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It has always been a dream of mine, ever since Gingrich destroyed the camaraderie of Congress with his bombastic attacks, that one day, both sides would give the press a collective F*ck You and begin to work together……..

The press instigates many of the adversarial relationships… Framing questions, reporting sound bytes without mentioning the context in which they were uttered.

So, as you know, the two principal players were Eric Cantor, and President Obama. Obama’s role was mostly filled by Delaware’s own Joe Biden…. affectionately known in here, as Seabiscuit.

Personal relationships are how things happen. That doesn’t make good copy, so the press tries to find differences and drive wedges in to split them further…..

On would be shocked, shocked to hear something like this went on….

“I think the success of these talks thus far is due to the vice president and the way he has conducted the meetings,” Cantor explained.

“it’s been a great, pleasant surprise” to work with Cantor. “The guy’s as smart as hell,” Biden said, adding that Cantor has “been totally, completely straightforward and sincere.”

(Btw, just how smart is hell? On Google, I can find no reference!)

Elsewhere in the House majority leader’s comments on deficit-reduction talks he praised to the Times-Dispatch, the panel led by Vice President Delaware’s Joe Biden.

The commission had identified a possible $1 trillion in cuts. Cantor cited the seriousness of the endeavor and the civility of the tone mentioning “this is how the political realm ought to function”.

Remember Dick Cheney?

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Duffy is God’s answer to a prayer.. I miss the old days of blogging when we were debating principals instead of people… Duffy has stuck to the old line of debating principals with facts, and that is what makes him special in the eyes of bloggers everywhere…

Since the passing of Steve Newton, he has been the only one to challenge me in any argument, and usually some pretty good stuff comes out of both sides during the exchange… I have respected that.. Cause once again, opinions mean dick. Facts are what we steer by.. It is my hope that in responding to his challenge that an answer may make itself apparent.. Who knows? It may not come from me… But if I’m the catalyst for bringing it out in the open, then… none of this was in vain..

Why I like to debate Duffy is simple.. Neither side, he or I, is concretely set in their opinions… We accept it when the other side makes sense… I usually go into such debates having no idea where they’ll end up… I hope the rest of you enjoy the ride as welI….

That said..

Duffy leads: Wall Street’s problems were caused by Fannie and Freddie loaning money to people they knew couldn’t pay and moreover, forcing banks to lend money to people who couldn’t pay. That was not deregulation but misregulation

kavips rebutt’s:Uh… Mr. President. That’s not entirely accurate.

First off, the Community Reinvestment Act of 1977 was developed for, and locked in on, urban developmental areas and had no part of the subprime boom, which primarily occurred out in western desert regions where owning 4 to 5 investment homes was normal… Those homes were overwhelmingly funded by loan originators NOT SUBJECT to the act… We all know the crises was not because people couldn’t afford a payment on their house. It came about, because with no occupants, people could not afford the payments of 4 to 5 houses….. Instead of one loan per borrower turning up in default; four to five were.
Investment Homes lead forclosures not inner city Residences

Second off, The housing bubble reached its point of maximum inflation in 2005.
The Housing Bubble Starts to Dive in 2005
Courtesy of NYT

Third off, During those exact same years, Fannie and Freddie were sidelined by Congressional pressure, and saw a sharp drop in their share of loans secured by the Feds… Follow the dotted line on the very bottom of the graph…
Freddie and Fannie on the lowest line
Courtesy of NYT

Fourth off; During those exact same years, private secures, like Delaware’s own AIG, grabbed the lions share of the market.
Private, not Public Insurers Caused the Crash
Courtesy of NYT

Remember these graphs for later on when I discuss the results of deregulation, versus regulation… But like it or not, these graphs conclusively show that private insurers, who thanks to Marie Evans, we now know were deregulated by Phil Gramm in the 2000 Omnibus Bill, were the primary cause of the worlds financial collapse.. Probably put best by these words of AIG’s spokesperson, who when asked why they didn’t have sufficient funds to cover losses, said point blank, “We were deregulated. We were no laws requiring us to keep any funds, ..so we spent it…”

Duffy leads: The loosely regulated hedge funds escaped this mess largely unscathed. Why? They can’t count on a bailout like the big banks. The Too Big To Fail banks were counting on a bailout (not unlike the S&L bailouts which started on the Republican’s watch) and they got them.

kavips rebutt’s:Uh… Mr. President. That’s not entirely accurate. I agree that the hedge funds did survive better than the banks. Not because of bailouts, but because they sold short during the crises and made billions while firms closed and people got thrown out of work. There is nothing wrong with that; I did the same. In fact close readers may remember my warnings that the crises was impending almost a year earlier. Very close readers may remember my telling them exactly when to sell, and at what point the stock market would rebound… I must say: I called it rather well. 🙂

“Hedge funds were not in my understanding, at fault in the credit crisis,” said David Ruder, former chairman of the Securities and Exchange Commission. “At the most what they did was to sell securities when some of their investments were declining and they needed to have liquid funds. They were not the architects of these problems.”

