Oh, No! Not Another One?

 

Quite often you can see things otherwise invisible when you look at a big picture.. For example if you were flying from San Fran to Bangor, ME, no one in your interactions along the way would be able to tell you what was happening across the entire route in real time.  You simply trust that and hope all will end well.

But if you are at a console watching air traffic control across the entire United States, and noticing how suddenly those little plane shapes disappear whenever they cross the Mississippi anywhere between Memphis and Cedar Rapids, you know from that anomaly that something must be wrong… You don’t know what, but only you see it from looking at the macro picture, a hole developing into which those entering, never return.

Which is why some of us like to look at macro math.  Basically it is stuff that no one else thinks is important and for most of daily living, they are correct.  But if you are used to looking at the same picture every day and one day it is different, a person familiar would notice that.  No one else would.  Imagine waking up one morning and walking through your house and quickly looking up from your footsteps, seeing that portrait you have hanging on the wall has its subject facing left, instead of right… You would be unnerved, right?  Yet a visitor to your place, would not notice.

Here is where we are. We are already in a free-fall towards another financial crises which if not addressed quickly, will repeat 2008-9 and possibly be bigger. It is strongly possible that this summer quarter’s financial reports leaking out in October, will cause a crash similar to what happened 8 years ago….

I’m sure this is a surprise to you as it was me. I sure you are as skeptical of my telling of it, as you would be my insisting I saw my portrait whose image had been flipped during the night..  Main stream’s financial media and both political parties are still asleep and dreaming of the promise that the economy is buoyed and is roaring back.  Just like how we all get surprised when acquaintances of ours, actively healthy people, suddenly confide they’ve been diagnosed with terminal cancer.  That is the cruel side of life. Sometimes the outside does not properly show the hidden condition on the inside.

What has not been shown in all our financial reports, is the massive amount of quantitative easing buoying these glowing results.  QE for short, is where government prints money costing nothing, and then spends it on something. They could loan it.  They could donate it.  They can buy stock with it. They can do anything with printed money that can be done with circulated money… And in a recession, this policy works… (which is why we do it)… Businesses get loans and stay afloat; banks get loans and keep their doors open. But the last recession was 8 years ago, and across the world’s financial markets, certain actors still are doing it…

So in our newscasts we appear to have a great recovery just before the elections. Our stock market is high, our unemployment is quite low, and our corporate profits continue to rise.  Is their any other way to measure it?

But does it make a difference to you if the reason the stock market is high because many of the stocks are now owned by government entities involved in quantitative easing, bought at low times to boost prices keeping plummeting crashes from continuing?  Does it make a difference that corporate profits are continuing because of massive increases in corporate debt primarily taken on to avoid showing a negatively balanced profit sheet, debt often owed to government entities which bought them up when no one else would to help keep their prices high… Does it make a difference if I told you that despite all the newly minted private sector jobs now being generated at reduced wage levels from skeletons of the older jobs now gone, the entire total income now being generated by all those working, is less per person than was before the great recession of 2008-9?  But you knew all this, right?

When put all together, the bottom line is that our economy is actually in a recession if measured by “real” corporate profits being down,  by “total amount of generated wages” impacting the economy being down,  by corporate “revenue streams” across our business world, being down,  by our “stock market minus QE infused purchases” being down,… but the supports provided by QE hide these facts from us all.  And it is not just here in the US. It is even a bigger global problem. There is the EU who prints money for every Southern European economic crises.  There is Japan who prints money to prop up everything. There is the ongoing problem in China. There is Britain who is now pumping to keep Brexit from collapsing its economy. Globally in just one quarter, we witnessed QE soar to never-before-seen levels. and it hasn’t stopped climbing.

Have you noticed how even with bad economic news, stocks go up?  That should not be — a reality which is obvious to grasp when parsed this way….

“Uh-oh, looks like you are going to lose a lot of money/  Oh! No problem, I’ll just buy more stocks at a higher price then..”  Time in and time out, this is exactly what happens.

QE is buying those stocks… and we’ve reached the level where there are so many, there is no one there to sell them too… Bond yields are negative and yet they keep buying.

“We are therefore in uncharted waters and it is impossible to predict the unintended consequences of very low interest rates, with some 30% of global government debt at negative yields, combined with quantitative easing on a massive scale” —Chairman Lord Jacob Rothschild of Rothschild Investment Trust

Notice how across the globe, governments are now buying up $180 billion a month or $30 billion per month higher than all the QE in the world at the peak of the Recession (2009).

Now jump to the crux of the problem.

Did you notice the climb of negative yield debt just in the past 8 months. Aren’t negative yields dangerous?

Can be. Already one third of all sovereign debt yields negative interest rates. That means that investors are effectively paying borrowers to lend to them. The Bank of Ireland and Royal Bank of Scotland already charge depositors interest, as opposed to paying depositors interest.   That’s bizarre. Not to mention unsustainable.

At the current rate of decline, the entire global market will be in subzero land by the end of the year.

 

Around 45% of the global “fixed income” market is now “compromised” by central bank buying.” 

This is compounded by the new fact that nearly half of the bond buyers in the world don’t care about price because they print money out of nothing.   So what does this look like? Take Japan, for example.

Japan’s biggest banks are running out of room to sell their government bond holdings, pushing the central bank closer to the limits of its record monetary easing.   Finding willing sellers is a headache for Governor Haruhiko Kuroda as the central bank prepares to review policy at next month’s board meeting, amid growing concern among economists that he has few tools left to revive the economy. Record bond buying has already saddled the Bank of Japan with more than a third of outstanding sovereign notes, draining liquidity from the market and making it more volatile.

As proof of this trend, on August 9th, the Bank of England couldn’t find enough bonds to buy.

In plain terms it is as if you were now living solely off borrowed money and constantly getting new loans just to make the payments on your past due old loans and then suddenly, not being able to get any new loans anymore……

As we can see from the first chart above, Japan’s “need” is near $90 billion a month, which means once the loans potential dries up… there is an $90 billion dollar hole into which everything collapses…

Don’t underestimate what is happening here, the BoJ is buying a lot more than just sovereign bonds.

The Bank of Japan’s controversial march to the top of shareholder rankings in the world’s third-largest equity market is picking up pace.  Already a top-five owner of 81 companies in Japan’s Nikkei 225 Stock Average, the BOJ is on course to become the No. 1 shareholder in 55 of those firms by the end of next year, according to estimates compiled by Bloomberg from the central bank’s exchange-traded fund holdings.

 

Japan may be the extreme example, but they are hardly alone.  

