Explaining the Causticity of Syrian Involvement

 We are a tired generation… We grew up with ‘Nam.  Which ever side we were on during the battle here in America over that police action, or war, looking back after it was done, …. we all knew it was wrong….

After that we thought all war was wrong, and unfortunately took some of that angst out on those who least deserved it:  those coming back from the steamy jungles of hell…..

Against our will a certain president soon sent Marines into Beirut;  what happened then reinforced our belief that an American war was unjustifiable and that all other means must be utilized to prevent American war from ever happening again….  Against our will, we propped up a Nicaragua dictator against some rebels.  Against our will, we sold arms to Iran to use for paying for our support for that Nicaragua dictator, since a Congress elected by the American people, flatly said no to supporting him in Nicaragua…  We found a way to do it anyway….

I remember Senator Rudman, (R-NH) saying at the hearing while addressing Oliver North,… “The American people have the RIGHT to be wrong.”

Oliver North had been insisting that even when Americans flatly say NO, one still must do what one deems is necessary, that whatever one deems necessary, is the highest moral truth.  “Sometimes one has to go above the law!”  was actually said by the defense at this hearing.  Only one good thing came out of those hearings:  we all were introduced to Fawn Hall.

But then…  The Brits quickly regained the Faulklands. Then came Grenada, which went off without a hitch.   Then Panama, which was successful and almost painless.  Then came General Schwartzkopf.  The 4th largest army in the world, was routed in hours, and in days, had been completely mopped up.  Then came the Balkans.  We were on a roll.  We’d finally nailed down the successful formula of how to win in battle.

Today we say Iraq is a failure.  But that was so not so just after the invasion.  Inside Baghdad, the pulling down of Saddam’s statue, the victory of capturing Saddam, the ability of us to hand out billions of American dollars, initially gave this campaign the luster of looking like another success story…

Until we tried to steal their oil.  The standard global rate of dividing oil revenues is that the US gets a 20% cut for the development, and Iraq would get to keep 80% because it is after all, their resource.  That is how we deal with Nigeria.

But Brenner announced that we’d flip that to pay for the war, and that Iraq would be allowed to keep 20% because we liked them so much, and we’d only, by our good graces, take 80% of the revenues. 24 hours after letting that cat out of the bag, the first IED went off under a US military vehicle…  Before week was out, the total was in the hundreds.

The luster was gone.  We were an invading army, something  we have not called ourselves since WWII.  We always saw ourselves as the policeman who leaves as soon as order is restored…

Afghanistan likewise, got worse.  Then Pakistan.  Then Yemen.  On the diplomatic front  instead of doing no harm, .. we could do no good.  Then Libya costs us an ambassador who was running guns through Turkey.  He shouldn’t have been there; it should have been a low level staffer with security clearance.

This baby boomer generation knows that war is wrong.  We know from experience. The only time it can be employed successfully, is a) when the whole world is united behind you, b)  you go in and get out, and c) you have a structure that stays in place long after you are gone.

The only time it goes badly… is every other scenario.

Which brings us to Syria.  Syria has no importance to anyone.  (They couldn’t even defend the militarily advantageous Golan Heights in ’67!)  Which is why we let the Russians have them.

People are going to die in Syria if a):  Assad wins, b):  the rebels win, or c):  no one wins. The only thing changing upon this wars outcome, is which side will be massacred at war’s end.  Hence the battle for survival over there now.

So by having the US intervene or not, we are choosing which side gets to kill the other after the hostilities die down.

The weakest argument for going in still left with standing, is that they used chemical weapons.  In WWI, the British, French, and Germans all used chemical weapons.   Are chemical weapons really worse than being burned alive?  Or asphyxiated as a bomb blast sucks all the oxygen out of your lungs and the room?  Or a milk jug sized piece of jagged metal shrapnel ripping and leaving a hole through your body?  Or a mine being stepped on?  I’m trying to think why chemical weapons are so much worse, except for the fact that we’ve been told” they are so much worse”?

