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Usually this is an after thought…” Oh, wow, year’s over, let’s get a person of the year”…  And then once we elect one,  we go… “holy crap… we totally forgot so and so….”

So to try to stir up some old simmering coals of memory, both mine and others, and perhaps even to (heaven forbid) get some debate going in the blog sphere, I thought I’d make an initial run on Thanksgiving Week, and then add people into the nominating category as others mention various ones I should kick myself for forgetting.

It will also force me to review the year which is something I rarely do… because face it, as a human being, I am slave of the moment….  If I did this last year, come December 14th the entire world would have been turned upside down and all the old priorities of 2012,  would in one day become trivial….

And so starting early gives me the chance to make the argument for each of those I decide to enroll with your kind recommendations included….

Julius Cephus:  Particularly this one man organized and stopped an end run around the Port of Wilmington.  The Kinder Morgan deal did not go through, and the Wilmington Port is bustling like never before…   Kinder Morgan was to strip the union of power, and drop the rates of pay, further dampening the economy of Wilmington proper.  It was also the first defeat of a Lavine-Markell development project, .. Fisker and Bloom had gone forward without a hitch.  Julius and other’s push back resulted in a General Assembly motion that stated they, not the governor, had final approval. It was the first time we were exposed to the current Governor’s manipulations.  They were to play a significant part across this year’s tapestry.

Steve Newton:  A blogger who has written infrequently, but effectively. His piece on SB 51  is what alerted us to the end run being performed by Dave Sokola on lowering the current standards being used for educating teachers.  It is brilliant.  It took an evening of reading the legislation line by line and cross referencing  it with Steve’s analysis, to understand the huge negative impact this bill would cause.  By the time this was done, the Bill had already passed the Senate unanimously without comment, and with an friendly amendment added that was voted upon without even being read.  Some public outcry was mustered within the House, both in committee and on the floor, but under the Governor’s direction, the Speaker of the House, pushed the bill to the floor before significant outcry could be mustered.  Only 4 House members were not on record for it’s passing.  Our educational schools now have to water down their teaching standards to meet the new law.  Steve also has brought the Highmark story to Delaware.  His research in the increase of medical costs in Western PA as a result of knocking out competition by unfair practices, leads one with a cold chill of what to expect in Delaware’s future.  We are already there.  As an insurer, Highmark is only paying medical claims in its own affiliated clinics.  As the new Blue Cross/Blue Shield owner, that is a huge percentage of Delaware’s residents.  None can go to any other hospital.  He has properly fingered Karen Weldham Stuart for not catching this prior to implementation.  Without Steve, this would have passed unnoticed.  The News Journal still has not once mentioned the takeover of Delaware’s health field under one owner.

Ernest Lopez.  If Kennedy were still writing Profiles of Courage, he should include this man.  Ernest Lopez is a conservative, and voted with Libertarian values to pass the gun legislation recommended by Markell and Biden.  Reflecting the views of his district, instead of taking the threatening message sent to him down from the NRA, he voted for his district.  A very vocal minority, who is always vocal, and always in the minority, swore they would unseat him.  He disregarded their idle threat, and voted both his and his constituents conscious.  A major billboard was put up to call him out.   His vote caused the passage of us now requiring background checks at public gun sales.  Now a certifiably insane person cannot slap cash and get a gun.  It is a no-brainer, and Ernie was the only Republican with brain enough to even know what a no-brainer is….

Cathy Cloutier:  her vote allowed gays to marry.  Again, she is a Republican who said enough is enough… Tired of voting against her conscious just so Sussex County would not flip over to the Democrats, she finally did not toe the line and voted along the lines of her own constituents, all overwhelmingly in favor of gay marriage.  In doing so, she went against the entire grain of her party, who firmly feel that gays are second class citizens, even though most Republicans in office are closeted gays.

Bethany Hall Long:  on the same vote, made a viable personal decision, and also voted for the legalization of gay marriage. Unlike Cathy’s vote, this was accomplished at great personal sacrifice, for all of those in her personal life, were solidly against this policy from taking effect.  In voting for what was morally right, she had to contend against those whose influence she could not escape.  She went with the correct vote, over the easy one.   As a result, Gay marriage is now legal in Delaware.

Paul Baumbach:  gave great ammunition against the fight for SB51, and later against HB 165. Both bills which will damage Delaware’s education for years to come.  He was one of the four who put up a fight on the House floor.  Paul also arranged for the meetings in Newark to discuss the new Power plant that figured in this past week’s election.

