the hospital. I work in the medical billing field, and I know what I'm talking about:
Yeah so did I, in fact I wrote the programs, and I don't think you DO know what you are talking about. Here is what I learned at the hospital: When a person is diagnosed with a life-threatening condition, they don't have the time or will to haggle over the price of the fix, and they don't have the leverage even if they did, because doctors are booked twelve hours a day and can afford to just take the next person in line.
Now you apparently had NO economics, because if you did you would recognize a monopoly situation when you see it, and realize this forces the price of the life-saving service to the point of 100% of the average person's money. Pay it or die, and the price is the same everywhere, because enough people will pay it to keep the doctors working just as much as they want to work.
Hospitals do not compete, and your third party complaint is a red herring. The insurance companies, hospitals, and pharmaceuticals are emptying the pockets of patients that have no real choice in the matter, and the government tries to stop the extortion with regulation, and the other side always finds a way to continue the extortion just because they can. Health care costs rise 6-10% a year because Wall Street demands it and the guy having a heart attack will pay whatever it takes to live, even if it bankrupts him. The only way to end that exploitation is to remove the profit motive, and that is the moral thing to do because patients cannot bargain with a figurative gun to their head, which is the situation for the vast majority of people being served by any hospital.
> FedEx is forbidden to compete in the first class letter carrying business! Don't you know that?!
I know that FedEx's cheapest package, which is the equivalent of a letter, costs twenty times as much as the US Postal Service's cheapest package. The label of "first class" mail makes no difference, and the rule that FedEx is not allowed to carry routine letters was challenged by FedEx in court and the US Postal service dropped the issue years ago. Apparently YOU didn't know that.
In any case, arguing that the US Postal service is subsidized is like arguing that the US Military is subsidized; it is a US organization!
> ... your own complete lack of understanding of basic entrepreneurial economics must be embarassing to everyone who knows you.
Your complete inability to comprehend what you read or to follow a logical argument must be a burden to anyone that knows you.
> As for basic political philosophy, yours is straight from your government high school education.
I don't recall hearing the points I made here in high school, and the majority of the free-market idiots of your ilk seem to think that the government should be a for-profit industry.
That position is ridiculous on the face of it. You want your police and court system to operate on a for profit basis? Such a system would be completely corrupted by money and provide not even a semblance of justice, it would just be the rich ruling the poor. But maybe that is what you want, I don't know.
It is not what I want, so I repeat, there are services we need as people that we do not WANT to be run at a profit, and that is the point of government.
to make up for the gap created by diminishing real wages?
A *wonderful* and well-written, coherent article. I just wanted to mention for those who may not be on-board that the Central Banks in various forms has been doing what you stated for hundreds of years.
Since most of you all ready are aware, I won't do the google. But I do encourage those that don't know yet to study the history of banking (many "authoritative", some maybe marginal but all freely available, both printed and video) and central banking specifically.
As has been demonstrated historically, Central Banks are a useless, destructive parasite upon a nation. That was recognized by the founders of this nation and was why they authorized the treasury to provide the nation's money.
Unfortunately, greed combined with corruption, as it has throughout the history of mankind, to defeat the noble goals.
On another topic touched upon in the article, I find promise (further down the road). The saving rate has already climbed to 5.6% (if I remember the reports correctly). By implication this means that people are already reducing leverage (denying the banking industry that which it most desires) as what is saved is likely *not* being burdened with debt - even most produced by our educational system would realize how counter-productive that is. It seems that the American populace (over-)responds well, albeit tardily, to negative stimulus.
This in spite of the exhortations of the political and commercial interests that wish it were otherwise.
Therein lie the seeds to a faster-than-expected rebound from the morass we are currently in. We need only prevent the politicians and corrupt from stifling this natural tendency towards self-preservation residing in all.
Education via excellent articles, such as this, are the tool to accomplish this. This article and others of its ilk, *must* be widely circulated, discussed, put in historical context and presented to the populace via every available conduit.
It is *our* responsibility as citizens (i.e. the *real* government of this country) to make *sure* that this is done. It is worth the small time and effort *away* from our investing activities. In fact, it would be "enlightened self-interest". The fact that *we* have the tools to engage in the trading/investing activities demonstrates that *we* are equipped to accomplish this supremely important task.