The balance sheet assets of the world’s six major central banks hit a new all-time record, increasing to $16.9 trillion from $4.9 trillion 10 years ago, a 239 percent increase.  All the major global central banks are buying up financial assets to the point that global liquidity is drying up. In other words, the central banks are becoming the markets.  Markets have become so distorted by central bank activity that they are no longer transmitting very useful information about the economy at all.”

Bad as this may sound, this is still not the real problem  Here is the REAL scary problem. These low negative rates in safe bonds are sending buyers out in droves to the unsafe markets to find any yield, even small ones of 5%.  In these markets the risk looms so large for so small a payoff, that one day’s trade can wipe a years of yield right off the books.

Volume in emerging markets have soared double their previous record in volume sold since March.

But that is just one example

Junk bonds, rallied 48% this year, even while junk bond defaults have hit five year highs.

Corporate debt.

Corporations are issuing record amounts of debt, and investors and QE are gobbling it up.

Companies worldwide are poised to raise more than $100 billion so far this month, the most for the period in Bloomberg data going back to 1999…. The average yield on sterling-denominated corporate bonds has fallen to a record-low 2.19 percent, according to Bank of America Merrill Lynch index data. Globally, the average is near the lowest ever at 2.3 percent, the data show.

More than $2.3tn of dollar-denominated debt has already been issued by companies and banks since the year began, including three of the ten largest corporate bond sales on record, Dealogic data show.   Which makes perfect sense…until you factor in that corporations are defaulting on debts at a near crisis level.

The year is half over and we are already at the 60% level of 2009……….

According to a new report from Standard & Poor’s Global Ratings, corporate debt around the world is massively on the rise and could skyrocket to $75 trillion from the $51 trillion it’s at now…. What’s more – S&P estimates that two out of five corporations are highly leveraged (meaning they’ve taken on too much debt). About 43% to 47% of corporations globally are at a financial risk level.

EBITDA = (Earnings Before Interest,Taxes, Depreciation, Amortization)
Far, far above the 2009 recession levels…

But why are corporations the world over, all taking on debt at the same time (we are just finding out now because reports are filtering out from June 2016)?….

Because operating cash flow doesn’t cover it.

 

In Q2, companies generated $425 billion in operating cash flows. Only $151 billion was invested in fixed assets. The lack of investment is the bane of the US economy. And:

 $110 billion went into dividend payments.    

$61 billion was used for takeovers (OK, that’s down from last year)    

$137 billion was blown on financially engineering their earnings via share buybacks.

So operating cash flows were $35 billion short. That happened quarter after quarter. Hence debt ballooned to 32% of total assets at non-financial firms, the highest since 2008, another propitious year.

As you can see in order not to disappoint shareholders, corporate entities are taking on low interest debt simply to keep their profits looking pretty for the short term.  As seen above one could easily avoid debt by

• a) cutting dividend payments,
• b) stop taking over other businesses, or
• c) stop buying back your stock to increase earnings/share…..

No, but none of these superfluous options got cut back, debt was taken on to cover them…

(As an aside, if anyone is wondering what is still wrong with the American economy, the number of whopping total of $61 billion applied to takeovers compared to an anemic $151 billion into capital investment, says it all… )

You must be wondering!  With all this bad news, why is the stock market climbing so precipitously?  Who would put money into a struggling company laden with debt (32% of assets) which cannot meet profit targets without taking on even more debt?  Let me guess. You? You are going to go out and buy some debt laden stock right now, correct?  Of course, you’ll put your whole retirement plan on it, correct?

Well, yes. If you have anyone minding your money, a mutual fund perhaps, I’m sorry, but this has already happened to you.  For in the short term, it has become the only way to get any yield at all.

Today’s precarious stock market scenario only makes sense when compared to negative bond yields… From the comparison chart above, you can see that this is a new phenomenon.  Accounting for the negative bond yields, today, you make 70% more in stocks than you do in bonds…

With a bubble stretched this thin, and with ample covering up so much bad financial news, the danger becomes very real that a tiny pinprick from somewhere, whether coming from student loans, junk bonds, emerging market bonds, corporate bonds, equities, or sub-prime car loan bonds, causes negative losses more than the ability of one to pay……

When disaster finally happens there will be another rush for the exits everywhere, and that is where the fatal flaw in the system will be exposed: there is no liquidity in the markets….

The World Bank estimates the ratio of non-performing loans to total gross loans in 2015 reached 4.3 percent. Before the 2009 global financial crisis, they stood at 4.2 percent.     If anything, the problem is starker now than then: There are more than $3 trillion in stressed loan assets worldwide, compared to the roughly $1 trillion of U.S. subprime loans that triggered the 2009 crisis….

Mr. Businessman calls up his bank… I need a loan right now, quick!   ….. Sorry says the bank. We’re out of money…..

The one solution?  Pretty painful.. Raise interest rates,.  which will result in downward pressure globally on all portfolios, dropping overinflated stock like its hot, but… will dothe necessary job of stopping corporate debt-load from continuing to grow and return us to more accurate reporting. Raising the interest rates act like chemo therapy to the economy, providing long-term healing by actually killing off parts of the living body to keep a malignancy from spreading to healthy tissues… When given the choice, very few of us choose to die forthright, instead resign to taking the chemo.  As we struggle with the decision, at the end of our thought process we all succumb to choosing that option at the end, coming to the realization that either way, we die, and at least therapy provides us the option of more time….

These implications hitting in October are anyone’s guess to their impact on this election year.

What To Expect From A Republican Senate?

The answer is to look at the House, and see what bills passed there which would then, clear a Republican Senate and find their way to the President’s desk for a veto….

Here broken down by issue, is what has actually passed the House, but was stopped by the Senate…

Women’s Issues:

*A law that would make it a federal crime for an adult to accompany a teen across state lines for an abortion and hold doctors liable for knowing that.

*A law to ban abortion coverage in all state health-care insurance exchanges.

*A law to ban abortions after 20 weeks with an exception only for the life of the mother.

*A law to end the contraception benefit in the ACA.

These will need to be stopped by the veto pen of Obama. The real danger is if they get slipped into necessary pieces of legislation, funding bills, so he has to bear the burden and blame of shutting down government or letting them pass.

Paul Ryan’s Budget

*Protect tax breaks for the wealthiest.

*Austerity put in place to hold back growth.  Non-defense discretionary spending would fall by $783 billion.

*The Ryan Budget would cut nearly $2.8 trillion from the Affordable Care Act’s subsidies and Medicaid.