A causality is a causality.

We understand “why” some say we should go into Syria.  Because if we do not respond to chemical weapons in a big way, someone else will become confident and use theirs.  There is only one way to keep the genie inside the bottle, and that is to never leave a opening for it to escape….

We also understand “why” one of our beloved School districts had a policy that suspended, and expelled those who brought weapons to school!  Not just guns, but knives too. After all, the argument for punishing Syria, applies to soon-to-become high school felons too.

But, there came a time when the response generated by a policy, actually became the crime,   You remember the little boy expelled who brought a cake to school, and his grandmother thoughtfully sent a knife knowing teachers usually don’t have utensils in their classrooms.  The teacher actually cut the cake, served it, thinking nothing of it.. it was someone higher up, reviewing the situation, who said, “wait, that can be interpreted as a breach of regulations.  Let’s make an example out of this little boy”.  He was suspended and could have been expelled, except it eventually became news and public outcry was solidly on his side.  The policy makers were laughed out of town.

Which is why, if you are making this decision, you need to stall.  Acting quickly and decisively is equivalent to acting on rumor and innuendo.   So what if Syria lied and shot the gas cannisters off?

Does a military strike create enough excellent good will to neutralize this bad act?

Ironically what is best for the US in this situation, is for Assad to stay in power, to have a zealous change in heart, to work closely with the USA to get his economy working, to becoming a partner in that region with the US, and to signing a treaty with Israel, as did the Egyptians many, many years ago…

What is worse for us, is if the jihadists win, push out the moderates and take over the reform movement (they always do), then go to war with Israel, Jordan and Turkey.  Making ourselves into the evil empire will only create more explosions everywhere, flare-ups which would not have occurred had we taken the Jedi way, and used the “Force” in our possession, to make events on the ground turn our way and happen in our favor….

Realistically such a rosy scenario probably can’t happen; but if it did, were this to come about, there would be no doubt: Obama would be lauded as the best president we’d ever see in our lifetimes.  The cost of failure is so low that it just might be worth the try.

The second point… which all us Viet-namers will well remember, is that you may win every engagement you participate in Syria, but you won’t win the war at home, and that… will suck all your energy away from all the good you plan to do before 2016.

It broke LBJ.  It broke Bush II.  Don’t let it break you….

America Is “Breaking Bad”

There was a moment, when after the magnets had done their job, and the police are sorting though the residue on the floor, they pick up a photo picture, and notice something missed before, an address with names..

I felt “OH NO!”. especially after the high of seeing the lap top was beyond repair.

I noticed my teenage daughter cringe at the same time as well.

And that’s when it hit me. Our youth is being taught to sympathize with bad guys.

It is no wonder when shots ring out in Wilmington tomorrow morning, that even thought witnesses were present, no one saw a thing.

Really, when watching that show, which Jason mentioned was the best on television, who do YOU empathize with?

After our generation is dead, this nation I’m afraid is in for some dark days.

Let’s hope that outlook changes after the Dark Knight Rises.….

At What Price, Loyality?

This is going to my hard core Republican friends. Why are you still supporting Romney?

1) You know he is not going to win.
2) You know as the election heats up, his Bain Capital experience will make Republicans untouchable for decades.
3) You can’t pin down where Romney stands on anything.
4) He tied his dog to a car.
5) He stands with black people and says “Who let the dogs out, woof, woof.”

Most of you are telling me, “I certainly can’t vote for Obama. I guess I’m not voting for President this time.”

Let’s say, just for argument sakes there was a presidential candidate out there who says to have good government you need: …………………

1. Become reality driven. Don’t kid yourself or others.
Find out what’s what and base your decisions and actions
on that.

2. Always be honest and tell the truth. It’s extremely
difficult to do any damage to anybody when you are
willing to tell the truth–regardless of the
consequences.