If *we* do not do this, the populace will be (has been?) wooed by charismatic public speakers that, at best, leave the nation no better-off than they found it. At worst, ... history provides many examples of the worst-case scenarios.
I predict that a similar (over-)reaction by the populace will occur if the politicos fail to recognize and properly address the underlying issues. Even with the relatively primitive communication facilities extant in the sixties and seventies, young, fervent and motivated people were able and willing to take risk and make sacrifices to end an unjust squandering of human lives by the government.
As mentioned many times on this list, (Will Rogers?), "History may not repeat, but it does rhyme".
With the author's permission (or lack of objection), I will immediately forward a link to this article, so that all of the excellent (and even the others) comments may be seen.
My Humble Opinion,
HardToLove
Am I embarrassing you? If you think I am embarrassing myself, you are mistaken. My rebuttals are grounded in human psychology and logic, and anybody that resorts to an emotional argument (like I should be embarrassed) is not engaging in debate but simple vitriol. I don't give a crap about what you think I should feel, feelings aren't the way out of the dilemma. Thinking is. So if you have a reasoned argument against my position, let's hear it; otherwise I will assume you are just an emotional reactionary with a simplistic mind that cannot think for himself.
You and Glen L should start a chorus of parroting the party line about the infinite wonders of free markets and deregulation. It would be a comedy, of course.
On Jun 14 09:32 AM TonyCinTX wrote:
> Allow me to point out a logical inconsistency:
>
> Mr. Quinn repeats the canard that one cannot borrow one's way to
> prosperity. This is a lie. Most new businesses are started with borrowing.
> The stories of maxxed out credit cards and second mortgages in the
> early stages of businesses that made it big are both legion and legendary.
> Those guys borrowed thousands and made millions, even billions. Who
> says you cannot borrow your way out of trouble?
>
> The distinction is what you do with the money acquired. Mr. Quinn
> wants us to invest in an energy overhaul; so do I. If we had to borrow
> half a trillion from China to do it, wouldn't it be worth it to get
> us off oil and on to electric cars and trains fueled by geothermal,
> wind, solar and ocean energy?
>
> Also, borrowing at one rate to pay down a higher rate is actually
> a reduction in expense. The US government can borrow at a real rate
> of less than 2%. If our government borrows at its low rate in order
> to reduce consumer interest rates that are running at 24%, (say through
> some legislative trick or another) wouldn't that cut consumer expense
> and improve their prosperity? Expenses do matter in economics.<br/>
>
> Then on to vilifying health care! (I worked in a large hospital for
> three years as a consultant, and my wife works in one still): Health
> care is the only for profit industry in which the majority of "customers"
> are presented with the choice of imminent pain and death or agreeing
> to the sticker price. Hospital administrators know this, and that
> is why you pay $15 per tablet for Tylenol.
>
> Mr. Quinn and others may not have made this connection yet, but let
> me point something out: We have government do jobs that we do not
> WANT done at a profit. We don't want our police force to be a for-profit
> organization, we don't want our health inspectors to be either, nor
> our safety inspectors, or our garbage collectors, or any of our consumer
> protection agencies like the FDA, FAA or SEC. A profit motive would
> create too much potential for corruption in these jobs, and that
> is why we have the government do them. For all that the US Postal
> service gets dissed, they deliver a letter cross country for 50 cents,
> while the same delivery by a for-profit carrier like FedEx costs
> at least $10, twenty times as much.
>
> Well, health care is in the same boat. In the last forty years the
> non-profit wing has failed, and no longer provides competition for
> the for-profit wing. The for-profit wing has won, by cutting costs,
> cutting quality, carefully following the borderline of the absolute
> minimum legally required effort and oversight, and exploiting their
> captive relationship with patients by literally extorting them. Your
> money or or life, buddy.
>
> And that is the point when we as a society can and should stand up
> and say, "This is a job for the government." Not so they can make
> a profit, not so they can dictate our health care or force us to
> exercise, and not so they can eliminate the for-profit trade: So
> they can provide a counter-balance and competition for the profit-at-any-cost
> boards of corporations.