*The Ryan Budget cuts all Food stamps, all Earned Income Tax Credit, all unemployment insurance, and all retirement funding for federal workers up to $1 trillion.

*Reducing Pell grants, food stamps, money for renewable energy.

*Target the EPA.

*Federal subsidies for the National Endowment for the Arts, the National Endowment for the Humanities, and the Corporation for Public Broadcasting can no longer be justified.

*Allow for further drilling access in Alaska, the Outer Continental Shelf, the Gulf of Mexico,  and the Inter-mountain West National Parks.

*Keystone Pipeline

*Go after the Consumer Financial Protection Bureau, gutting Consumer protections by giving business more control, or taking it out from under the Federal Reserve Bank, which could reduce its authority.

Immigration

*An immigration reform  with no path to citizenship, sweetened so that Obama would have a very hard time vetoing: DREAMers, border security, STEM, and temporary legal status.

*Plenty of ways to try to force Obama to accept GOP priorities, especially on immigration matters, or issue a veto that would be difficult for some red-state Democrats to defend.

ACA

*Repeal is unlikely now for political reasons… They would nip and tuck. Starve the ACA by budgetary means. What happens if Congress doesn’t pass the health budget the president requests.

*Doing away with the medical device tax and cutting expenditures required to properly implement ACA and in generally making things nasty for the administration.

Supreme Court

*GOP give a nominee a hearing but sit on the vote, leaving the Supreme Court with only eight members until we see who wins the presidency.

Hillary Clinton

*The Republican Senate will try to keep the Benghazi attack in the headlines until the day Hillary Clinton gives her acceptance speech, and beyond.

*With 2016 coming? The best thing for them to do: (in political terms, that is, albeit not for the country)—is dig in, and drag down Obama’s poll numbers. If you are running to succeed a two-term incumbent from your own party, you are in some sense running for his third term. Gutting Obama hurts Hillary’s chances.

Irony

Ironically more legislation will pass both Houses if Republicans do take the Senate.  If a piece of  legislation clears the House, it will likewise clear the Senate to then land on the desk of the President.  Question is:  is that type of legislation what you really want passed?

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As long a the president has his veto and the Congress cannot override it, the big changes like the ACA already embedded into todays society by the Obama administration cannot be rescinded.   But, considerable bites can be taken out of them.  The next two years will be all about reversing the growth and development achieved over the past 6.

This is what is predicted to pass.. Of course those predictions are being made based off of 2010’s voting results…  (Looking at who voted in 2010 and predicting who will win based on those “probable” voters)…  This is why all the polls are showing the Republicans taking over the Senate….

But this all changes if and only if every single Democrat does go out and vote as they did both times in 2012 and 2008…. if they vote Democratic…..This election is all about getting them off their ass… If every Democrat is motivated to get off their ass, America continues it’s great economic  track record and even continues shuffling forward a little faster…

If they don’t, then we indeed have the road to hell ahead of us…  Conservatives will be grateful, of course, if you stay home… However, your children and grandchildren when they grow up and find out what you you could have prevented and didn’t do, won’t.

 

 

 

 

It Could Be Worse….

Today it is depicted as sml.  Or fml.  Loosely translated, it means “I’m screwed”….

When I was young, grandparents were very sympathetic.  So we milked them for it.  However to all my problems they had one answer. “Well, it could be worse.”  i always felt that was a cop-out, like “hey, really man?  I come to you for aged wisdom and guidance and all you can tell me is that… hey dude, you know man, it could be worse?”

Funny.

Only now I am fully comprehending what it must have been like living through the Great Depression.  Only now can I fully realize what it was like to lose your house, your farm, and actually have nothing.  Only now can I fully realize the true horror of having evil tear apart your world, and land a sucker punch out of the blue with an unprovoked Pearl Harbor or an invasion through the Ardennes.  Only now, can I appreciate what it truly meant, that zero ships made it up the coast from Florida to New York in quite a few months. Only now can I fully realize what it meant to watch evil take out civilization like shutting off light switches and there was nothing we could do about it except read of the defeats in the newspaper….  Only now, can I fully realize what it meant to put your life and job and family’s future welfare on the gambling table and agree to strike your employer, until he agreed to pay you a little more than the starvation wages you were stuck in…

What my grandparents were telling me was this:  “That’s not really that bad;  try hard and you can dig yourself out of it… “

What was unsaid, probably because they hated bragging, was this……. “We did, and it was much, much worse than what you face today.”

Quit complaining, and do.

Extending Rand Paul A Common Courtesy

Rand Paul made some rather bizarre statements that at first do not seen true… This is an attempt to tackle them logically and see how in what context, they could possibly be true…

His subject was the extension of unemployment benefits.

“I do support unemployment benefits for the 26 weeks that they’re paid for. If you extend it beyond that, you do a disservice to these workers,” he said… “When you allow people to be on unemployment insurance for 99 weeks, you’re causing them to become part of this perpetual unemployed group in our economy,” Paul argued.  “You get out of a recession by encouraging employment, not encouraging unemployment.”

First… Take his statement:  “I do support unemployment benefits for the first 26 weeks…”  He is talking about state money, not federal.  Federal money starts on the 27th week.  So at issue is who will pay for it.  From the point of the Treasury, since employers pay unemployment insurance into the state, and the state pays the unemployed, essentially employers are paying the unemployment, and not the government… Of course sometimes the cost may outweigh the income and shifts have to occur. However it is in no way nearly as costly as using all Federal money, all of which comes from taxes, to pay for those people who cannot find work….

So from the Federal Governments role, not extending benefits initially looks good on its balance sheet…

Now let us look at it through economics…  You have someone maybe or maybe not trying very hard to earn a job…. In any regards he doesn’t have one… So from the 26th week to the 27th week, this happens.  His income goes from $330 (Delaware’s maximum) down to zero….  He files for SNAP (food stamps), Medicare, TANF (cash assistence) and utility payments.  Most likely, with zero income he will be eligible.  There will probably be a two to three week delay before the payments go into effect, and they will be paid with all the back pay up to when the request was processed.

Now, to keep TANF, this person must undergo a forced regime.  They must show up at a service such as the Salvation Army or Career Team, and go through seminar training for roughly the equivalent of a work week.  They get times for interviews and resumes, and have coaches helping them find employment…They undergo internships.   This impedes their time looking for additional work… If one is required to spend the day in class, it makes going to an interview rather difficult…  It sort of makes it harder to get a job for the same money that just getting unemployment would allow….

