Joseph L. Shaefer

U.S. Jobless Rate Hits 10.2% - Government Supporters Blame Rising Productivity

Rising productivity never lost ANY one their job! Yes, technology has replaced some drudge work -- machines now scoop dirt out of ditches faster than men, sewing machines made better lives for seamstresses, though there are today fewer seamstresses, and automobiles meant that horse curriers, groomsmen and blacksmiths were replaced by car dealers, auto mechanics and factory workers.

So what? Every time we became more productive, not only did those "displaced" go from digging ditches to something hopefully better, but a whole NEW group of employees were created to make and service machines, to sell consumer items to those with new and different jobs, and to entrepreneurs that founded new companies and all their employees.

When someone says, "Well, people are just working smarter and better, that's why unemployment is up," it's a lie, plain and simple. BECAUSE government favors the big, the ungainly, the goliaths that contribute the most to their campaigns, they have taken from the small and given to the big. Instead of creating jobs, this money has disappeared down the rathole of bonuses and perks.

Unemployment is up because our government is sticking its tentacles into the fabric of business and entrepreneurship and ripping it to shreds.

Wall Street Breakfast: Must-Know News

Interesting juxtaposition of articles, Eli --

"Consumer bankruptcy strikes new high" preceded directly by "Big bonuses are back. Wall Street incentive pay is set to rise by about 40%..."

Our government "leaders" works to ensure that Wall Street -- from whence many of them came and to which they will return after their "public service" -- is taken care of while the rest of us suffer the highest levels of personal bankruptcy.

Vote them all out. The next crop may be no better but at least it'll take them time to figure out where the goodies are hidden, giving the country time to recover on our own while they are distracted searching for the candy.

Fiscal Responsibility Has Moved Abroad

The worst crime against working people is a company that fails to operate at a profit -- because then the business will ultimately fail and its workers will lose gainful employment and their incomes.

By the same token, a government that consistently operates at a loss while claiming that "deficits don't matter" is bankrupt both morally and financially. Deficits matter -- to individuals, to businesses and to nations.

"You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time."

It's time we stopped letting anybody fool us any of the time and began once again to work hard, savie for the future, spend responsibly, and elect leaders who share those values.

Despite Inflation, The Social Fabric Remains Intact

The US government is comprised of a self-serving clique and the economy does not currently provide opportunities for all. Yet, like Roger, I must respectfully disagree with some of those whose comments I value most highly on SA. I do not share the belief that America is going to hell in a handbasket.

Times of retraction lead to introspection, and that’s a good thing. But just as things were never as joyous as we might have believed during “the good times” neither are things as bleak as many say now that we are in a not-so-good place. Neither will last forever. The pendulum swings both directions.

Our opinions are formed by our experiences and upbringing and I accept that my experiences may not be typical. While I have seen the shortsightedness and frivolity of many, I have also had the honor, my entire working life, of working for, working alongside, and commanding some of the finest Americans of this or any generation. The American Soldiers, Sailors, Marines, Airmen and Coast Guardsmen that I know are as honorable, ethical, serious, hardworking and generous as any who have gone before. They give me hope and confidence in the future of this nation.

If many of our fellow citizens have became lazy, complacent, and looking for the next government program that will give them something for nothing, others are seeking something greater than themselves and finding it in duty to country.

The generation of statesmen who returned from WWII who believed in something greater than themselves had seen, firsthand, reason enough to keep America from becoming less than its promise. In the intervening years, we lost many of those statesmen as mere politicians chose to run for office.

But a whole new generation of young American men and women have been to war and seen the ugly alternatives to a vibrant, tolerant and just nation. I believe their social consciousness has been raised to the same degree as the previous generation of statesmen. These are the men and women who will come to replace the politicians of today.

If you doubt the resolve of these young people, just stand in any airport that welcomes them home from overseas, as I have.

Or read this story by Army Reserve Chaplain Jim Higgins, who was pastor of a Methodist church in Georgia, before deploying to Iraq. He writes of a thousand soldiers seeing a movie courtesy of MWR (Morale, Welfare and Recreation) at Camp Anaconda in Iraq in 2007. (The full story and verification of its accuracy may be found at www.truthorfiction.com...)