>
> There are services we do not want the public sector to provide, even
> if that can be done at a profit. In recent decades, health care has
> become one of them; the profit motives of hospitals and pharma is
> now bankrupting people, endangering their health, or just plain killing
> them by withholding care and medication they cannot afford. That
> is not good for society.
>
> Although I agree with the points made by Mr. Quinn, his arguments
> are weakened when he does not understand basic entrepreneurial economics
> (you CAN borrow your way to prosperity, just look at FedEx), or basic
> political philosophy.
I have a challenge for you. If you looked at the economic and regulatory policy of the Obama Administration without listening to what they say what do you think it is designed to do? do not forget to include manipulation of the S&P, repayment of AIG CDS at 100%, geitner saying it is too early to think of removing stimuli, Pimco saying the fed will have to do more quant easing to keep yields down, and The finance ministers from G8 countries -- Canada, France, Germany, Italy, Japan, Russia, Britain and the United States -- said volatile commodity prices put at risk growing signs that their economies were heading towards recovery.
I assure you that all can be tied together and the only clear answer is that our government is intentionally going to lower the value of the dollar and attempt to inflate away bank debt.
Supported S&P raises commodity prices, lowers dollar, raises t-bond rates which forces more quant easing and creates a further feed back loop.
If this is what you did not want you would let S&P fall, raise dollar, lower energy prices and reduce cost of govt borrowing and less quant easing. Of course this would help the economy because lower energy prices mean more spending money and easier to refinance. It is in effect a free stimulus that is non inflationary.
Hence the conclusion to be reached is that inflation is desired. ruining millions of peoples savings, ensuring stagflation, but bailing out wall street and their bonus structure. End of story.
I am not going to argue about market manipulation to anyone anymore. I think we can say it is an accepted fact and posted almost universally now on these boards by multiple sources.
Earnings rise in the long term as the wealth of the country decreases? It can't... we are not close to the end, its the beginning.
www.frbsf.org/publicat...
It compares US deleveraging to the recent Japanese experience.
“The Japanese stock market bubble burst in late 1989, followed soon after by the bursting of the real estate bubble in early 1991. Nearly 20 years later, stock and commercial real estate prices remain more than 70% below their peaks, while residential land prices are more than 40% below their peak.
After Japan’s bubbles burst, private nonfinancial firms undertook a massive deleveraging, reducing their collective debt-to-GDP ratio from 125% in 1991 to 95% in 2001. By reducing spending on investment, the firms changed from being net borrowers to net savers. If U.S. households were to undertake a similar deleveraging, their collective debt-to-income ratio would need to drop to around 100% by year-end 2018, returning to the level that prevailed in 2002.
… it seems probable that many U.S. households will reduce their debt. If accomplished through increased saving, the deleveraging process could result in a substantial and prolonged slowdown
in consumer spending…
… Moreover, this form of deleveraging would simply shift the problem onto banks that hold these loans as assets on their balance sheets. Either way, the process of household deleveraging will not be painless.”
When you boil it down life is an investment. You can spend your money on cigarettes, lottery tickets, booze, huge homes, expensive cars, or credit card payments... or you can look at every dollar as an investment. Am I better off in the long term investing this dollar?
The same question goes on the income side of the equation. Should I take time off without pay or refuse overtime? I have people working for me and 50% take time off without pay in a major recession every day. If you suggest that is not in their best interest that falls on deaf ears. You see the opportunity to get out of work is too great an opportunity to pass up.
We are moving away from a large middle class in this country to an Upper class, middle class and a 60% lower class. Thise who invest in their education, work and savings will make it. Those who do not will not.
Those who earn a good income but chose a 6 bdrm 5 bath house are selling themselves out as much as the ones who drop out of high school.
Make an investment in yourself and work hard and save. You will soar above the lower class. In the short term it may not be obvious until they have their huge home or their Mercedes or Escalade repossessed.
Much better for the Government to regulate interest rates down to say 3% for five years on existing mortgages. This would give home owners a reason to hold. They have to live somewhere.
While mortgage holders would scream blue murder they would on average be much better off. (Do the maths yourself, if you doubt that statement.)
I know that many of these mortgages have been sliced and diced but solving the resulting financial problems is the reason we pay those bankers all that money.