So the idea that cutting unemployment is economical for society is bogus.  It completely forgets to factor in the cost of assistance that would be required.  Essentially from an economics standpoint, it would not fund the supplicant from one fund, but would be doing so from another….  The one fund would need to be funded by additional revenue.  The existing fund, would have to figure how to pay for the extra demand off of their limited resources…

In review, this idea does not work well on either the deficit’s or economic level.  It simply moves the cost to another department, and that is actually more costly by the time one factors TANF, Medicaid, SNAP, and subsidized utility payments.

The only way cutting unemployment could work, is A)  it forced someone to get a job, and B)  the person disappeared off the grid and cost no one anything….

I cannot but help think, that the premise for Rand Paul’s argument, is based on the assumption that people are free-loading on unemployment.  He is calling them out by implying  sure they are going through the motions of looking, but they are acting like they are on vacation….

For it can only if that premise is taken, then the removal of benefits miraculously causes everyone to walk up and get a job and live happily ever after… Further more, I sense morality making a play here… The idea that getting money while not producing is unhealthy for our country, seems to be the driving force here…

If you extend it beyond that, you do a disservice to these workers,” he said… “When you allow people to be on unemployment insurance for 99 weeks, you’re causing them to become part of this perpetual unemployed group in our economy,”

The idea clearly stated, is that the perpetual unemployed group in our economy, exists because people are on unemployment.  Other factors are irrelevant… such as no new jobs,  such as old people suck; let’s hire new ones, such as the jobs we have are in Missouri; you’re in Delaware. All of these factors are simply dismissed.

If you want a job, Rand Paul’s stated assumption goes, you just have to go ask and they will give it to you, no questions asked.  Only because you are unemployment, have you not only not gotten a job, but neither have you sufficiently looked…..

Are the jobs really there?

Let’s look at numbers….  Four days ago it was released that 230,000 new jobs grew  in November. it surprised everyone. Unemployment dropped 3 tenths.  The total number of unemployed  dropped down to 10.9 million.  The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 4.1 million in November. These individuals accounted for 37.3 percent of the unemployed. The number of long-term unemployed has declined by 718,000 over the past 12 months.

So, 4.1 million of the 10.9 million are either at or over 27 weeks of being unemployed…  if Rand Paul gets his way and benefits suddenly stop, 4.1 million shuffle onto on assistance instead of getting unemployment….  Rand Paul was expecting them to get work…

Let is demonstrate how long that would take….

4.1 million unemployed  – 230,000 monthly new jobs  =  3.87 million unemployed left without benefits in January 2014

3.87 million                        -230,000 monthly new jobs  =   3.64 million….          February 2014

3.64 million                       -230,000 monthly new jobs  =   3.41 million…..           March 2014

3.41 million                       -230,000 monthly new jobs  =   3.18 million…..            April 2014

3.18 million                       -230,000 monthly new jobs =    2.93 million…..           May 2014

2.93 million                      -230,000 monthly new jobs =    2.70 million…..            June 2014

2.70 million                      -230,000 monthly new jobs =    2.47 million…..            July 2014

2.47 million                      -230,000 monthly new jobs =    2.21 million…..             August 2014

2.21 million                      -230,000 monthly new jobs =    1.91 million…..              Sept. 2014

1.91 million                       -230,000 monthly new jobs =    1. 68 million….             Oct. 2014

1.68 million                      -230,000 monthly new jobs =     1.45 million…               Nov. 2014

1.45 million                      -230,000 monthly new jobs =     1.22 million…              Dec. 2014

1.22 million                      -230,000 monthly new jobs =     920,000……                Jan. 2015

920,000                            -230,000 monthly new jobs =    690,000 …..                  Feb. 2015

690,000                            -230,000 monthly new jobs =    460,000                          March 2015

460,000                            -230,000 monthly new jobs =     230,000                          April 2015

230,000                            -230, 000 monthly new jobs =    full employment….     May 2015……

Of course this is only theoretical. If real,  it would take much longer because one would have to factor in all the new perspective job seekers entering the job market each month,  as well as factor the ratio of which the new get hired versus old, etc. and obviously it would take much longer than just this scenario implies…..

But the fastest we could ever hire all of those long termed unemployed is a year and a half….

A year and a half with no income.  Even if looking for work regularly, and someone took a slot before you, it could be a year and a half until another slot opens up where you could finally be employed….

Those who say, one can get a job delivering papers,  in the meantime, are forgetting that there already are 7.7 million part-time workers due to the economy,  already working those jobs, and looking for full time employment as well…

So it appears that simple math proves Mr. Rand Paul wrong.  Keeping unemployed workers on unemployment benefits is not providing a disservice to workers, it is doing the opposite;  but cutting them off and leaving them with no money while they try to find work  across a full year and a half is what would truly provide perhaps the greatest disservice to workers….

Rand Paul erred in his math.

Now this may be esoteric for most, but for me, this was the most intriguing aspect…  (So instead of ending with a bang-up finish, this post will fade away ethereally..).   Remember that unemployment benefits are taxable income… So if unemployment is extended past 27 weeks, the net cost over a year will be less because some of that comes back as taxes…   So if one takes that calculation into effect, and at a 10% rate which is low… $33 dollars of every $330 Federal Unemployment check comes back, meaning the economy is being boosted by $330 dollars, at only a cost to the Fed’s over time, of  $297….

The average benefit per person on SNAP is $133 dollars.  Medicaid costs and average of $166 among low income people.   Rand Paul’s plan would increase these two items to $299 per person,  to save in another category, $297 per person…..

It appears the only thing Rand Paul has going forward in his favor, is the cultivation of  anger against people terminated by the past Recession who cannot get rehired and must wait for the economy to grow…..”How dare they take our money!”  The math behind his assertion, agoes completely against him….

But to his defense, he did say something of merit:  “You get out of a recession by encouraging employment, not encouraging unemployment.”

Increasing the size of government would do far more to get people off of long term unemployment benefits, than cutting them off cold turkey. Adding 100,000 new Federal government career jobs each month, would do wonders all across the economy. Don’t think Rand will have any of that, which is why the economy will only putt along until Congress allows the Federal Government to again start hiring …..

Fascinating Stuff; Compare and Contrast

Courtesy of Tax Foundation and Philadelphia Federal Reserve

Labor Day: Time To Re-Evaluate Our Priorities

Labor Day is a holiday.  After all, executives need a break too.  Most independent businesses are closed today.  But on the other hand, most businesses paying minimum wage (or just a little more), are open for business scheduling workers to work or be fired,  This includes restaurants, gas stations, grocery stores and of course Wal*mart.