For those who have never been to one, every military theater worldwide, whether in an air-conditioned facility in America or a GP Large tent in Afghanistan, precedes the movie with the playing of our National Anthem as those of us in attendance stand at respectful attention. In this instance, a thousand soldiers were standing at attention but the recording stopped. They continued to stand at attention.

The music started again, but stopped again. Then one of them started singing quietly. A few others joined in. Then the chorus rose as all 1000 troops joined in to complete the Anthem. Chaplain Higgins writes, " I wanted you to know what kind of Soldiers are serving you here."

I have personally witnessed scores of acts of patriotism, courage, fortitude and humor and toughness in the face of adversity. Those who disparage Americans may have had different experiences. I have seen both sides and I say: God bless any nation that can still produce young people like these.

Wall Street Breakfast: Must-Know News

"The government, which controls Fannie, is thought to be reluctant to approve a deal that would allow Goldman to save on taxes, given the firm's already tenuous standing with lawmakers and on Main Street; taking widely-respected Buffett as a partner could reduce the tension."

It could. Or when combined with TARP money and sweetheart deals with GE and GS, it could tarnish Warren Buffett's reputation. Lie down with dogs, get up with fleas...

California's High Tax / High Benefit Model: A Constantly Renegotiated Bargain

“That government is best which governs least.”

There is both a quality-of-life argument auguring in favor of these simple words and an economic one. As to the former, no one who believes in the nation envisioned by our Founding Fathers wants a more intrusive government prying, nanny-ing and enforcing arbitrary rules into our private lives.

But the economic argument is equally compelling and may be stated in the simplest terms via an analogy. All bookies depend upon the spread between opposing bettors and the bookies’ cut of your winnings or losings. Their ideal is to get a 50/50 betting pool where exactly half the bettors win and half lose. With their cut -- the vigorish, or “vig” – they live a fine life no matter what happens to the bettors.

The Los Angeles Times article asks and answers, “In what respects, then, does California ‘excel’? California's state and local government employees were the best compensated in America.” You cannot continue to raise the amount of vigorish taken or you will lose the betting public. We have a choice of bookies to use, and the article makes it clear that California is losing residents at a massive rate.

It is both disheartening and unnecessary. I was born in California. I attended a great California university, joined the Army and did my basic training in California, and still love the land there. Close your eyes and try to pick another state that can offer wonders like Yosemite, Carmel and Monterey, Shasta, the great breadbasket that is the Central Valley, Southern California beaches, the Giant Redwoods, San Francisco Bay, the Wine Country and the celebrated Sierra Nevada Mountains.

Yet with all those glories, I can no longer live there. Instead, I live a few minutes from the California border, high in the Sierra Nevada but in the magnificent western state of Nevada, a state where the level of regulation and level of taxes are a fraction of those in California – and the level of freedom and personal responsibility are orders of magnitude higher.

California leads the nation in physical beauty. It is blessed with a temperate and beautiful climate. Fresh clean water roars out of the Sierra every year onto some of the most fertile soil in the world. So how could this bounty have been lost? Taxes. Regulations. Overpaying ticket-takers and rubber-stampers while penalizing entrepreneurs and employers.

The tragedy is that it is completely self-inflicted. But the trend is not yet irreversible. California could once again be the leader in education, innovation, entertainment, agriculture, and energy that it once was. It is this generation’s object lesson that the type of governance we choose makes all the difference in the world.

Homebuyer Tax Credit: The Moneypit Is Alive and Well

The problem is not lack of potential buyers -- as long as other taxpayers (oops, "the government") continue to pay much or most of the down payment -- meaning these buyers will STILL have little or no skin in the game.

You have to have a monetary and emotional interest in your home or it's just too easy to walk away when it gets "too hard" to make the payments or you need to choose between making home payments or getting that shiny red new truck.

When will our government learn? Something we work for has value. Something we are given may or may not...

Wall Street Breakfast: Must-Know News

"BofA's TARP exit hits snag... Until it exits government assistance, BofA remains bound by pay czar Kenneth Feinberg's compensation limitations, which bank executives fear will hamper its abilities to recruit talent."

Translation: We really don't give a rodent's posterior about recruiting talent, but that's a good excuse to deflect criticism from the notion that we're only paying back the TARP money so we can give our top dogs even more bonuses and perks. Frankly we don't care if it comes from the shareholders or the taxpayers as long as it comes to US.