It wont happen but. This administration only adopts programs that bankers like.
On Jun 14 05:41 AM JohnAl wrote:
> John Lounsbury, education is a hot button issue with me too. I work
> in the system. And I agree with everything you say, except that I
> take slight issue with this wording; "and many have not received
> the education necessary to engage in any intellectual activity more
> complex than peeling bananas and opening beer cans."
>
> Education isn't really something "received", it must be pursued.
> It's driven by an inner fire, a desire to learn, a fire that can
> be lit in most people by a good teacher.
>
> The problem with the US public education system is that there are
> too few good teachers, because the system itself is horribly flawed
> and most smart people who enter it as teachers leave quickly after
> they discern it's flaws.
>
> Here's how the system currently "works":
>
> The federal government says there must be "accountability", and they
> force it's nature on state governments via NCLB, and the funding
> that accompanies that legislation.
>
> Next, state governments define "Standards Of Learnings", (appropriately
> referred to as "SOLs") which provide course content road maps to
> local school divisions.
>
> Finally, local public school divisions add the details to the SOL
> road maps, defining what will be taught at every grade level during
> every minute of every school day.
>
> The students are then tested regularly, and decisions about the quality
> of the schools are made based on these test results.
>
> Of course, just like much of what government tries to do, this system,
> while well intentioned, is horribly flawed.
>
> 1. In most cases, students aren't held accountable for their SOL
> test results. Some just draw patterns in the bubbles on the test
> sheets.
>
> 2. Holding individual teachers and even schools accountable for the
> performance of their students on these tests is incredibly unfair,
> not only because students aren't held accountable (and thus many
> don't care) but because there is no attempt to measure where the
> students were academically BEFORE the teacher (or school) received
> them. Only performance on the specific grade level tests are measured,
> not "value added" by the specific teachers and schools.
>
> 3. Measuring schools based on the performance of their students ignores
> the greater importance of parental influence. A school full of children
> of uneducated parents who don't value education is always going to
> perform more poorly than a school full of children of parents who
> do value education.
>
> Now, imagine you're a teacher in this system and you see how your
> performance is going to be measured. It's just like being a manager
> whose performance is based on the performance of his charges, only
> that he is given no authority over his charges.
>
> So, most good teachers leave the system after a year or two.
>
> The only students who are going to succeed in this system are those
> who have their fires lit by the few good teachers who do stick it
> out, or by parents or others outside of the system.
>
> Readers, take it from somebody who knows the system well... send
> your children to private schools or home school them.
----------------------...
No. By and large, these are _not_ debts. This is spending which projected to occur under various entitlement programs. Benefits can be modified without triggering any default . . . for example: retirement age can be raised, co-payments can be increased, and so on.
This is a very important distinction. When a Treasury bill comes due, it most be paid-- the Treasury has no choice in the matter (other than to default). If Social Security benefits are ruinously high, these benefits can be adjusted through legislation.
But as for the rest of it, your remark about gutter language indicates that you are not familiar with what in going on in the republic. I hear and see things in the few minutes of US television I inadvertantly am exposed to every day that I did not hear or see during my almost 6 years in the US army, most of which were spent in the ranks of the US infantry.
In any event I repeat and expand, COMPULSORY pledge of allegiance to the flag, singing of the national anthem for all Americans, encouragement of prayer, discouragement of gutter language, porn and dope, and teaching of US history from kindergarden. And prhaps I should mention to the Now Generation and Sleepwalkers that it will take a LONG LONG TIME to get results from this strategy, but certainly less time than it took for Bill Clinton and George W to pour sand into the machine..
My point was that it is simply not true that you cannot borrow your way to prosperity; in fact almost every business success in the country has borrowed and repaid loans, for equipment, buildings, vehicles, supplies and legal services to get started. Translating this to a national level, what those businesses were borrowing to build was infrastructure. If our government went another $3T in debt to build a new infrastructure (roads, rail, energy), that would be an investment that would pay itself back a hundred fold in our lifetimes.
My second critique was against the knee-jerk panic about government health care costs, which strikes me as simple adolescent petulance about paying taxes. In fact, Canada and several European examples demonstrate that governments can get health care costs under control, with very little inconvenience to the populace. Their approach drastically cuts the PROFITS of health care, but guess what? Doctors and hospitals don't mind; Doctors in Sweden and Britain earn less than half of what their average American counterparts earn, and they still produce doctors as fast as their schools can graduate them. The supply remains the same.