While their owners are cavorting in the Caymen Islands, those needing the day off most, won’t get it.

fact is, most can’t afford to take it off;  they desperately need to make money because they make under $8 dollars an hour.

So to make Labor Day a real day about “Labor”, we need to change the rules. What if, for example, we said, and passed a law, that on Labor Day, all those making minimum wage, got paid in extra, a full days wage, officially titled a “worker appreciation wage” wholly courtesy of their appreciative employer.  We’d just make it mandatory.

This would become a benefit for all those working minimum wage.  If you were off, you got paid. If you worked that day, you would get double payed, with one check coming off the employers labor line, and the other coming off their benefit’s line.

This could be easily mandated on a state level if the General Assembly could simply muster enough votes being cast.

Let us look at the benefits to businesses.

The cost would be mandated and therefore spread over an entire year, instead of just the week it fell. Therefore each day would be assessed 1/365th of the cost one’s minimum wage employees would receive.  The cost is never felt.

For young students, or those working  who desperately need to maximize their paychecks, getting double paid on one day, would be a great incentive to work. Locally it may help the beach temporary labor situation that is always so critical on Labor Day itself.

Recently we saw strikes among minimum wage earners and demands for $15 an hour.

Comparisons were made to Australia, without mentioning that Australians employ a lot less people in those jobs than we do here in the US, and uses robotics or machines to compensate for fewer workers.  That is probably not the solution we are bargaining for.

$15 dollars an hour would double the $7.25 wage we currently have.  Taking Burger King, the doubling of their labor (assuming they kept their full staffs) is more than their operating profit last year.  Whereas (as quoted by the strikers) they made millions company-wide, they did it by having quite a number of units all making a little bit. Their operating profit averages out to making only $28,000 a year per unit.  The reality is that the average each unit makes, is a profit of $78 a day.

Though a living $15 min wage is a nice sentiment, it is very unrealistic.

However, that an incremental wage increase IS very realistic.  $9.00 an hour should be the immediate goal… Instead of a 100% doubling the employers labor costs, one is increasing only by a percentage in the teens…

As many have pointed out, minimum wage is now what many heads of households are dependent upon.  The solution to this problem should be instead to raise the wage scale elsewhere and generate jobs paying livable wages, instead of of forcing a minimum wage to be a livable income for all at $15 an hour.

The economy today is very similar to the economy in the 1920’s… Therefore the solutions one would guess woudl work best, should also be the ones we put into effect in the 1930’s.

Here is what the National Recovery Act entailed.  The government was arbiter.  It asked Labor what they needed to live comfortably.. Back then it was $30 a day. Today, the same would be $120 a day. The government then asked businesses what price they would set to make a fair profit (5%) off their transaction if they paid labor $30 a day.  They told them.  The government then through voluntary-mandating set the price for labor and for the sellers, and promoted the concept, urging citizens not to weaken the program by undercutting those supportive businesses displaying the blue eagle emblem of the NRA (National Recovery Act)..  Labor liked it because it had a set floor under wages.  Businesses couldn’t undercut it and drive it lower.  Businesses like it because a bigger competitor couldn’t undercut their business with a price-cut they had to match causing them to lose money and fold.

The economy rebounded returning to its health, and the NRA quietly slipped out of the picture and market forces again took over, but all transactions were above the floor levels set.  Everybody was happy.

Far cry from today, when everyone is angry because they don’t have enough money, no matter how hard they work.

Although history often credits the labor movement for striking to keep the floor rising under wages, it rarely reports on the businesses who willingly agreed to price structuring which kept them solvent through the hard times.  Because of this agreement, everyone working made money. One of the reasons we didn’t have the massive riots across our cities as do many other nations today…  For those unable to find work, the government stepped in with $1 dollar a day and food and board, and put people to work in CCC camps in our National Forests, or planting windbreaks across the Mid West.

Many blame Globalization for today’s ills.  In a very close comparison, today’s Globalization is much like the free-for-all capitalism that flourished in the 20’s.  Pig prices were high so you raised more this year; unfortunately so did everyone else, and the price dropped lower than it had been in a hundred years.   The benefit to the consumers of having very cheap pork, is short-lived as farms got mortgaged off due to being unable to meet their obligations.

It’s time for a re-evaluation of what is important to us.  Is it:

a)  maximizing profit

b) living happy

c) being a dutiful servant to our masters

The answer is pretty obvious.  Therefore our goal, yours and mine, is that we need to elect and only support those people who stress they are pursuing the same interests as ours.

And sure it ain’t anyone supported by ALEC…..

Wise To Now Get Out Of the Stock Market

A perfect storm is brewing, and as with any hurricane warning, it can blow right past.  However not being aware and getting hit, can be devastating.   Here is what is happening.

• Corporate profits will be under projections because purchases are under projections. After all, at this time last year we didn’t have the 2.5% Social Security Tax.
• Attacks on Syria could cause an oil spike on the global market,
• The Sequester continues tightening its belt even more beginning in September as all departments try to hit their low budgets…
• Another debt ceiling crises, this time over Obamacare.  Government shut down.
• Stocks have fallen off their highs, and only good news can bring them back.
• The Fed is looking to raise interest rates.
• New outbreak of Bubonic plague.
• Possible collapse of student loan debt.
• Banks too big to fail in 2008, are even bigger now.
• % of Wealth in the top 1% equals that of 1929

Safe is better than sorry.  I’ll put more on this later, but, really, things are looking worse than just before 2008. Those are the big ones.

To have political crises and economic backtracking hitting at the same time, could create a rogue wave and cause one of those major drops. When the stock market dropped in 1929, know one really knew why.  It fell in September, then went back up. Then fell again in October, several days in a row, and went back up, then fell gradually until 8 months later when it finally hit its low.

Here is what you need to do with your IRA or 401K if you have never made an adjustment before. …

Call up your plan administrator at your workplace.  Their name will be on the literature you get quarterly.   They are your employer’s liaison with the investment company. Ask them if you can switch your accounts back and forth.  Almost all plans today allow it.  Your administrator herself has done it many times so ask them if it is easy. Ask them if you can move your volatile accounts over to safe ones.  Ask them how it is done. Here is how doing so saves you money.

Stocks are volatile. Treasury Bonds are solid.  Good stocks can give you a good return on your investment,  Treasury bonds have flat growth and should only be used to protect your money during a collapse.   Stocks are only as good as what people will pay for them.  Treasury bonds have a regular rate they pay out over time….  Stocks can become worthless.  Treasury bonds are the safest investment ever.