You have to love corporate doublespeak, Act II...

Wall Street Breakfast: Must-Know News

"Peltz takes a foothold in Legg Mason...'We welcome Nelson," Legg CEO Mark Fetting said in a statement. "We look forward to benefiting from his insights and experience as we work together to build greater value for our clients and our shareholders.' "

Translation: We welcome Nelson about as much as we welcome a hurricane that destroys half our property. On the other hand, given the drought we've had, we can always hope that the rainmaking he brings will replenish our cisterns.

You have to love corporate doublespeak...

Fantasy Housing Numbers a Prelude to the Next U.S. Crash

I happen to have left my cool and sunny mountaintop aerie of Lake Tahoe and am now on business in Miami. What I see here points to continuing housing problems from an untracked -- and untrackable -- source: "strategic defaults." The front page of today's Miami Herald chronicled an individual who paid $125,000 for a condo now worth $35,000. He simply stopped making payments on the condo a year ago, not because he can't afford it, but because he is so far underwater it doesn't make sense for him to, in his mind. Rather than do the ethical thing and leave, however, he is using the money he would have paid to the mortgage lender to pay off credit cards, car loans, etc. When / if the bankers finally get around to evicting him, he'll have lousy credit but no debts and a steady job. We can speculate on the size of this shadow market of foreclosures but we won't know who will walk away, who will continue to be squatters until they are forcibly ejected, and who will pay...

John Meriwether Is Back - Risk Must Be Too

Every time I read about people being sucked into yet another hedge fund disaster, I promise myself I'm going to write an article on just doing it yourself and saving the ridiculous fees, the contracts that give them the use of your money for too long, and then being locked in whether you like it or not.

Thanks, Edward. This was the final straw, seeing so many fooled yet again. How many times does Lucy have to pull the football away before Charlie Brown figures out he's being had? This was a good reminder and now I've gotten around to writing it...

Not a Drop to Drink: Three ETFs for Future Global Water Shortages

Both Jack Gordon and Fran took John A. to task for his comment, “…Tibet has been part of China for thousands of years. Read your history.”

They were right to do so. I am a professor of military operations and history. I make certain my students cite their research and exercise academic rigor before they extend their analysis, and hold myself (as does my and every other university worthy of the title) to that same standard. Clearly Jack Gordon and Fran do the same.

I wouldn’t normally cite sources in a more practical forum like SA, but I would admonish anyone stating mere opinion in matters of factual history to “read your history.” Back atcha:

The Tibetan Empire came into being, as most did in those days, after much bloodshed between various factions and clans. After consolidating his power at home, the first ruler of that final entity, Namri Songtsen, sent emissaries to neighboring lands to let them know there was a new sheriff in town high up in those mountains. Emissaries were sent to China in 608 and 609. (Beckwith, Christopher I., The Tibetan Empire in Central Asia: A History Of The Struggle For Great Power Among Tibetans, Turks, Arabs, and Chinese during the early Middle Ages, 1987, Princeton University Press, Princeton, NJ.)

From this time forward, Tibet grew to be a major Central Asian empire, extending well into what is present-day India and Bangladesh, Mongolia, and Kazakhstan. It fought with China on an equal and peer status and then enjoyed treaties and inter-royal marriages with China on an equal and peer basis.

A treaty between the two per nations was signed in stone, and still visible, in 821, which reads in part, “The whole region to the East of that [boundary] being the country of Great China and the whole region to the West being assuredly the country of Great Tibet, from either side there shall be no hostile invasion, and no seizure of territory... and in order that this agreement establishing a great era when Tibetans shall be happy in Tibet and Chinese shall be happy in China shall never be changed, the Three Jewels, the body of Saints, the sun and the moon, planets and stars have been invoked as witness.” (Michael C. Van Walt Van Praag, The Status of Tibet : History, Rights, And Prospects In International Law, 1987, Westview Press (Boulder, CO.)

During the 13th and 14th centuries, of course, both China and Tibet came under the influence of the Mongol empire. Tibet came under Mongol influence before Kublai Khan's conquest of China and regained complete independence from the Mongols several decades before China regained its independence.