They have proven for us that the answer to the health care cost crisis is dumb bunny simple: Get rid of the get-rich-quick profit motive, eliminate the quarter-over-quarter 10% profit growth corporate mentality, and start treating hospitals, insurance, and pharmaceuticals as mature businesses aiming for a 5-10% annual profit with zero growth. Thousands of American non-profit hospitals operated this way for decades without any fiscal problems, and more thousands operate in first-world countries like the USA with no fiscal problems.
Health care is not like selling any other discretionary product. Over 95% of health care, by cost, is for non-discretionary purchases. Bypasses, bone settings, medicines, emergency and accident care, surgeries, cancer treatments and other procedures that nobody would do if their lives weren't at risk.
The supply of patients is largely fixed, very inflexible, and with very little discretion. With near zero ability to increase the demand for their product, corporations that run hospitals can only increase profits by cutting costs. I worked for a large for-profit hospital chain, and this was their strategy. Cut personnel costs, cut supply costs, cut maintenance costs. After several years of this, these cuts produced a statistically significant diminishing in the quality-of-care of their hospitals, measured in increased patient deaths, increased infections, increased medical error, and increased incidents of negligent care and lawsuits. It did, however, produce more profit for shareholders, year over year.
Regular competition does not work. It doesn't do any good to make your hospital nicer or better than another; people will never become sophisticated and discerning consumers of something they really need badly just a few times in a lifetime. Cost cutting and price raising to the point of patient extortion is the only way to relentlessly increase profits, as Wall Street demands.
When it comes to health care, the profit motive kills and cripples people. The solution is to take Wall Street out of the equation. That will cost us money, but unlike simple spending, this is also an investment that will pay off for consumers of health care (all of us) in reduced costs going forward.
That was my point. As a society we have come to realize that for-profit health care is destructive and too costly and is making health care progressively worse every year, because people cannot afford it.
One solution is to eliminate the profit motive. Pay a tax so the government administers a non-profit approach; and the tax will be made up several times by the reduced costs that result. As I said, this has already been proven to work and work well with high patient satisfaction in several other countries.
Perhaps a good analogy might be toll roads. Imagine if the government did not collect taxes and build roads, and instead every single road in your town, in your state, were a toll road, operated for profit, without price regulation. Chances are, you would pay far more to get to work than you currently pay in road taxes and it would take much longer. The domino effect of that is much less travel, much less commerce, fewer cars and less social contact. There are far too many roads that are basically the only sane way to get from point A to point B, and these would become essentially monopolies.
This is why no free market economist has every developed a viable plan for unregulated, free market road infrastructure. A non-profit tax based system of publicly owned roads is the only viable option. You can have several toll roads, but it is in the public's interest to have the vast majority of roads built and maintained by government through taxes, so no profit motive is present.
The same thing has become true for health care. It has become a profit monster that is collectively making decisions to let people die in order to maximize profit. Now I agree we cannot have infinite health care costs, but decisions about the life and death of citizens are not decisions that should be made by people whose salaries or bonuses or even livelihood depends upon the decision being made.
Our objective should be to maximize the number of lives saved with the resources we have, and any profit motive will diminish that objective. For profit health care has proven itself incapable of controlling the cost of health care for patients, and therefore health care should be primarily a non-profit enterprise, and all citizens should have access to a non-profit alternative. If for-profit hospitals can survive and profit in that environment then they should be welcome, but they cannot continue to exist in an environment where they have a life-and-death monopoly over patient care, because they have proven themselves too greedy to do anything except bankrupt their patients.
My point to Mr. Quinn was that you can't look at the cost of government run health care without considering the benefits of it, including net savings by the taxpayers that funded it; because under that metric nobody should spend any money on anything ever.
Every individual is predisposed, 'hard wired', if you will, along particular lines. When that individual is 'discovered' and affirmed, success in learning, and therefore fulfilling socialization and high levels of productivity, are just around the corner.