So if the stock market loses  30 percent and you have a value of $100,000 saved up for retirement, that is now $70,000 dollars.    You lost $30,000 in your portfolio’s worth! Now if you move your money over to Treasury bonds now while stocks are high, that $100,000 stays at $100,000 while later, everyone else drops down to  $70,000.  As the stock market plummets, drops, and drops some more, you have “no worries mate”, your money  stays right where it is in value….

Then, when the market reaches it’s lowest point and turns back around, you get out of your Treasury Bonds and again invest in all stocks.  As each of those stocks rise, so does the value of your investments.  So you go in at $100,000 and as the market rises its 30% back to where it was, you net a value of $30,000, and your total worth is now $130,000.

Those suckers who didn’t switch, saw their value drop to $70,000 in the crash.  After several years in recovery, they will finally return to the value they once had prior to the big drop, whereas you, by not losing your money in the first place, have actually grown your money….

But what if you pull out and the market keeps climbing instead, and doesn’t fall? Should the market defy all the negatives I mentioned above (it won’t),  your value will not drop, it will however stay at $100,000 while others in the market climb with the value of their stock. You may lose $1 ,$2, or maybe $3 thousand of what you could have potentially earned,  but that is a long shot and long shots never happen.  Even if it were, still that is a small price to pay to insure you won’t lose $30,000 in the next two months.

Apologies To Bryan Townsend

Bruce Ennis put forth a bill (SR8) requesting Delaware go forward with formally supporting Glass Steagall re-implementation by the US Congress.

Bryan Townsend kind of came out against it. Here is Nancy’s copy of his emailed response to her.

One must understand all legislative members in Delaware are somewhat compromised. We are a banking state. In the words of Gov. Howard Dean, MD. himself… ” Any candidate who challenges Wall Street’s status quo is going to come under an avalanche of hateful attack ads this year –“

So there is considerable reason not to be an ardent Delaware fan of the return in 2013 of Glass Steagall….. One must give the courageous Bruce Ennis a plug for being one.

But it makes so much sense. There are times in our life when one can willingly chose a very risky path of action which will occupy 100% of ones attention, as in driving a mountain road along the cliffs in Montenegro at over 100 km/h. Or, we can choose to put ourselves into a safety bubble, such as cruise control on a major interstate highway, and relax and enjoy the other things in life, since all our effort is not involved on monitoring what otherwise could become a life or death scenario.

I have read Mr. Townsend’s statement and it is accurate. However my criticism is that it deals with banks. His and our responsibility is to the people whose money is in those banks. And who are on the hook when those banks fail.

The FDIC insures deposits now up to $250,000. It should not be responsible for funds placed in hedge funds, As Elizabeth Warren accurately stated:

Banking should be boring. Savings accounts, checking accounts — the things that you and I rely on every day — should be safe from the sort of high-risk activities that broke our economy.

If we are going to insure the people’s money, it should be kept in safe investments. What point have we in insuring by default hedge funds, swaps dealing, and other risky investment banking services. When the same institutions that take huge risks are also the ones that control your savings account, the entire banking system is riskier.

The funds for checking and savings accounts of America’s families and businesses, should not be handed over to the London Whale. If a crash occurs, and the money is safe, then the losses are only on paper. But when yours and my monies are in Bangledesh, China, or Antarctica on some risky get-rich scheme, and fail… our tax money needs not be thrown away because our American Banks were involved.

Banks cried the economy was safe enough for the repeal of Glass Steagall.. History showed them wrong. Even the most vibrant time of economic growth ever seen in America (92-00), could not prevent the collapse 9 years later after 8 years of Republican control..

The only way to keep citizens money safe, is to insure it. We are lucky we have a rich nation which can do that. We barely survived the financial collapse of late 2008. Our employment numbers still show the cost.

Yes, one can take the bank’s side and say things were different in 1932 than they are in 2013. But doing so, puts one in contrast with what is best for We, the people. The simple solution is to make it clear to all, that the FDIC will only insure safe investments used for checking and savings accounts. For risky investments banks are on their own. For them a bank must use other funds it can easily afford to lose if it wants to play at the crap table… It should not be throwing our money away because it assumes the taxpayers will simply replace their losses for free.

We should not be in the business of arguing what or what not banks should or should not do. They can do that within whatever parameters we choose to give them. However our concern is simply over how much we should insure. The new Glass Steagall Act of 2013 will make that clear.

Man Of The Year

Although the year is barely out, we do have our first nomination for the spot to be announced in December 2013.  With the Kinder Morgan Deal now on hold semi-permanently, even they are pointing to our hero of the year as the man most responsible for allowing the port to remain state owned….

I can say it was Julius Cephas who was behind almost every move to combat the loss of good jobs at our port.  He is being pointed out as the villain by the capitalists at Kinder Morgan.  In Delaware’s eyes, that elevates his hero’s stature even more…

In truth, he is no villain and knowing him, he will probably shun the acclimations being made by us common folk as being our hero.  In his eyes, he was just doing what needed to be done because no one else was there at that very moment to do it, and as that task swelled, it took a lot out of him….

Capitalists always need a villian.  But it was the “truth” which actually is what killed this deal.  Kinder Morgan WAS going to cut back on jobs, and their change of heart and blaming Julius instead of others, points exactly to the core of their problem with our port… …

People in Texas, do not understand unions.  They simply can’t fathom or understand how there can be an actual law that lets people strike and shut you down, whenever you try to pay them less..  In their eyes, you work for what they want to give you and if it is too little, ..humph.  go elsewhere….

The second culprit (after the “truth”),  was our office of economic development.  We gave Kinder Morgan too many “eager” signals that set us up as being seen as an easy pick.  They truly thought they could waltz in, pick up a top notch East Coast Port for a song, and we would eagerly give it up…  Again, that was because everything was done in secret.  Had a meeting been forthcoming in the very beginning,  Kinder Morgan might have moved on earlier when it became readily apparent, that southern Texas practices do not bode well in the Northeast…

Of course, being a corporation, they will blame the whistle blower.  (Ironic since the whistle blower of Enron works for them)..   Of course.  It is not like they find anything immoral in taking a state asset for a song, in firing those skilled dock workers, and replace them with some Spanish speaking Texans who never even heard of a union….

And Julius did blow that whistle. .  Like Rose on the Titanic, he took the whistle off of Jack (pun intended), and blew softly at first, then harder, and harder.   Gradually the sound registered on others ears….