De regulated hedge funds are not the issue… De-regulated, excessively leveraged, mortgage securities, are a different story however… They, not the banks that held them, are the cause of the crises…Years from now, when academics search for causes of the stock market crash of 2008, they will focus on the pivotal role of mortgage-backed securities. These exotic financial instruments allowed a downturn in U.S. home prices to morph into a contagion that brought down Bear Stearns a year ago this month – and more recently have brought the global banking system to its knees.

Where you err is when you state that banks too big to fail, assumed they would be bailed out… By implication, you say imply they failed from squandering money, and wanted the bailouts.. But your tax dollars didn’t flow directly to the bottom line.

The roughly $200 billion the Treasury Department has handed out to battered banks was swapped for a special class of stock that pays a 5 percent dividend (rising to 9 percent after five years.) As of April 15, the Treasury had collected about $2.5 billion in dividend payments on its investment.

So in that sense, the bailout money represents an expense for banks. That’s one reason a number of banks have said they want to give the money back as soon as possible.

You say big banks were counting on a bailout, and they got them? That didn’t happen to these banks. New Mexico, Georgia, and Florida each lost a bank just last Friday. That brings to 8, the number of banks failed in June. Unfortunately if a bank is failing, it can’t bet on itself to fail, as can a hedge fund.

Duffy leads: Banks have successfully lobbied to get their losses absorbed by taxpayers and gains are kept private. How nice for them. They felt comfortable making insane gambles because they knew they’d be bailed out. Most of them were right. Also remember that it was Bill Clinton who tore down the wall between retail and investment banking. The idea was to give banks more stability as they typically perform as exact opposites in bull and bear markets. (FWIW, I think that was a good idea and I can tell you first hand that two of the Fortune 100 banks I worked for were carried by retail banking in bear years. They may not have had bonuses those years but they didn’t have layoffs either)

kavips rebutt’s:Uh… Mr. President. That’s not entirely accurate. The idea is that the banks made bad decisions knowing taxpayers would bail them out is the issue that is inaccurate. For the record, I have no qualms that it was the Clinton legacy who tore down the wall between banks and investment banking. Like you, I feel it was a good idea to do so… Again the problem was not primarily with banks making loans to people who could not pay.. Although, it was as late as October 2009, when I was made aware of one private Bank in Denver still exaggerating income to make loans look good enough on paper to get approval of securitization. What caused the collapse was the leveraging of those loans as securities, so that as the housing market became overextended, and the ARM jumped past the low cost opening years, the damage was 100 times worse because of leveraging. What made the collapse criminal, was that the insurance most financial institutions had bought from AIG, to cover such an improbable event, had already spent by that companies executives, out on bonuses to themselves. What made it doubly criminal, was that when they received government dollars through a taxpayer bailout, those same executives assumed it was to first go towards paying their bonuses again. However, very recent events may give some cover to the argument that some collusion was implicit in the bailing out of Goldman Sacs and AIG… Basically, once bailed out, AIG paid Goldman Sacs for shares twice as much as they were worth. The documents also indicate that regulators ignored recommendations from their own advisers to force the banks to accept losses on their A.I.G. deals and instead paid the banks in full for the contracts.

Very good news. Credit card delinquencies are way down... and not for reasons you might think…

Since the Democrats passed Joe Biden’s recommended legislation that regulates Banks from moving things around internally to create and cause the delinquencies, there are much fewer of them. Go figure.

Almost exactly as when the price of gasoline dropped from $4.25 to $1.40 in less than two weeks because the hedge funds collapsed, we now have proof that the money we were throwing away at credit card companies, was only because there was no regulation governing how and in which ways, those balances could creatively be determined.

Now that we have regulation…. we have financial sanity and another very good reason to vote every Republican out of office…

Don’t take my word for it, … trust Fox News… Even that Republican spokes-organization, is now saying that Republicans cost average-American’s, a accumulation of billions of dollars spent unnecessarily ….

Evidence is mounting daily: Democrats good. Republicans? … not so much….

….. and now Steve Newton of Delaware Libertarian is bowing out….

Forgive me for getting some out of order, but his name now goes up on the wall next to those of Dana Garrett, Mike Matthews, Jason Scott, Shirley Vandever, Dave Burris.

All gone, leaving only these few greats are still left: Nancy, Tommywonk, Kilroy, LiberalGeek, Pandora, David Anderson, & Hube.

The era over which these giants roamed was between the elections of 06 and 08. Some started earlier, but these few individuals were the only source of information during that time stamp.

Today, the News Journal has lost its paternalistic viewpoint touting the union of construction labor and developers formerly known as the Delaware Way, and is actually reporting news ahead of bloggers for a change. Likewise today, WDEL has both on its morning show with Al Mascitti and afternoon show with Rick Jensen, steered discussion away from the likes of (who?) Sean Hannity… and Al Loudell has kept us abreast of local politics in ways unheard of before bloggers began typing in their briefs…

So in a way, since these bloggers were successful back then, today they are not as vital as they once were… Many saw their blogs as the only way to get the truth past the News Journal censors, those higher ups who would not publish any truth that showed an elected official in bad light….