John Kowalko:  also was against SB51, HB 165, as well, being against the power plant.  In fact, John was the first person to sound the alarm over how big the power plant would be.  Without his big voice, it may have slid through unnoticed.  The power plant has defined northern Delaware politics since September.

Kim Williams;  responsible for HB 40 which investigates Charter School’s meddling into our educational systems.  She was as an acting state representative, allegedly refused entrance into a committee hearing on education, for fear she might say something damaging to the bill being rushed through….  She brought to the public’s knowledge, that the Charter School bill was drafted illegally without public input, and the charter group constructing it, was also under FOIA, to which the private group denied.  The Attorney General backed up her assertion, that the bill was formulated illegally but their decision was moot, because the bill was passed both houses anyways.  Kim Williams also in the HB 40 task force, led the group to realize that charter schools unlike public schools, do indeed filter those entering charters to weed out those who might lower their test scores….

Mark Murphy, Rodel, Sweeney, Hefferman, and the Fake Educational Reform Establishment:  I almost purposefully did not post this.  Although the first person’s name is usually followed by explicatives whenever mentioned, it is unlike Voldermort’s, still getting mentioned.  Mark Murphy was not put in his position based on his ability. He was placed there for his loyalty to the cause of  corporatizing public education.  Markell pulls the strings, Murphy figures how to get it done…  It is hard to make a puppet the most influential person of the year… So I was going to skip him… But at the last minute, remembered that every time  he or anyone of these make an op-ed, it resonates as gigantic news. The entire community rises up to counteract each op-ed, usually with the word “lies” thrown liberally about…. So, they do exert an influence.  I looped all of them together, as the group of liars in a Greek play, who stand on the stair steps and taunt the protagonists.  Well,… they are part of the play…….

Dan Short:  Sometimes villains get noticed too.  Primarily a single issue candidate, who personally supports the NRA, he actively campaigned and organized to create enough backlash so Markell’s gun laws could not get enough votes…  Without him, there is a possibility that all four of Markell’s gun control pieces of legislation would have passed both houses of Delaware’s legislature. Dan Short should be given the credit for stopping them.

John Sigler: Single handedly by his very brief tenure as the re-elected head of the Republican Party, he pointed out through his pigeon shooting, just how inept the Republican Party was at everything else.  With his leaving, all fissures cracking the Republican bedrock, were impossible to ignore.  Blogs split. The IPOD’s split. Former candidates of the same party just months earlier, now not talking to each other. The Delaware Republican Party is dead; no it is past dead.  More dead than a pigeon shot inside a box by John Sigler, former head of the Delaware Republican Party.

Nancy Willing: Her blog, the Delaware Way, is the go-to site for local information. Whether about Dover, about New Castle County, about any of New Castle County’s associations, Nancy combs all sources and puts them down in aggregate form. Heavily involved in the Power Plant controversy, The Delaware City Rail Yard controversy, Barley Mill controversy, the Woodlawan controversy, the Kinder Morgan controversy, the Charter School Controversy, the Common Core Controversy, Nancy has who is saying “what”, and links to “why”. One can expend less energy by using her blog to follow all the stuff the News Journal neglects, in a few quick empty steps.

Amy Roe:  a head of the Sierra Club, who emerged from nowhere to lead the fight against the power plant, and give quite a run against the establishment candidate.  Becoming the face the anti- power movement could coalase behind, she gave the anti power plant movement both dignity and grace.  Coming up short only 115 votes, she has awakened Newark now politically as never before…  The power plant if it goes forward, now has a strong group of Newarkeans against it.  Hopefully they will be monitoring it regularly and helping authorities keep in in compliance with all local law.

Tom Gorden; although much quieter than his first term in office, Tom Gorden is rapidly rolling back the privileges the previous Clark administration handed over to our state’s top developers. The Barley Mill plaza which had a green light, is now parked at a red. In a big sea change, though handled quietly, community groups are now no longer persona non grata in county government. It is no longer accepted as a matter of course that the Woodlawn Trust will be gobbled up by developers. If enough fight can be mustered, it can be stopped. Furthermore, with Tom there is closer coordination with the City of Wilmington, than we have experienced anytime in our lifetimes. In the county, local policing has been stepped up, particularly in neighborhoods prone to crime…

Dennis Williams: Came in with grand expectations, which looked deliverable for a while. The tide is turning and his relevance on this list, is because every day, the headline reality in Wilmington’s streets, brings his electioneering boasts back to haunt him, like a sizzling hot branding iron.  Time, Dennis, to say “Damn the torpedoes… Their punk asses are going in jail no matter which blowhard on City Council spouts off,before mine gets tossed in jail for impersonating a mayor..”