Without Julius, Bob Marshall would not have pushed through Senate Bill 3.  Without Julius, most of the links showing up in everyone’s blog, would have not been found.  Without Julius, the case for protecting workers would not have even made the rounds of the Norman Oliver show….

There were many helpers. Bob Marshall, Nancy Willing, Norman Oliver, Norinda, Helene Keeley, Al Mascitti, Liz Allen, John Kowalko, and (an other blogger too shy to be mentioned here). When one looks back through all of them one sees from everywhere, there in the center of the universe,  stands a normal human being just like us, known to most … as Julius.

There will come a time when a better deal will arrive.  Could even be this year. There will come a time when a suitor who does care about Delaware, who does care about unions, about human beings, about those businesses on the outside, and who will want to upgrade the port for everyone’s interest, not just their own… And that suitor in this day and age, could even come from abroad.  Germany is very committed to union labor, to the environment, to being a good neighbor…. There are a great many possibilities out there that are immeasurable…. We definitely dodged a Texas bullet with this one….

When that suitor arrives… Julius’s stature will be set in cement….  For he did nothing really Herculean, except argue the truth…  He didn’t lie.  He didn’t connive,  He didn’t threaten….

That was done by our office of economic development.  Instead and unlike them, Julius told the truth.  He told the truth to anyone who would listen.  He told the truth enough, so many “did” listen….

And that is why, he  deserves this nomination as Delaware’s Man of the Year.  I know it is early into 2013, but great things just do not wait!!….

You will hear smears that Julius tubed the deal… I saw the letter and it is already out on WDEL and the Delawareonline’s News Journal… But as an impartial blogger, I can tell you exactly what killed this deal.

It was “the truth”.  The truth of what this deal would cost us Delawareans….. is what turned the tide and caused the outcry that rose up against it….

If Kinder Morgan really wanted this deal, they could have easily said… “we are expanding and putting 5 new berths out into the river.  We are buying the port for the bargain price of $5 billion.   We need those businesses outside the fence because the jobs we get, will soon be too big, we can’t do it ourselves.  We will keep the union just as it is;  Wilmington needs good jobs and we are going to do our part….  We are also going to contribute into an emergency fund to be used for any spill or environmental accident that takes place under our tenure….

Kinder Morgan could have done any of those things, … and didn’t…. The blame doesn’t lie with Julius after all…. Especially when you consider the following…

This Economic Council erred on Fisker Automotive.  Then it erred on Bloom Energy.  Then it tried to Kinder Morgan us out of our port…..   Someone rushed in  with a save to make sure that last one didn’t happen.

That person is now hereby nominated for Delaware’s Person of the Year…….

Levin and Marshall Head to Head On Port Of Wilmington

Most of you missed this, but Alan Levin and Senator Bob Marshall stopped by coincidentally at the same time to visit Rick Jensen of WDEL, and smooth as he was, Rick convinced both to sit down for an hour and go head to head over the topic of  privatizing the Port of Wilmington….

First Alan Levin;  Delaware Economic Development Office….

a.  Delaware river will be dredged to 45 feet.

b.  Panama canal will open to new big ships from the Pacific, which will be coming up the Delaware River.

c.. Ships if not coming here, may go to ports north to Philly, Paulsboro, Newark NJ, Norfolk.

d.  If we don’t accommodate these larger ships, jobs will go elsewhere taking 3000 jobs. By 2016 we should start seeing them.

e. Was not a sweetheart deal. Competing bids were proffered.  Local  ILA (International Longshoreman) even asked the state to search out new private/public partnership bids back in Sept 09

f. Turns out that the  Bank of Montreal was advisor for port transactions, the division was located in San Francisco. It’s job is to  just finance ports.  Sent out 70 inquiries  17 expressed inquiries for further information,   4 actually made bids.  2 were called non responsive.  leaving 2 good. Kinder Morgan and one private equity group financed by local individuals.

g. Of the two bids received, the Kinder Morgan bid secured workforce. The other group said they would rob workforce pension and union bust to squeeze their profit out of efficiencies.

h. Kinder Morgan bid grants a three year guaranteed security, to the  ILA, to the  teamsters, to the businesses outside..  What other business gives you a three year guarantee?

i.  Kinder Morgan would grow profits by increasing tonnage.  They want to add 3 additional warehouses  200,000 square feet each, and 28 additional jobs.  The other bidder, made up of local cutthroats, would cut the workforce to squeeze out its profit.

j. Kinder has the ability to bring in additional volume, to negotiate and bring other companies in.  The other bid doesn’t.  Improvement costs are substantial.  $12 million per crane. It costs between $60-70 million to replace berth 5 and 6, just the repair of which will cost $8-10 million. We need the long term lease. Companies want return over time.  they won’t do it for 5, they won’t do it for 10. That’s why it is a 50 year lease.  The people of Delaware want commitment as well.  They don’t want someone saying “we’re outta here” after 5 years.

k. BDO did an independent audit.  As does the State Senate  they also show a $ 3 million yearly loss.  Reports are posted in their auditor’s office.  BDO is independent and won’t jeopardize  their reputation by lying about the port of Wilmington.  It is bottom line business.  Net profit in the end, is minus $3 million dollars.  The General Assembly is putting in $10 million a year for improvements.  That $10 million doesn’t get us past where we are. It doesn’t get us out to the large ships.  We need to get out into the Delaware  and that will cost $100’s of millions of dollars.  Kinder Morgan has considered expanding the Delaware River auto berth, built 20 years ago to accommodate Volkswagon.  The berth goes southward. Kinder would go northbound, and put two berths, with two cranes which will service the 3 warehouses being built.l.

l. LNG is off the table,  that has been committed to in the General Assembly and will also be in the lease. Can Wilmington accommodate LNG tankers?  No!  The port of Wilmington is not big enough to do LNG.  And two, they will not increase coal over today’s level; our same level of 100,000 tons of coal is stipulated for the next 50 years.

m. Protests against the port are  having negative effect. Both Mr. Kinder and Mr. Foster came with the understanding we were the ones seeking and they were not expecting negativity. They understand the ebb and flow, but were not prepared for this huge outcry. it was us. We invited them to the party. Had they come to us as a hostle takeover, the outcry could be right and proper… So far we’ve done  what we thought was right.  We got to find a way to stop the annual spending of the $10 million because the $10 million won’t get us out to the river. Kinder proposed and promised and has done it elsewhere.

n. Kinder Morgan if they have a customer who needs to get to the river, they then will build to go to the river; they can make the extension at that time.  But Kinder (like any successful business) does not promise or commit to anything except what it is prepared to do today.

o. If deal falters, the future of port will be tenuous.  It will continue to have great management, and a great workforce, but won’t have the proper resources to go to river.

p.  If deal collapses, no,  the port won’t go bankrupt.  but collapsing the deal  is not responsible.  Being responsible is doing something to stop the $10 million  bleeding.