Those studying this phenomena will see that there was much agreement between bloggers on both sides of the aisle… It was very rare for this group to be divisive over the prime issues of this state’s business.. All of them were for Atkins removal. All of them were for beginning offshore wind in Delaware, … All of them were for the slowdown of work force housing… all of them were for the betterment of Delaware’s educational opportunities…

Of course we quibbled on who would become the next president, but that is to be expected… No family lives without arguing at least once…

There were rises and falls among each giant’s influence… But at the core of each individual was the feeling that each had a unique insight into the current problem staring us down, and wrote about it with an urgency that turned out usually to be correct… And usually, if agreement was not forthcoming by the first comment, by the end of the comment thread, some form of agreement among the blogger’s roundtable, was visible…

As politicians came to realize the News Journal wasn’t changing, they began contributing to these giant’s pages, giving substance in ways unheard of among those writing for the Community Board of the News Journal… Reading the blogs gave us a real time insight into the workings of our state government in Dover……

But it was the wind controversy that elevated the giants to their current stature… Only the blogs could get the message out that Delmarva was incredibly concerned about losing control of their monopoly, and that wind power for Delaware would by offering competition, lower our energy prices. And they did, so well, that the entire legislature at the end of their 2007 session, voted unanimously to approve of the landmark agreement between Bluewater Wind and Delmarva Power….

Some of us think that they, shaking in their boots, didn’t dare vote otherwise… For bloggers have long memories as well as does the public….

But these giants among men, did more than just push wind. They publicized the eminent domain controversy. They scoured local politics. They broke the work force housing pact apart. They clamored against Atkins, forcing him to resign. They dogged the SEU. They picked apart candidates so much that those who had flaws, couldn’t win. Dana Garrett could be heard almost weekly on WVUD.. Tommy Noyes, for a while was a weekly guest on Al Loudell’s award winning newscast. They OOGAcised the fight for open government, forcing one flustered legislator to call out for a prayer dedicated to just for the bloggers, asking for their salvation of their souls… Apparently those prayers were answered; for by their souls we have open government today….

But amongst the best, the very concept of government was debated back and forth, no doubt as it once was during the beginning of this nation during its infancy… Torture, domestic spying, gun ownership, thieving Vice Presidents, all had their day in court upon these pages….

And today, there are new names who in the years ahead might be considered to be the giants of this contemporary time zone..

Deldem, RSmitty, El “S”, Donviti, Cassandra, all came into prominence after the defining moment of passing the wind act…. As well as Sussex Green, Red Water Lily, Mourning Constitution,… all of which became big as the 2008 election season came upon us….

And from the ranks of commentators came a Sussex County Councilwomen, a candidate for a House seat, as well as a last minute candidate who took on Mr. Pam Scott, and began nailing his shoes to the floor…. Miro had a contender for once; that commentator speaks up often…

Steve Newton will be missed.

With his passing is the last of the great thinkers… Today, we have bullets fed to us… But Steve took on all other blogs, all other commentators and wrote posts about them… Steve looked at everything with fresh eyes…. Giants can do that, since they see things from way up…….

I won’t go in to praising Steve… for I’m here to call attention to the passing of a era. Perhaps those times when benevolent giants roamed our state, will be considered by us dying men and women, to be the glory times we hark back to, the second we close our eyes for their last time…..

For when you look back as what we’ve done, the word “giants” is not really a bad moniker….

It has been an amazing day on the international news front… These three stories are all tied together, thanks to the skill of the new administration…

1) The opening of dialogue with Cuba.

2) The handshake with Chavez of Venezuela

3) The UN walkout of the president of Iran’s diatribe of Israeli racism…

All three show a break from outdated Republican policies….

First with Cuba… A State Department’s go-slow approach was shocked by the admission of Raul Castro, that he is ready to discuss “human rights, freedom of the press, political prisoners… everything.” He said: “We could be wrong.. We admit it. We’re human beings too.

Ok, so how long have we had the embargo? And now…. we get the admission.. If you want progress, you must have dialogue… Those who punish first, expecting capitulation, are just plain wrong.. That of course includes the entire Republican Party…As most of you are now just finding out, they are just plain wrong…

The handshake from Chavez was motivated more by how much Obama is worshiped in Venezuela than by any policy change… Chavez cannot afford the appearance of being the enemy of one so admired by his own constituents… Therefore as long as the US interests do not directly impinge upon the welfare of Venezuela’s citizens, we should have an ally in Chavez who must appear to be on our side, especially since he may have his own domestic challengers… And as most of America knows, the criticism Chavez leveled at our former administration, was shared by 65% of Americans as well… In fact, America went to the polls in record numbers to elect our current president, simply because our last one was so bad…

Now with a simple handshake, we have far more political inroads into Venezuela than we ever would have had Obama dissed Chavez as did Bush… You might remember how stupid every American was seen to be, because Bush would never mention Chavez by name? We were the joke of civilization… and well deserved we should be.. Anyone out there who still thinks we should treat Chavez as a stepchild, is simply ignorant… And yes, they are also all Republicans….