Alan Levin:  Jack Markell’s second in command, he was instrumental in defending Markell’s position on Kinder Morgan and the port, as well as the new power plant for the data center. He also had a hand in keeping Dole in Delaware, and worked to slip the power plant past a slew of unsuspecting Newark City officials.

Jack Markell: had his hand in everything.  He was behind Kinder Morgan’s takeover.  He was behind SB 51 and HB 165.  He was behind the illegal charter group, requiring HB 40. He also was the driving force for the four rational steps to gun legislation, 2 of which were passed. He was also the driving force behind the passage of gay marriage, signing the bill in the chambers just moments after its passage. He also supported the transgender bill in its travels through the labyrinth of Legislative Hall. He as behind keeping Dole in Delaware. He was behind changing an icon in Millsboro away from pickles, over to poultry. He pushed the bill to curtail Flowers. Despite your opinion over whether these were good or bad, they still showed a ubiquitous and wide reach across the state of Delaware. Seems like nothing got done that didn’t have his fingerprints all over it.

John Young: As head of Christina board, John Young led the board in standing up to Mark Murphy and Jack Markell, by refusing the RTTT funds slated for his district. Although some hired fools, (Jea Street) tried to paint Young into a corner, it served the opposite purpose and gave Young a platform. For the fist time, Common Core was getting publicly bashed. For the first time, many were finding that aligning themselves blindly to this sham of improving standards, was probably going to hurt them politically in the next couple of years. It was the fist salvo back, so the damage estimates were not high, but it did open eyes of many who had been on the sidelines of all educational issues, making them also become vocal in fighting Common Core. His blog Transparent Christina has channelled a lot of detailed information into the Delaware market, and had made Common Core an apprehension, instead of the savior it was supposed to be….

Kilroy: Kilroy has always been haranguing over education. In fact he was doing such a good job I left that issue alone for years, because other issues for me, like the economy and elimination of guns from the hands of the mentally ill, were more important. But as the issue has shifted back into the limelight, Kilroy’s hard hitting is making its mark… Kilroy is blunt, and right now, that is the language that needs to happen. Blunt descriptions of what takes place in the stratosphere of he academic field…. Kilroy often breaks stories before the News Journal, especially ones embarrassing to the Murphy/Markell cartel of education. If you have read Kilroy over the past couple of years, you would already know that Common Core is not the panacea we have been promised. It is a power grab for taxpayer dollars, financed by Wall Street itself…. If you think otherwise, you haven’t been reading a balanced reading list….
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That is what I have so far. In retrospect I am surprised that education has played so much, as even I have only come to that topic lately… But if one looks over the News Journal op eds, education really did dominate the discussion in the 2nd smallest state this year….

I may have forgotten some big ones. To reiterate, that is why I am posting this early, to catch those big mistakes as they get brought to my attention….

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False…..

Manufacturing within the United States of America is near an all time high…..

Manufacturing is Good; New Jobs are Bad; Man loses to the Machine
Courtesy of Motley Fool

If you follow the blue line above you can see that manufacturing in the United States of America, has now reached the same level it was in 2005…. The current record was hit in 2006. (There it is also clearly visible: the rebound the current Democratic Administration occupying the White House has engineered.)…

You can also see that manufacturing jobs which held steady for decades, began plummeting the moment George W. Bush was sworn in and didn’t stop it’s free-fall, until President Obama put his hand on Lincoln’s bible….

Which means nothing really… Because it was completely out of the realm of either the Democrats and Republicans… It was computers and smart technology that put Americans out of work….

Robots don’t need smoke breaks, don’t do personal phone calls, and don’t go on strike for higher pensions… Computers make fewer mistakes, they don’t forget to carry over a place setting, and they don’t make a mistake by multiply instead of dividing…. It is not that American’s priced themselves out of the job market,…. it is that technology became so cheap, it became the process of choice…..

Our very rejoicing over the downward cost of a large screen LED TV or all the potential of a top-of-the-line 2005 desktop computer held in our hand, a computer from which we can even make phone calls, is also what took our manufacturing jobs and shoved them…..

They are gone. We can’t and don’t want them back….

No Republican will bring back jobs. Sorry Mitt. No tax break will bring back jobs, Sorry Mitch McConnell and Eric Cantor… We are in a major shift just like the Great Depression… Back then, it was agriculture jobs that evaporated. Grapes of Wrath all over again. Today, it is manufacturing jobs…. eaten by machines.

I wonder how many people reading this can actually remember back to when retailers used to close one day for store-wide inventory, often having large sales to clear out merchandise to facilitate human beings doing the counting? Seen any closures lately? It’s now done overnight(in hours) with scanners. Now multiply that labor saved over the course of an entire year, then times the number of outlets across the country, and you can begin to grasp the immensity of just how life has changed….