Now… state senator Bobbie Marshall…author of Senate Bill 3 signed by Jack Markell, overseeing the lease of port….

a. Big problem is… we do not have details of Kinder Morgan.  No written proposal,

b.Expansion is something we all favor. but deal  receded into one of ” no expansion”, but we will now have to turn over the entire port. including the 300 acres owned by Delaware citizens, managed by Diamond State Port Authority to someone we don’t know.

c. Port is actually  a profit making entity if you remove the depreciation yearly. Actual operation is profitable.

d. Port could grow jobs within the  interior 250 acres if port grows and expands, and with new money, more employment opportunity exists if expansion occurs…

e. Point out that Julius Cephus (ILA) has rallied people, businesses, and elected officials, and has pointed out that this may not be beneficial in long term.

f. Preliminary proposal at this time, the due diligence will be present by end of month which will allow presentation to bond bill and bond bill will hold hearings on the proposal… Senate Bill 3 requires review by bond committee.

g. Members of legislature representing the state of Delaware, passed bill in 1994 to allow Diamond State to operate the day to day operations, but never was it place  in the code, to give either Diamond State or the governor sale and total control of 300 acres of port property.  General Assembly and its citizens are the tenant. Diamond State Port is the renter.

h. Port of Wilmington Directors are responsible to exercise “all function” of port….including the leasing of lands to companies…. That is different from” selling” the land of the taxpayers out from under them.  The state taxpayer keeps ownership but leases to Kinder Morgan.

i.  All  interested parties, need to read Miami Herald and how expansion of Panama Canal will affect the ports of the east coast. We need to invest the Delaware river side of the port and that is not happening with Kinder Morgan.

j.  This is a lease, this is not a sale to Kinder Morgan. The Diamond State board can do leases….  Alan’s understanding is if the bond bill committee approves Kinder Morgan deal, it goes to the House and Senate for up or down vote with no debate.  But Marshall say debate will be impossible to quench.

k. Any one can appear before the bond bill committee… Alan will appear. Senators can appear. Kinder Morgan will be given total control of port. Diamond State Board will still be in place, will still have oversight, but not its running on a day to day basis.  They make sure agreement is in force, and if not, they will take appropriate action.

l. Worried about control  People getting laid off?  Kinder Morgan will automate and cut employees down to one.  Low skilled people will get shut out,  Has happened all over the country.  Failed private ports run by Kinder Morgan, cut people.  (Which ones ask Jensen.)

m. Kinder Morgan is interested in the fruit business, Kinder Morgan is paying premium for fruit; they want to build three warehouses. Already they are seeking  long term contracts with Dole, Chiquita, and the Chilean Pacific Seaways in order to get their fruit.  They have to have to be given the chance.

n.  (Jensen) Depreciation needs to be on the form to comply with IRS. Depreciation is where the loss of the port is coming from. Without it, the port is profitable according to Marshall.

o. Kinder Morgan is a bulk and liquid bulk company. (John Vitale):  Concerned this deal will cost him money; his business is on the outside of the port.  Container experience is limited to one 10 acre container port in Florida. Taht is all the experience they have.  Products generating most jobs in ports are containers, breakable containers as in fruit, and automobiles. Handling bulk products are the least job creators.   The outside area around the port has grown because the conscious decision not to handle bulk, because they didn’t mix with fruit and automobiles… .

p.   Ok, (John Vitale) With Kinder Morgan switching to bulk, we could end up out on the river, but we still would have 20 percent of today’s  jobs.

q.  Flat out,(John Vitale)  bulk products are far more profitable and will drive out costlier containers which are labor intensive, forcing the outside businesses to go out of business. High number of jobs at the port are there because of fruit, these will be lost by not sticking to containers…. A for-profit company will not be in the best interest of the  existing port.

r.  Ferrous alloys, fertilizer, liquids are not competitive with the outside businesses. (Alan).  We can promise this:  employees will last three years, we will get an income stream to the people of Delaware, and that capital improvements will happen.  Check out Vancouver where Kinder Morgan has spent in last two years, $140 million spent on improvements for cargo bulk containers, something they didn’t anticipate when they leased it two years ago. …They are  willing to pay a premium for our expertise. They think fruit is good business.

s. Concern that we are putting too much faith in hope. Kinder Morgan is a Wall Street for-profit stockholder company.  Delaware’s General Assembly’s support is contingent on growing business to the river. Legislators are very worried about the external  businesses existing outside the port.  i

t.  Bonds $7 million owed to the city (Roger Roy) ..  In 1994, we made two deals with Wilmington: one to pay them over time, and the other was to take over  the bonds they owed,  which is to pay off their bonds which they currently have.  State still owes city close to$7 million..

u. (Kowalko).  We will debate the bill on the floor. … Alan is saying the Bond Bill Committee will debate the pre proposal proposal… not the proposal because at this time, there is  no proposal.  Issue is not about Kinder. …  The bond bill was to discuss t he ethics of privatization of the port, not the deal itself.  Therefore when it goes on the floors, that will be the only time to debate the actual Kinder Morgan proposal.

v. (Liz Allen)  Vancouver contract shows Kinder Morgan is not liable or loss for any cargo, not liable for any delay, strikes, fires explosions, or acts of god, and Kinder Morgan is indemnified from all losses…. Both (Alan and Rick) spoke up that sounded like a standard hold-harmless contract, one required for all business.  So who is responsible if there is an explosion (Liz)?   Responsibility goes to Kinder Morgan, they have the liability(Alan), their insurance covers that, and we are not absolving them of liability.  All obligations go to the person leasing the deal, not the lessor…

w. (Rick)  Emotion doesn’t make sense. Why so much negative  emotion?. (Bob Marshall)  Those interested and raising concerns are those who work in the port, work in businesses  around the port.  Kinder Morgan is a profit making company, former operator working as Enron officials, that raised a red flag. Rick asks:  is everyone at Enron a criminal?   No.

x. (Alan) Trepidation is about change to what we know.  We have tried to mitigate  that concern on everyones issue.  Bottom line is people of Delaware can no longer afford putting $10 million a year to upgrade the port.

y. (Alan)we take money away from everyone else in the state to bolster the port. We have an obligation to the port of Wilmington, but we can’t take anything away from Seaford, and Laural, and education and public safety….