Third, the president of Iran got up and railed against Israel’s racist policies… He was jeered off stage and half of the crowd walked out… Here we gave him the rope, and he hung himself… Today he gave the United States’ cause for the support of Israel, far more credibility than had we as the old administration would have done, forbid him from coming and speaking… The old policy gave him support among his allies… Today, based on his personal implosion, his allies are running away for cover…. He is far more isolated upon the world’s stage, than at any time over the past administration’s misjudgements….

Hence the brilliance of the Biden/ Obama tact… Let our enemies do our work for us.. Let them ruin their stature in the world by themselves, without us damaging ours in the process…

But if one of our former enemies can outmaneuver us on the global stage, so that they truly appear willing to change, and anxious to open new relations up with us, then after all these wasted years it appears they weren’t really our enemies after all…

Of course Republicans will complain they are… But then, by now, we all know that when it comes to governing, Republicans don’t know much of anything.

Saying a lot is one thing; planning it and executing it is another. — kavips

Here is the “full court press” we recommend…

We recommend dividing our economic gurus into three teams….

Team One’s responsibility is to jump start our economy. In athletic parlance, it is called “winning today’s game” It’s goal is three consecutive quarters showing real GDP growth, coupled with three quarters all showing an increase in the level of personal wealth attained by each of the five quintiles. It then disbands.

The second team’s responsibility is to tackle our longer term problems of our deficit spending, and our ballooning entitlements… In athletic parlance, this is called getting ready for the playoffs…..

The third team’s goal is to focus on how we will one day exit our current, direct and necessary governmental intervention into the economy at some point in our not so distant future…. In athletic parlance, this is called building a team for next year….

These three teams must get started immediately, for successful policy on all of these outreaches is critical if we are to again become an healthy economy. We expect to find that each teams answers may contradict the other teams in both theory and philosophy. What works for today, may not work for tomorrow. If so, we need to recognize that possibility now and lay plans for any upcoming change in the future. But the sad truth is this. Right now, we do not have any plans sitting on the shelf, which we can pull down, and right our keeled-over economy. We need some contingency plans in writing, emanating from experts and experienced thinkers, and not from politicians whose responsibility is to jerk their knees to the mood of the moment.

Again, those teams can be summarized as follows: the “today” team, the “next game” team, and the “next season’s” team……

Here is what we recommend for the first all star team to pursue.

Surprisingly we recommend that we find the proper way to give each mortgage holder a three month holiday from paying their mortgage, one giant loan extension. This break allows them to get their finances in order… There is no way any government can match a stimulus impact nearing the size of this amount. If this is utilized, within three months, America’s economy will have pulled itself out of its depression. We found the proper Executive Order outlining such, if issued by the President, could be enough to put this policy quickly in effect… We also found that it worked best if the benefits were not watered down by any type of means testing, but were given to all homeowners irregardless of their income level… It would be fair to all: a pass for three months on paying one’s primary mortgage.

Secondly, we recommend that a way be found to force lending. We discovered that it was the process of “calling” in one’s loans, that made it difficult for banks to lend, both during the Great Depression and today… We recommend that some agreement be made among principal parties, so that when a loan is ever called, the banks coughing up the funds, have a long span of time in which to acquire that capital… perhaps up to a year…. Removing all fear that a bank may go under, could be accomplished rather quickly by eradicating it’s uncertainty that at a moment’s notice, it might have to give all of it’s money over to another bank…. This could be effectively done by issuing one more Executive Order directed towards the Federal Reserve, which states that banks had up to a year to turn over their assets if their loans were ever called in by another bank…. and that the bank requiring the loan to be returned, could go ahead and place that incoming amount on its books as an asset, since the money was surely on its way…

Thirdly, we recommend direct projects be funded by the government for the sole reason of putting people back to work, and in doing so, inject cash directly into the system… However we recommend some qualifications be instituted on what was built. Building a bridge to nowhere does little good except during the time of the actual construction. Building something like new schools, on the other hand, continues various economic benefits long after the building is finished. New teachers and new administrative personnel are needed for many years thereafter… The best bet, and what should be the primary factor in deciding which of the projects clamoring to be built will get the nod, is to insist that whatever is built, will be something that creates new jobs that last long time after the project has been completed…

Number four: we recommend that unemployment be fully funded… We also recommend that all those receiving unemployment should be required to work in some capacity, on their own time as a volunteer. Currently our unemployed payments are hinged on the proof of “searching” for work… We felt that with no jobs being created by the private sector at this time, that this clause of the Unemployment Act would be a waste of effort; we felt it was far better to help a child read, pick up neighborhood litter, or volunteer to assist a classroom in a neighboring school, and then issue proof of doing so to claim a check, as opposed to filling out applications that would not be seen by employers definitely not hiring…… Therefore we recommend that unemployment be tied to giving service back to one’s community. If unemployment ever reaches 25%, with one out of four out of work as it was briefly during the Great Depression, keeping those unemployed busy, would be good for them as well as for our nation.