Yes, abolish the NEA, but not before abolishing the 'Prussian' antiquated educational model. Education needs to be about individuals, then about cooperation and collaboration.
It is naive to think artistic, mechanical, and other 'practical arts' predisposed individuals should be forced into math and science modes of thinking, and vice versa.
Put (read: track) all the math/sci folks into those disciplines. Likewise, the others in their respective 'bents'. Make 'cut outs' that allow for changing tracks in case a person 'develops' or discovers prediliction for math/sci along the educational way, and also to allow others to 'get off' the math/sci track.
The above is the 'undemocratic' European method of educational tracking that our Government WILL NOT ALLOW US TO PRACTICE. Give a math/sci teacher students who love math/sci, and you will see scores soar. Give him a potpourri of students and watch him fail and join NEA because that is his only means of survival in a system ruled by Denial.
Get rid of educational bureaucracy/expense. Have twice the number of teachers, paid well, on one year, 3 year, 5 year contracts; have their work 'graded' by a committee of peers, parents, students.
Have plenty of well paid 'aides' to help individuals with their tailored curricula. Eliminate 90% of peer confusion/dominance by keeping individuals separate and in small groups of 3-5. Parents: Get over the syndrome: 'School was the best years of my life'. If so, it was because you were never 'discovered' and have never worked in your 'calling'. By demanding 'social fun' in school you are in denial: Your responsibility is the 'social fun'. Fun in school is finding out who you are and learing how to be it and doing it!
By the last 2 years of HS, at least, individuals should be working part time in their fields for credit. This should continue through higher education.
When we can commit to a higher priority and budget for education, then we have 'some' grounds for complaint of outcome. Until then, to complain is naive. We need change. Read 'Three Cups of Tea'. Put $ into helping people around the world, and money into educating our own, and we won't need that much of a defense budget.
Former 25 year educator, former SP-5 (P), USA, RA19889058
Jackson Ordean P.S. We have never approached 'The Basics'. That only 'seemed' to work in the structured, authority friendly society of 50 years ago and more.
On Jun 14 02:31 AM Homer II wrote:
> John Lounsbury said, "We have somehow lost the basics"
>
> Not "lost them".. we sold them down the river by letting the NEA
> unionize our public education. And we continue to relentlessly throw
> more money at the schools even in the face of declining test scores.
>
>
> If I were the parent of a primary or secondary school child, I would
> either home school them or move the kids to a private institution.
> Anything less than that is sentencing the child to a sad life of
> mediocrity or failure.
"If I were the parent of a primary or secondary school child, I would either home school them or move the kids to a private institution. Anything less than that is sentencing the child to a sad life of mediocrity or failure."
The socialization (including NCLB) of public school education has taken more than a generation to impose. It will take at least as long to undo the damage those policies have invoked. We all need to work at the local level to rid our public schools of this system of abject failure. Until then, we are left with "educating" our youth OUTSIDE of the government controlled excuse.
The people that really SHOULD be reading that article, are too busy watching American idol, or House flippers or all the other crap on TV polluting their brains.
On Jun 13 10:50 PM conceptwizard wrote:
> Nicely done James, I always enjoy your posts. I was reading these
> T2 Partners housing charts on Zero Hedge. they dont paint a pretty
> picture. It seems that there is a great deal of denial going on.
> It seems ludicris that the Fed and Treasuries dont know this. I believe
> Uncle Ben is starting to shed a warning in his indirect read between
> the lines way he has.
> On the economic front there is no foreseeable way in which the United
> States can work off the $4 trillion it owes foreign governments,
> their central banks and the sovereign wealth funds set up to dispose
> of the global dollar glut. America has become a deadbeat – and indeed,
> a militarily aggressive one as it seeks to hold onto the unique power
> it once earned by economic means. The problem is how to constrain
> its behavior. Yu Yongding, a former Chinese central bank advisor
> now with China’s Academy of Sciences, suggested that US Treasury
> Secretary Tim Geithner be advised that the United States should “save”
> first and foremost by cutting back its military budget. “U.S. tax
> revenue is not likely to increase in the short term because of low
> economic growth, inflexible expenditures and the cost of ‘fighting
> two wars.’