3. Always do what’s right and fair. Remember, the more
you actually accomplish, the louder your critics become.
You’ve got to learn to ignore your critics. You’ve got to
continue to do what you think is right. You’ve got to
maintain your integrity.

4. Determine your goal, develop a plan to reach that
goal, and then act. Don’t procrastinate.

5. Make sure everybody who ought to know what you’re
doing knows what you’re doing. Communicate.

6. Don’t hesitate to deliver bad news. There is always
time to salvage things. There is always time to fix
things. Henry Kissinger said that anything that can be
revealed eventually should be revealed immediately.

7. Last, be willing to do whatever it takes to get your
job done. If you’ve got a job that you don’t love enough
to do what it takes to get your job done, then quit and
get one that you do love, and then make a difference.

Honesty. Integrity. Principal.

Sounds good so far. Let us say just for argument, he had chief executive experience. Let us say just or argument that he once ran a state, one of the fifty in this union. Let us say while governor, this is what he did…..

During his tenure, New Mexico experienced the longest period without a tax-increase in the state’s entire history.

1) He cut the rate of government growth in half,

2) Left the New Mexico state government with a budget surplus and 1000 fewer employees (without firing anyone),

3) Privatized half of the prisons in the state,

4) Brought a state-wide school voucher system to New Mexico.

5) Vetoed 750 bills (more than all the vetoes of the other 49 Governors in the country at that time, combined) with only 2 overrides, earning him the nickname Gary “Veto” Johnson.

6) In 1999, Johnson became the highest-ranking elected official in the United States to advocate the legalization of drugs.

7) Shifted Medicaid to managed care.

ISN’T THAT WHAT YOU WANT? ISN’T THAT WHAT WE NEED?

Can you not think of a better way to show your lack of enthusiasm over a wealthy capitalist buying his way to the top of your ticket, by voting for someone who has character, who does what you’ve always wanted, a doer, not a talker?

And to think…. you were simply just going to throw your vote away.

His name is Gary Johnson. He is the new party’s candidate for President.

Remember Republicans. It is your values that are important. If your party has given up and moved on from your values, don’t think you have to be loyal to the word…. “Republican”… What you have to be loyal too, is yourself. Always. Never lie to yourself.

You don’t need to waste your vote on Romney. You probably need to find more about this guy, Gary Johnson, and then throw your support behind him.

Don’t worry it is not one of the two parties on whose ticket he is running. Remember, at one point in time, the Republican Party was a once a third party too. One that went mainstream because of its core values, its principles resonated with everyday American People.

How To Grow Jobs….

Raise top marginal rate to 40%.

Remove all existing tax credits for corporations. Keep current corporate rate at 35%….

Hire 35,000 additional accountants for the IRS….. Just do it.$35,000,000,000.

Allow dollar for dollar, a one time tax credit over these next two years, for every dollar spent on new construction here within the boundaries of the United States. A small business making $60 million this year, .. times the corporate rate of 35% stands to pay $21 million in corporate Federal Income tax. But with the “kavips deduction”, it instead decides to build 4 new locations with a start up cost of $5 million each…. and pay NO FEDERAL TAXES that year.

Those four new locations, each pump $5 million into their respective economies, which as it changes hands, gets taxed over and over and over again. If each unit has sales over $2 million, at a 30% payroll cost, they over the course of a year, pump an additional $660,000 into each local economy… As that $660,000 changes hands, it gets taxed over and over and over again as well….

So what do we have?

Whereas we had no investment under Republican Tax plans, (all that free money was going to Chinese investment since they worked for $1 a day), now under the kavipsian tax plan, we have in the first year, $21 million invested domestically, and a combined $2.6 million each year in brand new jobs, flowing out through the economy……

That $2.6 million if all in one state with a top rate of 5%, puts $131,000 into the state treasury that was not already there. At 2.5%, it puts $65,000 back into local government…..

If the corporation choses to do the same for a second year… then, those amounts get doubled!