Number 5: We found the stimulus plan in the form of a rebate check, went to pay down existing debt and did little to stimulate the economy. We found that tax breaks for corporations were equally a waste of resources and actually hurt the economy far more than helping it.. A better approach we found, one which was historically documented throughout the Eisenhower and Clinton years, was to increase the rates that corporations and the wealthy were required to pay in taxes..and then give them an option out for not doing so. We found the economic growth caused by doing this, was rapid. Higher taxes caused the consistent reporting of lower profits mostly because companies opt to reinvest their money into themselves instead of forking it over to the IRS.. This did two things: this dropped the volume of money leaving the private sector, and secondly it caused increased hiring. Having every business reinvest its own money back into itself, pumps far faster money into research, development, growth, new products, new jobs, than anything the Federal Government could mandate directly with their limited resources. We strongly recommend that corporate rates be quickly increased, coupled with sunset restrictions that are guaranteed to lower the high rates when certain agreed-to economic standards have been reached… for instance 3 consecutive terms of 3% GDP growth in a row… The higher rates would then automatically expire.

Sixth. We encourage the ability of businesses and homeowners to completely and fully write off capital investment within the year that it was purchased. This results in lower taxes being levied upon those businesses during the first year of this policy change, when they sorely need it; and slightly increases the subsequent year’s taxes over the span of several years,… when they don’t… Whereas this can negatively impact the government’s revenues during its first year of implementation, it will serve to increase them during the boom times to follow, assisting us in our long term effort to diminish our national debt.

Seventh. We recommend that toxic assets not be bought by the federal government, but instead have their value guaranteed by the Federal Reserve for a fee. The guarantee simply states that the Fed would ante up the difference if needed, should the asset fall and eventually not meet its purchased value.. These toxic assets would then be marketable, and could then be picked up and held by investors, thereby again infusing banks with capital. It would serve us well by not tying down billions of the Federal government’s money. It would be similar to how we responded to our largest problem during the Great Depression. Back then, we didn’t nationalize the banks; we guaranteed the deposits within those banks… Guarantees, as it turned out, that we rarely had to pay.

Eight. The same type of guarantees should be applied to the process of overloaning. The local bank makes a construction loan, knowing that it is insured by the fed from any defaults. The stipulation is that it uses its own money in its own neighborhood, knowing that were serious default to occur, that the Federal Reserve would guarantee its return… The Federal guarantee allows a bank to loan more money than it has. The bank gets its return as payments on those loans begin pouring in. After the banks regain solid footing, these special loans could be sunsetted… Following this plan, puts capital directly where it is needed: in the hands of those who will rebuild our infrastructure.

Nine. The imposition of a Carbon tax acts like an old fashioned tariff to cheap imports. Although this impacts the cost we may pay for some items we use as a consumer, it makes the option of building in America while still paying higher wages, cheaper than shipping overseas to a sweatshop and importing those products back. Likewise the inflated fuel cost suffered last summer, had the golden lining of making building within the United States and shipping locally, appear more competitive than building offshore and transporting products back. For businesses to stay in this country, their entire cost. from top to bottom, must be cheaper than it is elsewhere. We need to lower all other costs for business just so we can keep our wages higher. For those wages are what drives our economy… The Carbon Tax, if elected by us and opted out by our competitors, can balance our two costs and help us to keep businesses inside this country.

Ten. Removing health care responsibility from being primarily funded by businesses, would assist in cutting labor costs low enough to make our country more competitive in global markets. A good portion of our nation’s economic health, lies in the number of manufacturing jobs it has at its disposal. Dropping costs vis a vis our competitors, would make investing in America again, far cheaper than moving into a plant offshore.

Eleven: Moving our nation rapidly to a source of energy far cheaper than the current costs of carbon fuels, would assist in dropping our businesses’ costs lower than those of our global competitors. It takes a wealthy country to do make such an investment in infrastructure, and as a nation, we the people of the United States of America, have the competitive edge over all other countries to do so. Wind and Solar have free fuel costs. That means applying efforts to use new technology to decrease capital costs, will over time, guarantee a significant drop in the cost of all energy being used within our borders. It’s cost needs to drop low enough to make the option of opening a plant in the US, equal to or cheaper than that of building one overseas.

Twelve. We need to begin planning for our new baby boom’s investment. 2007 was the first year we broke the 1957 record of new births. Increasing population is one of just two ways to increase an economy. That process was started during the nights of 2006 and early 2007. We need to prepare for impact in 6 years, 12 years, and 18 years as that baby boom bubble aims for our educational system… We need to be ready with new schools, new teachers, as well as eventually, more new jobs.

Thirteen. Returning to better and tougher product regulation can also increase the worth of products made in America. Already we see signs that “Made In America” is a quality statement among the wealthy Chinese… Beforehand, we were guilty of making the assumption that quality would remain consistent, no matter from which locality a product was made. Last year with pets dying, poisonous lead found in children’s toys, and other international quandaries, we finally understand how again returning to a tighter system of regulating ourselves, can make our products appear trustworthy and thereby remain more competitive, despite the higher wages we are paying to our nation’s hard working employees.

Fourteen. We must not panic ourselves into protectionism. It was tried and failed; the Smoot Hawley Act aggravated if not instigated the 1930s Great Depression. Protectionism can work on a micro scale, case by case, as it did for Harley Davidson during the Reagan years. But using protectionist philosophy as a broad swipe, drastically drops our nation’s exports, causing the GDP to collapse, thereby raising unemployment to levels currently undreamed of. Protectionism on a broad scale is very bad for our economy.