>
> Challenging America will be the prime focus of extended meetings
> in Yekaterinburg, Russia (formerly Sverdlovsk) today and tomorrow
> (June 15-16) for Chinese President Hu Jintao, Russian President Dmitry
> Medvedev and other top officials of the six-nation Shanghai Cooperation
> Organization (seekingalpha.com/symbo...). The alliance is
> comprised of Russia, China, Kazakhstan, Tajikistan, Kyrghyzstan and
> Uzbekistan, with observer status for Iran, India, Pakistan and Mongolia.
> It will be joined on Tuesday by Brazil for trade discussions among
> the BRIC nations (Brazil, Russia, India and China).
>
> Time is running out for the US dollar.
The idea of freezing spending and cutting SOME programs is sound, but the idea of another golden shower for the impoverished sounds like it was crafted behind some pretty high ramparts in a gated community. If you stretch the poor over the barrel for too long, be assured, you will feel the pain come full circle to your own backside; think demoralized workforce, higher violent crime rates, larceny, and sabotage - whether it be the loogy in your Waldorf Salad, or the corruption of your impressionable offspring by the disenfranchised who promote whatever the 21st century's answer to Anarchy is.
Whatever happened to buying the world a Coke. It can be diet.
On Jun 14 08:45 PM Northstar10000 wrote:
> Quick answer no one wants to hear. The poor must pay taxes and lots
> of them. Sorry half the population gets a free ride. That's the start
> of reality talk. Will action follow , I doubt it. It is only the
> start however. Check out †his. Drop rates for the rich, eliminate
> corp taxes. tax the poor to oblivion until they fight to get into
> the next lower tax brackets just above them. want more straight talk?
> I doubt it. Here is a small sample. Freeze spending and have actual
> program cuts. It's either å controlled depression or pure implosion
> of the entire system. Take your pick...
On Jun 13 11:51 PM Swashbuckler wrote:
> "The $56 trillion of unfunded liabilities for Medicare, Medicaid,
> and Social Security are a debt that must be paid." Nope. That will
> never happen. When the sh#t ultimately hits the fan, the administration
> in power will blame prior administrations, renounce the debt, and
> screw the people.
On Jun 15 05:35 AM Ferdinand E. Banks wrote:
> Swashbuckler, you could be right about separation of the sexes. Actually
> I am thinking more about the craziness now practiced in the US army.
>
>
> But as for the rest of it, your remark about gutter language indicates
> that you are not familiar with what in going on in the republic.
> I hear and see things in the few minutes of US television I inadvertantly
> am exposed to every day that I did not hear or see during my almost
> 6 years in the US army, most of which were spent in the ranks of
> the US infantry.
>
> In any event I repeat and expand, COMPULSORY pledge of allegiance
> to the flag, singing of the national anthem for all Americans, encouragement
> of prayer, discouragement of gutter language, porn and dope, and
> teaching of US history from kindergarden. And prhaps I should mention
> to the Now Generation and Sleepwalkers that it will take a LONG LONG
> TIME to get results from this strategy, but certainly less time than
> it took for Bill Clinton and George W to pour sand into the machine..
Somehow, over the past 20 years, it has become the parent's responsibility to ensure that their children are learning all that they should. Back when I was a student, this was the school's responsibility, and if any teacher or principal had put forth that parent's responsibility argument, the whole community would have been up in arms. That was fifty years ago though, when public school teachers were servants to the children and community they served.
Public education needs to be radically reformed, or replaced with something that shows much better results for our children and grandchildren. A good start would be to ban teacher's unions and collective bargaining within the educational system as a whole.
On Jun 14 02:31 AM Homer II wrote:
> John Lounsbury said, "We have somehow lost the basics"
>
> Not "lost them".. we sold them down the river by letting the NEA
> unionize our public education. And we continue to relentlessly throw
> more money at the schools even in the face of declining test scores.
>
>
> If I were the parent of a primary or secondary school child, I would
> either home school them or move the kids to a private institution.
> Anything less than that is sentencing the child to a sad life of
> mediocrity or failure.
On Jun 14 08:44 AM ChrisJCook wrote:
> Good article, but Mr Quinn does not mention that the reason people
> have been borrowing to consume is that their wages have barely kept
> pace with inflation, and that most of the gains from economic growth
> in the last 30 years have gone to investors.