So, where do we go from here?

The obvious answer is that with so many people out of manufacturing jobs, we will have to find another field or jobs for them to work. If the jobs are not there, we WILL have to subsidize them.. Welfare in conservative terms… And since we are broke, we will need to tax the wealthy for that….

Now we’ve done this welfare thing before. It didn’t work very well. In fact, it wasn’t until we eliminated or corrected it, that we got people out into the workforce to become an asset to society.

So.. with that in mind, since we have to pay these people anyway to keep them employed, to eliminate the problems of crime, destitution, and decay that come from an indigent society, it seems to make a little sense that we pay them to work instead of paying them not to work. Now I’m no wise man, but that simply seems to be a no-brainer…

So here is a need where we actually do need government to step in, and to step up its spending of money on projects that actually do put people to work; that way we can have a much better life than what we would experience had we chosen to let them starve and fend for themselves, which would not be pretty.

Of course the wealthy will have to pay for it… They are the ones making all that extra cash by not hiring us….

Those living in Delaware know this is nothing new… We are used to the benevolence of certain billionaires who in love with this fair state, spent enormous amounts of their personal wealth to build the first four lane paved road in the nation, from the Maryland border north of Salisbury to the edge of Marcus Hook PA… It was an engineering marvel at that time, and not a penny of state delegated taxes was spent….

Simply put, that is how it was done in the past, and if they can’t or unwilling to part with their money now, obviously we need to tax them more and do it for them…. It just makes too much sense…..

In Delaware the 8% seems to have turned into a 4% cut.

The problem as expressed here before, is one of scale. We can easily say, just cut the number of people we don’t need, and let the rest do the work.

That does not stack up.

For one. Those people cut would rather have ninety – two percent of their pay, than none at all.

For two. Those who say the economic impact of an 8% cut on our economy, for some reason fail to calculate that the same impact occurs if 8% of the states employees are laid off.

For three. As citizens of this state, we receive much better service by having more human beings assisting us, than by having fewer who are paid well… Imagine, standing in line at the DMV with only two people processing applications? Don’t worry, we are told… they are being paid well… Uh, ok.

So the concept of trying to accomplish more with less should not be viewed as a vice and vilified by every labor union known to man. It should be considered a virtue.

The alternative is layoffs. or higher taxes to drive more revenue though our coffers.

The populist argument is simple. People matter more than money, so tax corporations and pay people money…. I like it.

But I can remember hearing from those responsible for making Delaware a corporate friendly state, exactly how much good change came from getting rid of those negatives that impact businesses…

We honor Russell Peterson for his Coastal Environmental Act, but look at the News Journal Archives (print only) describing the bankruptcy possibilities faced by the second smallest state at that time (’79)… If we utilize our ability to take money from corporate entities because we can… then what do we have to offer them that is so great to maintain the balance and make them stay here and employ our workers? Why is Delaware such a great place to set up or keep a business if in that process, we destroy our best asset? In other words, why would Paris Hilton purposefully get fat and stop wearing make up? Same thing.

Balance is the key. And Markell is the man for that. For if this state goes too populist, it will hurt our reputation among those whose commercial enterprises actually fund our lives…

His 8% is a brilliant stroke. It keeps people employed, and trims our deficit down. It may need some tweaking.. especially on the lower end of the pay scale… but it shares the suffering better than the massive layoffs that must come if we cannot close the gap in any other way.

We pin hopes on green energy. Yet, who would want to set up a business here, if New Jersey offers it cheaper there?

Do not be quick to steal from corporations. If you’re going to steal, make sure it is from everyone, so no one can say we could have had any other choice…

But, the whole point of this article, is to demonstrate how Michigan is attempting to solve their crises. It can get quickly out of hand, there.

There is a movement to put on their ballot, a proposition requiring the downsizing of their government. In this report filed by Jamie Edmonds of WIXL TV (who just happened to graduate from the University of Delaware’s School of Journalism in 2005). there is the stirring of a citizens movement to simply downsize government.

-Their proposal would eliminate ten seats in the Senate and 28 seats in the House and two supreme court justices.

-It would roll back a lawmaker pay raise

-It would ban lobbying for two years after leaving office.

– It would cut state departments and salaries.

“What we are doing we’re having less government, less bureaucracy, more accountability to people,” Byrum said.

The group supporting this needs 300,000 signatures by July 7th to put it on the ballot.