We now move on with the agenda of that second team: the one responsible for tomorrow’s game. This team’s goal will be to again remake America solvent. The second team must focus on these following problems. As often happens in the financial sector, having two separate teams work independently, could be likened to any corporation which had one team working with the court on its immediate bankruptcy proceedings, and another team working with its creditors on how to alleviate its long term problems with long term solutions.

We must be ready before our depression ends, to jump into phase 2 and prepare for the method on how we wean ourselves off of debt. It is not just the National Debt we need to fix. We also need to tackle our personal, corporate, state and local government’s propensity to spend money we don’t yet have… As a society, we want more! And as consumers we are just not savvy enough to understand that buying now, will cost us more later…. “Oh, I can afford that low payment”, has become our excuse to put off our fiduciary responsibilities…..

We recommend that the compounded power of interest needs to be re-explained to our population; it needs to come from a political figure they trust. We were shocked to find that most citizens of our nation are relatively ignorant about the math behind money, The “bully pulpit”, we think should be used to explain how some debt for houses and building businesses is good, but that too much for personal consumption is not in the best interests of our nation…The accumulation of more and more debt, needs to be framed alongside the political perspective that in doing so … we cripple our country. “By increasing your personal debt, you are not only causing hurt to yourself, but you are eating away the foundation upon which stands this once great nation”….

We recommend the following three step process be used to deal with the personal debt of private citizens. We recommend first dividing the population up into these three classifications of personal debt… 1) Those who can never catch up. 2) Those who can catch up part way, and 3) those who are still living within their means.

For the first group we recommend biting the bullet and processing that whole group through bankruptcy as expeditiously as possible… Let them begin from scratch, and let’s write off their bad debt at once. It makes for a bad month, or two, and it severely impacts one quarter. The alternative to quick action, is to ignore the inevitable by muddling through this malaise, and continuing to have this sickness interfere with our economy for many quarters to come.

For the second group, we recommend the recalculation of their debt according to this formula which is different from whatever loan agreements they originally signed. Recognizing that much of their debt is currently at interest rates well over 25%, and a majority of their debts are carrying over one third of their balance in superfluous late fees, we recommend that each of those debts receive a new recalculation based on the amount of principal they borrowed, plus an average, fair interest rate over the life of the loan. We recommend 8 %, considering the Federal Rate is now close to 0%. We recommend the removal of late fees entirely, and should a payment not be forthcoming by it’s due date, that only, … the accumulated interest be added to the balance. (That was the original plan of the United State’s credit card industry up until 1997). We acknowledge that those still dreaming of a 50% rate of return off some accounts may scream that they are being taken. We simply argue in return that those who have been taken by them all these years, are finally receiving their fair break. 8% interest is still higher than any loss, which in today’s economic world is a very real alternative.

For those who have been consistent in their payments despite these hard times, ie the third group, we recommend that all of past credit records be wiped out entirely and that their credit scores commence immediately at 800, the perfect score. We feel that this would give immense incentive to all those of the top echelon for continuing to pay in a timely fashion, especially as they see others who can’t pay around them receive huge breaks. We recommend that anyone paying off pre 2009 debts, be given a huge positive impact in the formula used for all future calculations of a customer’s credit worthiness.

Although we emphatically agree that some personal debt is necessary, we also acknowledge that there are limits to the debt that we have left. For that reason we further recommend the passage of legislation either on a Federal level or by individual states to again set a high limit on the amount which can be made from borrowing. That decision is a societal one, not a corporate one. Society should reclaim its responsibility to monitor and set its usury guidelines; it’s a responsibility that should have never been delegated to those profiteering from the interest.

Lastly, to assist in personal savings, we recommend the restitution of buying U. S. Savings bonds. We further recommend the use of a mandatory deduction from each person’s payroll for US. Savings bonds at whatever low interest rate shall be determined. This will understandably have the effect of a new tax at first, drawing more money out from the private sector of the economy. But over time it will return that money back and provide all of us the benefit of lower future taxes, especially if it is used as a tool or way to restructure our gigantic, impending national debt. Opposite of a tax, under this plan each lender WILL get a full return of his money back at some future date. Under this plan, our nation is borrowing from each and every one of it’s citizens; it’s citizens in turn are investing in their nation, and accumulating personal savings while doing so. The explicit difference between this new plan and Social Security, is that in this case, all of the amount that an individual actually does put in, will one day be returned to either himself or his dependents. Unlike Social Security which was “supposed” to grow independently within a trust fund arrangement that was completely outside of the regular budget of discretionary governmental spending, this mandatory savings fund is designed to 1) increase the national amount of savings being done by all Americans, by 2) supplementing the national budget by explicitly invested that yearly amount into the paying off of our nation’s obligations. We recommend that this program should have written into its passage, that the yearly amount collected from its citizens, be at least, equal to that segment of debt decreased from our nation’s obligation. In other words, all the money goes to pay down the national debt. It can be used for no other reason.