>
> ie everyone except the top 10% has been in a recession for 30 years,
> but this was clouded by the property bubble.
>
> There is no solution IMHO without systemic fiscal reform, and I advocate
> a switch from taxes on earned income - which should be cut to a low
> level - to taxes on privilege, such as a tax on land rental value,
> a levy on carbon use, and a levy on limited liability.
theburningplatform.com...
On Jun 17 06:07 AM bbrowb wrote:
> Excellent point. I went back for a Master's degree and foolishly
> thought my salary would rise accordingly. I wish Mr. Quinn had a
> chart for wages over the last 30 years and the real root of our financial
> problems would be exposed. Of course we had to live on credit - every
> commodity price increased except wages.
> On Jun 14 08:44 AM ChrisJCook wrote:
If you understood even the boilerplate of our Nation's most sacred doctrines, you might have noticed at some point a repeating theme: freedom is paramount. You can repackage tyranny in any kind of wrapper you may choose, but to impede the pursuit of happiness for the sake rote uniformity subordinate to one ideal is both a tyrannical and failed ideology.
On Jun 15 05:35 AM Ferdinand E. Banks wrote:
> Swashbuckler, you could be right about separation of the sexes. Actually
> I am thinking more about the craziness now practiced in the US army.
>
>
> But as for the rest of it, your remark about gutter language indicates
> that you are not familiar with what in going on in the republic.
> I hear and see things in the few minutes of US television I inadvertantly
> am exposed to every day that I did not hear or see during my almost
> 6 years in the US army, most of which were spent in the ranks of
> the US infantry.
>
> In any event I repeat and expand, COMPULSORY pledge of allegiance
> to the flag, singing of the national anthem for all Americans, encouragement
> of prayer, discouragement of gutter language, porn and dope, and
> teaching of US history from kindergarden. And prhaps I should mention
> to the Now Generation and Sleepwalkers that it will take a LONG LONG
> TIME to get results from this strategy, but certainly less time than
> it took for Bill Clinton and George W to pour sand into the machine..
On Jun 13 11:58 PM Dave Wrixon wrote:
> "Since 80% of the people interviewed on CNBC manage other people’s
> money, I’m guessing they are just trying to stay in business by lying
> to the average investor."
>
> Got it in one!
Where do we go from here? Our children are the brightest, but they have become 'disconnected' into the electronic world that we have hooked them . They can text, but they can't talk. They can write voluminous essays on the philosphies of Voltaire and Decartes, but they don't know their Senators or Represenatives; nor do they how or why they vote; nor do they seem to care.
They seem to know we are the "greatest country in the world", but like most in this country, that is simply an 'entitlement' ; and unfortunately like all entitlements, this provides little or no incentive nor responsibility.
We have sheltered our children form all the hardships that we simply accepted at the time; but by doing so , we have left too many as simply helpless children.
Perhaps the new depression will make better adults of all us.
Perhaps the new depression will leave others in charge of the world that , at least morally and philosophically, will have been basicly as just as we have been for the last hundred years.
Here's to hoping!
theburningplatform.com...
On Jun 20 12:05 AM dragonpaw wrote:
> Dear Mr. Quinn;
> Where do we go from here? Our children are the brightest, but they
> have become 'disconnected' into the electronic world that we have
> hooked them . They can text, but they can't talk. They can write
> voluminous essays on the philosphies of Voltaire and Decartes, but
> they don't know their Senators or Represenatives; nor do they how
> or why they vote; nor do they seem to care.
> They seem to know we are the "greatest country in the world", but
> like most in this country, that is simply an 'entitlement' ; and
> unfortunately like all entitlements, this provides little or no incentive
> nor responsibility.
> We have sheltered our children form all the hardships that we simply
> accepted at the time; but by doing so , we have left too many as
> simply helpless children.
> Perhaps the new depression will make better adults of all us. <br/>Perhaps
> the new depression will leave others in charge of the world that
> , at least morally and philosophically, will have been basicly as
> just as we have been for the last hundred years.
> Here's to hoping!
"The rich rule over the poor, and the borrower is servant [slave in some translations] to the lender."
Your article sums it up brilliantly. Keep up the great work.