Now Delaware does not have a ballot Proposition Clause. We are too representative and have our government too firmly entrenched in our pre-colonial traditions, to ever go that route. But, the anger is out there among our people… And accountability must be taken by those whom we put in office.

That is why the 8% cut proposed by our governor Markell is a sound one. The alternatives which are now only being explored by the Joint Financial Committee of our Legislature, are all much worse…

Remember. When it comes to suffering, all must suffer equally for it to work… That should be our mantra. All must suffer equally. All.

If we could owe this debt to ourselves instead of others, we’d be rich from all the compounded interest we’d be paying back… — kavips

There is nothing that a strong dose of morphine can’t cure…. at least to the person receiving the injection ….. Damn… No legs…. Ahhh… no problem…..

Obviously the long term plan is the one we need to tackle first, so short term fixes like the one above, are seen as steps in the right direction, and not random neural contractions found during a soon-to-be-eaten chicken’s last minute.

Long term:

1) We need to spend within our means, both personally and as a nation.

2) We need to pay down the deficit, reducing our national interest payment.

3) We need to control our spending on entitlements: Social Security and Medicare.

4) We need a better trade balance with our trading partners.

5) We will need more cash in order to do all of the above.

We have been lulled into believing that we can spend money that we do not have… Hell we’ve been doing it for 8 years now… We did it for twelve years before that, starting with Ronald Reagan. And it was working fine up until late September…. Why can’t we keep on the same path?

As we have now found out, there is a small problem with taking out loans…. It’s called paying them back. To pay back a loan, some of the money that you are currently making needs to go back to those who invested in you at the beginning. Wait you say… why can’t we get more people to invest in us, and use that money to pay off those who invested in us earlier?

It’s been tried. And someone Madoff (made off) with a lot of other people’s money by doing just that. But eventually somewhere along the line, one cannot find enough new people to pay off the old, and crash, the system collapses.. Sort of like our Social Security system today ….

So if we have a loan, we have to pay it back?

Yes, that seems to work best. Although often loans can be forgiven after it becomes clear that they will never be repaid, and that further attempts to repay will collapse the entire pyramid where everyone loses everything… In those cases, sharing the risk by writing off some of the debts, allows one to begin making money again at some point in the future…..

But choosing to default, or not paying off the loans, also makes it impossible to get loan money later when you really need it.

So how much do we owe?

That depends on how you want to count it.. When you get a loan, there is a price tag attached that is called interest. One pays back the loan plus the interest to the party that fronted the money. After all, that is why people lend money in the first place… to make more of it… So if you bought a loan for $100,000 dollars, you could pay $100,000 the next day and be done.. That is one way of counting how much you owe. But, over time, that house you are buying is going to cost you 2.15 times its amount, because of compounded interest. So saying that you owe $215,000 is also correct….

The current U.S. obligations as of September 30th..( before any of the bailouts were passed by Congress) stood at 56 Trillion dollars. Every man, women, and child now owes $184,000 dollars. If we pay that back over 10 years, that is $18,400 per year of our income going just to the Federal government. Which means that if your family is struggling on $60,000 a year right now, that you had better start planning on how you can survive on $41,600 over the next ten years.

It may not be as bad as it seems. If free health-care becomes a reality, a yearly out of pocket savings of $7800 is a step in the right direction. Now we have just $10,600 to make up…. And if we cancel further investments into our 401 K for ten years, depending on how much you put in yearly, that accounts for somewhere between another $2000 to $10,000 dollars of which you will soon be out of pocket.. One had better hope that Social Security is still there for you when you retire…..

This is not something we have options on. This is a reality that must happen. Of course we can choose to pay it out over a longer time frame and survive with less money leaving our household per year, but over the span of a long time, we will ultimately pay a lot more… It seems better to knock out the debt, learn to live within our means, and once that debt is paid, prosper again after hopefully having learned our lesson over not paying as you go…..

That means that any new money pouring in from the “tax to the max”, must all be designated toward paying down the debt, and not be split off to other much needed projects. That is a hard choice to say no to… but once all debt is gone, less money will be required to be collected to fund those projects on a pay as you go basis. Our tax burden will be much less, giving us more money to spend, yet we will have ample money to fund the projects being built. The economy will grow in that scenario.

Of course this $184,000 is a shock figure designed to wake America up with a dose of reality. A bulk of the repayment will be paid back in the form of corporate taxes… starting as high as 50% and climbing perhaps to 90%. But the American consumer eventually also pays for those in the higher cost of each item he buys, since that payment will be embedded in the price he pays at the cash register.