At first glance this appears as one more obligation. Even if we eliminate a good portion of our National Debt, we will still have large sums sucked out of America’s pockets just to reimburse our thirst for retirement income and medical care of the poor and elderly. Currently discretionary spending is only 1/3 of our budget. Two thirds of our budget has already been committed to be spent and cannot be touched….

It is to that two thirds that we must addressed our concern if we are to EVER achieve solvency as a nation.

To that end, we recommend that Social Security taxes be increased 1.7% from the current amount of 12.4% of payroll up to 14.1% of payroll. We further recommend that Social Security benefits commence at age 70, instead of age 65. Together these will bring Social Security back to solvency.

Cutting back on the amount going out to retiree’s was not an option. Social Security currently takes up between 4 to 5 percent of our GDP. Social Security cuts depress economic activity and depressed economic activity is NOT more of what we need now. Social Security Cuts need to be taken off the table. For every dollar cut out of Social Security, the economy depresses by a factor of three. Social Security can become solvent through the 1.7% payroll increase, and by raising the age of retirement to 70.

Medicare and Medicaid is a different story, however. That entitlement in its current state, will be 5 times more costly than Social Security. That entitlement just simply cannot continue in its current fashion.

We recommend a shift in our nation’s focus towards it’s priorities on health care. Instead of our government guaranteeing unlimited care for keeping the dying alive, we feel its priorities should be shifted towards keeping the living population healthy. Our recommendation is to institute a new version of health care in which the Federal Government pays for preventative care, and leaves the ballooning massive costs of staying alive to private insurers.

We recommend that doctors be paid a flat fee per visit, and that the payment for that visit comes from the federal government. This would release significant savings to medical practitioners who require an inefficient number of staff just to deal with the maze of insurance regulations and requirements for each individual patient who pays a visit.

To pay for this, we are recommending that initially, an additional insurance payroll deduction ($11.48/ week) be applied to each paycheck. Over a short time, we recommend the removal of the Medicare and Medicaid programs as they stand today. By then the current Medicare tax would cover this program. This change will save roughly 400 billion currently paid to cover the Federal government’s responsibility towards our health care… Within four years this savings could pay off our national deficit in discretionary spending, and within ten years it alone could pull us out of debt.

We recommend that screening for the four largest human killers; colon cancer, heart disease, strokes, and prostate , be free of charge to every patient and be performed as perfunctorily as are our vaccinations of toddlers today. Our proposal is similar to health care programs of other wealthy nations. We propose that in one year we progress to step one, which is to have all medical, emergency room, and dental visits covered by the Federal government. Currently we found that a $75 dollar flat fee for the initial visit, irregardless of the ailment was sufficient, but argue that these fees be set regionally by boards of physicians themselves… We further recommend that after first visit is covered in full, if required, the second gets paid only at 50%, and subsequent visits are not covered at all. This provides sufficient incentive for doctors to get it right the first time, and prevents the stringing along by doctors of uncertain hypochondriacs in order to soak up additional federal dollars.

The estimated cost of preventive health care on a fee only basis is around $82 billion. We feel that it is the nation’s responsibility to insure that each of its citizens has the right to live healthy by providing free preventative health care; likewise we feel it is NOT in our nation’s best interest to squander our children’s inheritance just to pay for us to cheat death a couple of minutes more….

The Second team needs a solid goal. Financial solvency by 2020 would be a good start. The two best ideas we found to achieve that goal were to mandate a required national savings policy using Savings Bonds to pay down the national debt, and to revamp Medicare to pay 100% for all preventative and minor health care, but leave to private insurers the responsibility to cover the catastrophes if and when they occur.

The third’s team role will be to shift us away from huge government involvement in the economy, back to an economy that is privately run. Over the course of the past century we can see both benefits and pitfalls in following either privatization or socialism. Each are good in their time, and each if trending too long, comes to the point where each creates more problems than they solve. The smart method is to handle this occurrence by planning for it in advance. That would be the focus of the third team. This team would take the the long term problem of shifting our energy away from Carbon. It would tackle the problem of paying down our National Debt. It would look at our economic viability in the next two or three decades and recommend changes that might be required. It would look at tax policy to determine the ideal amount that creates a three legged system balanced between the government, business, and the people… After all the optimal size of government is relative. If it imposes itself upon businesses and the people, it is too big. If it fails to protect us, it is too little. Our wisdom has been enhanced. No more shall businesses and government expand at the expense of the people; no more should the people expand their government too far at the expense of business. We now understand that each leg’s function is to compliment the other two, and when in perfect balance, all three prosper.

The third team’s goal will be to examine all options available. and restore that balance between all three legs… There is a good chance that they will want to deviate from some of the plays we are calling in today’s game… That’s fine. After all, what is important is that we win today’s game, win tomorrow’s game, and continue to win all of next season’s game….

The play we need is simply the “full court press”

This humble plan is the beginning of getting us there.

Pundits discussing the speech were asked to describe a take away in one line sort of similar to JFK’s “ask not what your country can do for you….”