Now, here’s the beauty of the kavipsian tax plan…. Imagine, every business, corporate or private, doing this exact same scenario simultaneously…

Ironically, by raising the rate on the amount of taxes we take from the wealthy and/or corporations, but allow them to deduct dollar for dollar what they spend that year on physical capital (something that gets built) we force businesses to choose between giving the Federal Government more of their money…. or keeping it themselves.

We all benefit when they keep it .. themselves…

Tomorrow’s Senate Debt Ceiling Crises Vote….

60 required…

53 Democrats…
-1 Joe Manchin D-WV X
-1 Kay Hagen D NC X
-1 Mark Pryor D AR X
-1 Bernie Sanders VT
-1 Debbie Stabenow MI X

48 Democrats for…

Republicans:

+1 Susan Collins ME
+1 Scott Brown MA
+1 Mitch McConnell KY
+1 Olympia Snowe ME
+1 Lisa Murkowske AK
+1 Mark Kirk IL
+1 Kay Bailey Hutchinson
+1 Lamar Alexander TN
+1 Bob Corker TN
+1 John McCain AZ
+1 Charles Grassley IA X
+1 Richard Lugar IN
+1 Saxby Chambliss AL X
+1 Tom Coburn OK X
+1 Mike Crapo ID
+1 Lindsey Graham SC X
+1 Orin Hatch UT X
+1 John Kyl AZ
+1 Jeff Sessions AL X

I calling 67 votes for passage.

Missed some: Those in italics I got wrong. I miscalculated and guessed that the older ones, the dinosaurs, would be more inclined to cross party lines to forge a compromise, knowing the severity of default. They were the holdouts. I missed that entirely. Most of the freshmen fell in line with the spirit of cooperation… All in all, 7 Democrats voted against their president. 28 Republicans fell in behind their president.

States to watch, ones with both senators voting for default…. Alabama, Iowa, New Jersey, South Carolina, and Utah. Don’t drink any water imported from these five states.

The Folly of State Income Tax Cuts

Today Markell announced for the benefit of Colin Bolini and David Anderson, that he had rolled the top marginal rate down two tenth’s of one percent…

That number drops the top marginal rate to 6.7% down from 6.9%……

If you are making $60,000 dollars, the bottom tier where this begins, that percentage will save you…… $120 dollars….

If you reported an income of $1 million, you now have…… $2000 in your pocket…..

If your income is at $10,000,000 you are keeping an extra $20,000 in your pocket…

The whole principal behind tax cuts is that it frees up money that flows through the economy.

That principal is flawed.

If you received $20,000 would you buy stuff? Especially when you probably already had, with an income of that level, everything you could possibly want?….
No, you would put it in the bank and use it to buy investments, which do absolutely nothing for the economy.,…

If you received $2000, would you spend it all on a purchase? No, at that income level you would consolidate and pay down some debt. Again, that is good for you, but it does nothing for the economy.,….

If you are like Al Mascitti, and get $120 dollars as a surprise gift…. Do you spend it? Yes probably, but most likely it gets spent at Atlantic City……. Again, it helps their economy, but does nothing for ours…

We need to debunk this myth that tax cuts help anyone. They don’t…

The solid sure fire way to get an economy roaring IS to do what Markell did, but with strings attached.

The string is that, we will let you have this tax cut, only if you spend it in Delaware… And the best way to do that, is to deduct an expense invested in Delaware from the taxes owed at the end of the year...

Make investing in Delaware a deductible, and then our economy will grow. Make it for both individuals and businesses, then, we will grow twice as fast….

All that money saved from state workers taking a 2% pay cut, some losing their jobs, and others losing their benefits, just got pissed away…….

We need to be smarter next year…….

An Armed Service Day Look at Treason

A Pentagon study released last year, based on a review of 600,000 Iraqi documents captured after the U.S.-led invasion, concluded that while Saddam supported militant Palestinian groups — the late terrorist Abu Nidal found refuge in Baghdad, at least until Saddam had him killed — the Iraqi security services had no “direct operational link” with al Qaida.