While China was militarily conquered by the Mongols, the Tibetans and the Mongols established the historically unique "priest patron" relationship, also known as CHO-YON. The Mongol aristocracy had converted to Buddhism and sought spiritual guidance and moral legitimacy for the rule of their vast empire from the Tibetan theocracy. As Tibet's patrons they pledged to protect it against foreign invasion. In return Tibetans promised loyalty to the Mongol empire. (Van Praag)

In 1639, the Dalai Lama established another CHO-YON relationship, this time with the Manchu Emperor, who in 1644 rose to power in China and established the Qing Dynasty. By the middle of the 19th century, the Munchu influence in Tibet had waned considerably as the Manchu empire began to disintegrate. In 1842 and 1856 the Manchus were incapable of responding to Tibetan calls for assistance against repeated Nepalese Gurkha invasion. The Tibetans drove back the Gurkhas with no assistance and concluded their own bilateral treaties. (Van Praag)

Tibet formally declared its nationhood in 1912 and continued to conduct itself as a fully sovereign nation until its invasion by Communist China an 1949. Tibet has been part of China for thousands of years? I think not, sir. I and every other historian more well-versed than I date it from 1949, when it was invaded and annexed by the People’s Republic of China. "Read your history."

Too Big to Fail: Now It Gets Interesting

The last President with the guts to go trust-busting was Teddy Roosevelt. Couldn't we, just once a century, enjoy a similar courage from our leadership?

If you read the preserved newspapers from that long ago time, you'll find that John D. Rockefeller and the other robber barons said the EXACT same thing at the time that Goldman, Citi, Morgan, B of A and AIG are saying today. "If you break us up, millions of jobs will be lost." "America will now lose its competitive position in the world." "We must keep our mega-giants so as to compete with other giants from across the sea." And "You are destroying the very strength of America, replacing capitalism with socialism."

To which I say, hooey, balderdash, horsefeathers and moose poo. These "too big to allow to fail" oligarchies were split up and it ushered in a new era of competitiveness in American industry that allowed us to label the 20th century "The American Century."

The choice we face now is remarkably similar. We have allowed a few institutions to enjoy a revolving door relationship with Washington DC, providing favors, campaign contributions and employment to politicians in exchange for "Most-Favored Corporation" status. Whenever they do something stupid that would destroy another company, these once and future employees rush to transfer OUR savings (via taxation) to the Most-Favored Corporations.

David can beat Goliath and often does. It's part of the creative destruction that allows hope, change, and growth. But when David has his arms and spirit broken by a government that then stands firmly behind Goliath, propping him up whenever he is felled, usually by his own mis-deeds, it makes the job a lot tougher.

Too big to fail? Tell it to Teddy Roosevelt. Or to today's Exxon, Chevron, and a host of newer names allowed to grow and prosper because we refused to believe the hooey, balderdash, horsefeathers and moose poo put out by a bunch of cowards Too Big to Be Willing to Compete.

Nouriel Roubini, One on One: More Doom and Gloom

The Economists' Rule to avoid ever 'fessing up to being wrong is: "Tell 'em what or tell 'em when, but never tell 'em both."

Dr. Roubini has built a fine business following this rule, as have Robert Prechter, Mark Skousen, Howard Ruff, and scores of others in the past. "What's going to happen?" "There will be a terrible decline." "When?" "Sometime in the future." "How do you protect yourself? Gold, commodities, equities, debt?" "No. None of those will work?" "What then?" "Stay liquid."

It happens that Dr. Roubini and I agree that this thing has come too far, too fast. Where we differ is that I refuse to cower in a hole somewhere eating trail mix and muttering, "I told you so," so I will allocate to the assets and purchase the sectors I've been writing about, all the time enjoying the party, but taking some profits along the way so I don't have a lot of baggage as I quietly edge toward the exits.

In the real world, I need to make a reasonable return for my clients and myself no matter what I THINK the markets or the economy are going to do. Being rich, or at least protecting assets and making a reasonable return in all types of markets, is more important to those of us in the real world than being right!

Not a Drop to Drink: Three ETFs for Future Global Water Shortages

Freya, Hyflux has a contract for the biggest water desalinization plant in the Middle East and a backlog of others that show their expertise around the world. Now if we could just trade the Arab states even-Steven oil-for-water, that's a trade I'd be willing to endorse!