They were lost.. They struggled around completely missing the obvious… Which is why they are on mainstream TV and do not blog…. Bloggers get torn up for crap like that…

The theme of Obama’s speech is “For On This Day….”

For on this day these things begin to change…

Apathy, stalemate, ethics, nay saying, giving up, bullying to get our way…..

Those of you who go to bed way too early, may be reading this for the first time… But between inaugural balls, the Obama administration announced that all Gitmo prosecutions were on hold for a stay of at least 120 days…

“On This Day…..”

Then too, being a sleepyhead, you may have missed the announcement of the directive made by Ron Emanuel, Obama’s chief of staff, that all Bush executive orders were suspended awaiting review by the current president and his staff..

“On This Day…..”

You may have also missed that tomorrow on Wednesday, Obama will be meeting with the joint chiefs of staff to discuss his options of leaving Iraq…..

“On This Day…..”

This is not a political presidency… one who announces an action and milks it for all it is worth…. until an election is over and then that topic is never heard from again…. This one does the walk that goes with the talk…

This one is aware that America’s reputation has been tarnished; this one realizes that giving a great speech on the capital steps yet keeping the old policies in effect, does nothing to enhance our bargaining power oversees against our fearful enemies and with our wavering allies…

It is nice to see that things have changed.

They did so ” … on this day….”

Aware that many accounts would cover the whistle stop in Wilmington, Delaware, instead of being one of many, I chose to watch the train pass through Newark.

Face it. Today’s temperature had something to do with it… The idea of standing in bitter cold for many hours, … well… let’s leave that to the next generation… I would be content to say I saw the train pass by…

My biggest take away from watching his train go past, and looking around at where I was, was how much trust someone like our President must have in our nation each time he goes out into the public realm… For as tight as security was… opportunities abounded for the unthinkable…. at an almost infinite number.

He has to trust his nation, just as we have to trust him….

Did I say it was cold?

The bridge next to the old Newark Assembly Plant was covered with security. The steps and platform going Northbound were maxed out with people, all bundled in warm clothing.. Packed like sardines hopefully they had body warmth to share… Being without any heavy clothing, this author kept going and found a parking spot at some undisclosed Newark location where he could park ten feet from the security fence that was 40 feet from the track… Listening to WDEL, the train was just leaving Wilmington at 2:00 when the electrical anomaly surged… My radio went dead as did everyone’s electronics… All around everyone checked their cell phones, if they were speaking, they got cut off, and if they checked their clocks were temporarily set to 0:00. But as the signal was re-established, the cell clocks reset themselves. Unfortunately my car radio had to be done manually… (it has been so long since the last time change… Which sequence of buttons does one push?)

Fronted by a slow moving Amtrak helicopter at roughly 1000 feet, the anticipation began to build… Shouts of “lights” and the far off sound of a blaring train horn sent the anticipatory levels to near peak… Traveling slow, with syncopated lights blinking, one Amtrak engine with two cars pulled behind it, shook the ground under my feet… Bracing against the cold, we cheered as the train pulled through the station, the crowd roaring and shaking their signs. Looking through windows for any sign of a wave, I remember thinking… is that the Georgia Train Car I have heard so much about? It looks like a regular Amtrak car…. The crowd must have thought the same thing, for no one but me, who was by now freezing, moved towards their car…..

Once inside the warm cockpit, I remember thinking that the difference between the train leaving Wilmington and its arrival in Newark, had been too quick… Another train, THE train, must be coming… Braving the cold, was a bounty of protesters (or supporters) carrying large cardboard letters… Darlene Battle and a group from Acorn, put their signs up for Steve Beard to photograph. The sign once raised, said in bold capital letters: ELECTRIC CARS: YES WE CAN! (That photograph should be circulated on email in the near future…..)

I couldn’t help but think that with the coming of this new administration, where on earth could one invest and create a plant that could be capable of building our nation’s first electric car… An abandoned car assembly plant might be a start… And if one could find one such factory next to a University that was internationally known for its research into renewable technology, perhaps one may have found the ideal location in which to invest in a plant to make electric cars… And if one could ever find two underutilized automobile manufacturing locations, just miles apart in close proximity to that same university, then that might be the ideal core to initially invest all into that new technology….

Gee, I wonder is such a place even exists?

But it was time. Braving the cold once again this author found a location near the fence, and felt the sub-audible hint of an oncoming passenger train… The crowd began to roar as the two engine Acela train raced past on the near track at 70mph. The train was long.. Probably the longest passenger train I have ever seen on the East Coast in twenty years.. I didn’t count the cars, but at its back… in antiqued splendor, rolled the old styled blue colored gold trimmed in the word “Georgia”….. rail car… At such wind speeds no one was on the back deck, still draped with flags… the windows raced too fast to see anyone inside…. but how brave or how trusting one must be to travel it in today’s era…

It was cold, did I mention that?

As I raced back to the warm confines of my car…. a Delaware National Guard Chinook hovering at about 5000 feet up, was following the train.


“This poll has all the ear-markings of an electorate that has reached an opinion that Barack Obama would be a good president…The uncertainties [about Obama] that were so prevalent early in the year have just melted away.” WSJ

Yep,… that’s about it.