The corporate rates mentioned above, were the same levels applied to corporate incomes after WWII, which continued and were not relaxed until under John F Kennedy’s administration. Over this time frame, corporations will have to settle for just being in business. After all,… that is what most small businesses do; they are grateful each day they open their doors. There is going to be a new reality that permeates the American corporate business world.

The essence of our nation’s problem is that we have lived off a credit card; one that will be paid by our children and grandchildren. And it has not just been our government that has done so.. Private debt, corporate debt, as well as government debt have all elevated our spending beyond where it should naturally be. This has been going on for so long that most investors thought that this debt/GDP ratio could continue rising indefinitely without ever overwhelming the economy and corporate earnings. In fact, the way it kept growing, we also started wondering if this could also go on forever. The total debt in round numbers is almost $52 trillion. This was not much changed this year due to the credit freeze, but rose $4.3 trillion in 2007, which was over 5 times the rise in GDP. The composition of the debt is $25 trillion in Corporate debt-both financial and non financial, $14 trillion in Household debt, and $13 trillion of Government debt-Federal and State & Local) and the GDP is $14.4 trillion. These debt composition numbers are rough estimates but all would agree that we currently owe 3.6 times our entire GDP….

This debt cycle really started in the early 1980’s when the U.S. savings rate peaked at over 10% and continued downward until this year when it troughed at a negative savings rate. People once again spent everything they made and then some last year, pushing the U.S. personal savings rate to the lowest level since the Great Depression more than seven decades ago.

As anyone who has been on the wrong side of debt can tell you, once the savings rate goes negative, it becomes a lot harder on the next round to change it. For then we have to pay charges on that amount which we spent beyond our means… So not only do we have to cut back to live within our means, but we need to further cut back in order to live within our means AND pay back those pesky charges…..

Under compounded interest any wait to pay back the cost is expensive; sooner is better than later. If we borrow a dollar and are charged with 3% interest, we pay back that dollar and the three cents of interest we owe… If we wait one year and are charged 3% on the dollar-and-three-cents we owed but did not pay back, we now owe a dollar and six cents. That may not sound like much, but when it comes to big numbers, that 3% on our national debt of 10.6 Trillion, becomes $318 billion dollars. One chuckles when Republicans find themselves up in arms over bailouts costing these amounts, but yet when the same figure is just interest, it is just considered the price we pay for living “la-de-da” beyond our means… At 3%, want to know how much interest we will pay on just that 3% interest itself, if we skip a year? $9.8 billion just to pay the interest, on the interest, that we are too broke to pay… “Deficits don’t matter” said Dick Cheney. When no one has money… where do we find that additional $9.8 billion to cough up?

But debt can be eradicated. Here is proof from a fellow posting his strategy.. It is a personal story to be sure, but it shows the proper mental attitude that must be created if one is about to embark on changing his lifestyle for the better….

Just the numbers of consumer debt are startling…. U.S. Household debt soared from 4.2 Trillion in 1990 (the first Bush president) to $13 trillion in 2008. During this period, the average American household dramatically increased its home mortgage debt, from almost $2.5 trillion in 1990 to nearly $10.5 trillion today. Similarly, consumer “revolving” or credit card debt quadrupled from $239 billion (B) to about $950B today. Moreover, the growth of U.S. credit card debt is substantially under-reported by the official U.S. Federal Reserve statistics, due to the tremendous volume of mortgage refinancings that were transacted between 2001 and 2005. At least $350B in consumer credit card debt was paid off through mortgage refinancings, home equity loans, and cash proceeds from the sale of real estate over this five- year period. This is consistent with the findings of Alan Greenspan and James Kennedy, who report that equity extraction was used to repay an average of about $50 billion of mortgage consumer debt between 1991 to 2005, about 3% of the outstanding balance of that debt at the beginning of the year.” Significantly, it averaged only $25.2B per year prior to 2001 (link to Manning’s work)

So how do we responsibly pay down our national consumer debt? Judging from the data provided above, it cannot be done. But a reasonable approach would be to isolate consumer debt into three categories: a) Chapter 7 Bankruptcy; b) substantial debt relief in the range of 60 to 80 percent; and c) repayment of the full balance over a 5 year credit management plan. The first category (a) is for those right on the edge; we know bankruptcy is inevitable, so we get it done and over so that they can start their ten years of rebuilding their credit as soon as possible. The second category (b), is a win win for both lenders and debtors. Just enough of their debt is forgiven allowing them to be debt free in 3 years.. The third category (c) is solvent enough to pay all their debts over a 5 year period on a managed plan. As is done with any bankruptcy, applicants for these programs are mean tested to determine into which category they fall … We can dream that all debts may someday be repaid. That is unrealistic. A practical approach moves forward, determining which debts are solvent and which are not, expeditiously processing those that are not, and in just a short time, all debt is secured and we know what our economy has to work with. No more surprises.

You can determine how your family finances can be resolved by using this calculator provided by the same Manning mentioned above.. I recommend that if you have unsecured debt, you play around with the credit card repayment section, seeing the differences that occur if you contributed your coffee fund, you movie allowance, your HBO bill towards paying down your credit card debt. Those little totals often taken for granted, can make years of a difference in pulling yourself out of debt.

We often hear pontificating towards our governments, local, state, and federal, end with the admonishment that since American consumers live within their means…. why can’t the federal government do so as well…

That is not exactly true. We do a lousy job compared to our parents.

They and their parents bought savings bonds… Which brings us back full circle to our best idea of paying down our national debt… What if a percentage of everyone’s pay check went toward buying themselves savings bonds. Unlike a tax, at the end of maturation, they get the entire bond returned to them with nominal interest tacked on.

Kind of like our parents and grandparents implemented for us growing up. A forced savings plan… “Oh but I want to spend it….” “No, we’re putting it in savings”… With this plan, like a tax, the government has access to increased funds, but unlike a tax, it pays us back. This has three things going for it.

One it helps us save. The American saving’s rate was negative last year. That means individuals spent more than they had… Obviously when the time comes to pay it back, it will not be good for the economy.

Two it provides a intermediate source of funding for our government. Instead of cutting taxes, this plan augments taxes… Since the money must be paid back upon maturation, the government needs to get a rate of return higher than what it is paying back..

Three. Using this money to decrease the Federal deficit, is a win win for all. Essentially we are using this program to buy up our own stock. It will be us who have control over our nation’s destiny, and not…. it’s foreign creditors…. Applying the entire amount bought in this fashion, to paying down our National Debt, will give us lower taxes in the future. The legislation initiating this program could earmark all revenue from these mandatory bought savings bonds, go towards decreasing our National Debt.

It will take great leadership to change our behavior. The bully pulpit is needed now more than ever. Since the 1980’s, we have funded our economy by borrowing. Anyone can be given an unlimited credit card and then tell us he is living well. For a long time this nation has placed the acquisition of corporate profits as the prime gauge rating the welfare of our nation. Now, with acknowledgment that it will take 4 years of GDP to pay off all debt, private, corporate, and governmental, we understand our predicament.

Simply put: to survive, we need to acquire more money than we spend and use that extra amount to buy down debt. Once our debt is down, we can use that extra amount to spend again, exploding our economy through the roof of expectations.

defaults and foreclosures created housing slump
Courtesy of Irvine Housing Group

The housing slump is worse than we thought. Many of the homes now being foreclosed were speculations hoping to be sold in a rising market. What that means is that occupancy rates in apartments and rentals, will not rise concurrently as is usual when mortgage foreclosures rise.

That also means that the housing market slump will have to be resuscitated by fewer people. In other words, who out there is left to buy houses?….During 2005 and 2006 one out of every four houses was bought by a speculator with no intention of living in them.
This new data coupled with the realization last summer that most of the bundled loans are junk, and never will be repayed, has stopped the housing market cold. Any type of industry relying on the housing market, has already shut down and laid off employees.

Ohio and Michigan are in official depressions now, no longer calling it just a recession. Of course the Mid-Atlantic area has not been hit as hard as some. As is often the case, there are regional pockets of economic stagnation scattered across the country: remember Dallas and Houston during the nineties’ oil glut?. But when the new housing market climb begin, now with this new revelation, no one knows. As this new information filters up the pipeline, to expect another tumble in stocks would be realistic.

This year we see what might amount to the perfect storm. For just as the house values bottom out, the ARM rises, utility bills peak, and above all, food climbs to prices not even dreamed of. $3.50 for gas, $5.00 for milk, and 4$ for cheap bread. We will experience inflation like most of you have never seen. And we will be too poor to do anything about it.The standard measurement among economists is that for every dollar of lost equity in ones home, the homeowner lose 7 cents in real income. Based on this number the tax rebates this spring and summer will fall short of what will be needed.

There is one way to save the entire economy. Drop the Fed to 1%, keeping mortgage rates at 3%. Then push for the refinancing of ARM’s across the board. Whether it takes legislation or not, no one should lose a home to an ARM. Forget about signals of panic. We need people refinancing and buying houses by May!

Talking about these matters one gets the same feeling as standing on a Thai beach, watching the sea, following with your eye a tiny black line edging closer and getting bigger. The sooner you act, the less danger you will be.

If your are close to retirement, secure your assets. Worry about losses. Don’t worry about growth.

If you are just getting started, stay with the high rollers. All the monies you will be putting in will be buying up stocks at bargain rates, and when they recover……….Wow!

I often tease Dave about his man Mitt Romney. Any chance I get, I send this link his way……Teasing is wrong I know, and I expected some retribution for my partaking in it.

I did not expect the avenue that retribution would take……Because of the above link, my five year is a Mitt Romney fan. Little did I know that while I was listening WDEL, that he was listening to it as well. He surprised me by screaming out Mitt’s full name and clapping his hands ecstatically as only a 5 year old can.

To humor him we sat through most of a Mitt Romney speech. He was thrilled with the moment, and I had to shush each time the announcer mentioned his name. To humor myself since nothing of the speech would be of interest to me, I took a deep breath and came up with the bizarre idea that I would listen to him as if he were a Democrat running against Hillary Clinton. In a few seconds I was in character and listening for the first time to a new Democratic candidate.

He was better than expected. In this speech to the Detroit Economic Club, he was very much in line with my views. I know he has baggage, but that does not concern itself here.

Despite what I had thought, he is not on the Bush tax plan. Despite what I had thought, he is not a corporate shill. He said some things about himself of which I was not aware.

Whereas Al Gore invented the internet, Mitt Romney was behind the office supply firm Staples. Most said shopping for office supplies would never work. But it did. Another story concerning layoffs, describes Mitt’s takeover of a failing consulting firm. Instead layoffs, he gathered everyone in a room, and together they decided there would be not one more layoff. They worked together and pulled it out.

Tomorrow Michigan votes. Zogby has Mitt 3 points behind McCain. But among Republican only voters he leads in double digits. Due to the Democratic boycott of the Michigan primaries, Democrats and Independents are expected to cross over and give support to the founder of the Straight Talk Express, thereby putting a must-do Mitt state, in McCain’s column.

McCain’s an old man. After hearing Mitt not sound like a flake for the first time, I see such similarity between the two, that it seems a Dole-ish act of stupidity to waste such effort on someone so old. You can get the same model (the speech was in Detroit) with a lot less miles…..

“Washington politicians look at Michigan and see a rust belt. But the real rust is in Washington.

I remember being intrigued with Mitt back in August of 06 when Dave first brought him to our local attention. Remembering “Nelson” Rockefeller, Jack Kemp, and other great Liberal Northeast Republicans, I thought that due to the dismantling of the Old Guard Republican’s platform by it’s own lack of success now that it has been implemented for 7 years, just might give us a fresh Republican face willing to try new ideas based on old American values.

But Romney made a fatal flaw in his strategy. Since to be the Republican candidate, you have to receive Republican votes, he began pandering to the “kook” element of the Republican party. The Republican party from the state level up, is flat out dominated by “kooks”. Yet on the grass roots level, it is run by some of the greatest patriots I personally know. Anyway, as soon as Mitt Romney stopped being what he was in Massachusetts, he lost his edge. America does not want the same thing it has had for the last several years. It craves something different.

You can see by the popularity of John McCain that this is true. John McCain is on record of being AGAINST the Bush tax cuts. John McCain is on record as being AGAINST unmitigated deficit spending. He wasn’t always. For awhile he pandered to the party elite, by kissing ass. When his popularity dropped to the gutter, I think he finally said “what the heck, I’ve lost, I might as well run the campaign as I choose to do so.” As his ties to the Bush/Cheney cabal decreased, his popularity from those who hoped for a miracle in 2000, increased. And with what I saw in Romney’s eyes yesterday, I think he now understands the same message.

If Romney makes an appearance in our state, the corporate capital of the world, he needs to hear this from his local campaign committee. “Forget the Old Guard. Be who you are. Run strong as a “New” Republican. Tell us what you WILL do.” If he fails to listen, or those on the local committee fail to speak up…..America may lose its last chance to make the difference.

Years from now, America can be another France or Germany, still a great country, but no longer the principal player it is today.

In honesty, I am surprised by the things I learned from listening to Mitt Romney with an open mind. He offered a different perspective, I grant you, but offered real solutions that have yet to be forthcoming from any of those three contenders for the Democratic crown.

It is something to keep in back of ones mind as Democrats babble over whose insurance will benefit us the most. In several years hence, entitlements and interest will be eating 60 to 70% of our budget. Meaning of course that only 30% of our budget will go to EVERYTHING ELSE.

Above all, it will be important that we have a balanced menu next November as Americans seriously make the all important decision that over time will make us either continue as a first rate country, or not………

My 5 year old loves Mitt Romney.