600,000.

By investigation, however, it was found that the vast majority of Guantanamo detainees captured in 2001 and 2002 in Afghanistan and Pakistan were innocent citizens or low-level fighters of little intelligence value who were turned over to American officials for money or because of personal or political rivalries.

Vast majority.

The decision to withhold the documents was announced by the CIA, which said that it was obliged to do so by a 2003 executive order issued by former President George W. Bush prohibiting the release of materials that are the subject of lawsuits.

Our official policy was known to become the subject of lawsuits.

While allegedly being tortured by Egyptian authorities, Libi provided false information about Iraq’s links with al Qaida, which the Bush administration used despite doubts expressed by the DIA.

False information was used despite doubts expressed by the DIA.

The administration ignored warnings from experts in the CIA, the Defense Intelligence Agency, the State Department, the Department of Energy and other agencies, and used false or exaggerated intelligence supplied by Iraqi exile groups and others to help make its case for the 2003 invasion.

Ignored warnings from its own experts.

A bipartisan Senate Armed Services Committee report in December traced the abuses at Abu Ghraib to the approval of the techniques by senior Bush administration officials, including former Defense Secretary Donald H. Rumsfeld.

Top officials approved of the humiliation of prisoners of war.

Cheney said that the Bush administration “moved decisively against the terrorists in their hideouts and their sanctuaries, and committed to using every asset to take down their networks.” The former vice president didn’t point out that Osama bin Laden and his chief lieutenant, Ayman al Zawahri, remain at large nearly eight years after 9-11 and that the Bush administration began diverting U.S. forces, intelligence assets, time and money to planning an invasion of Iraq before it finished the war in Afghanistan against al Qaida and the Taliban.

Resources were diverted from finding Osama towards invading Iraq.

A top-secret 2004 CIA inspector general’s investigation found no conclusive proof that information gained from aggressive interrogations helped thwart any “specific imminent attacks,” according to one of four top-secret Bush-era memos that the Justice Department released last month.

No proof interrogations kept America safe… they prolonged the war.

Bottom line…

Torture was sanctioned by Vice President Cheney so it could be used solely to offer credulity to the invasion of Iraq, where there was oil.

America invaded for oil… America tortured for oil, … Every dead American soldier coming back from Iraq, died for oil….

On Armed Forces Day, it would be wise to question whether our members of the American military deserve better.. As individual citizens of this great country, we must make sure that no other future leader misrepresents the American way and abuses our system for their own private gain, as did Dick Cheney

Now as private citizen, it is time that the articles of treason be filed on Dick Cheney, former Vice President of the United States…

After all, he is innocent until proven guilty, but at least the opportunity to hold him accountable, must be taken now. For if no one is ever held accountable, then what is to stop the madness from ever occurring again, and again, and again, and again, and again, and again, and …..

Any person continuing to support private citizen Dick Cheney’s contention’s, should also be viewed as a suspect who is actively working against the best interests of all branches of the United States Armed Forces.

Happy Memorial Day.

Chapter 10: The Silver Bullet: “A 3 Month Mortgage Holiday”

All that I am giving you…. is the gift of time…. — kavips

What is a silver bullet? According to folklore it is the only thing that brings down a werewolf. Other bullets, indiscriminate of what weaponry they’re fired from, are ineffective against that monster who possesses an aura of impenetrable magic. Our collective wisdom of doing what we always done, of trying what has always worked before, bounces off the charging entity… As our ineffectiveness becomes apparent in face of our own annihilation, we find ourselves wishing for any magic item that could neutralize the evil about to devour us; something that could slip past, disable and kill it… To everyone’s surprise some unknown face steps out from the soon-to-be-annihilated crowd and fires one single silver bullet into the beast… The day is saved.

Today our global economy needs that silver bullet.

Appropriate measures must be taken to match the challenges set against us.

When one visits a physician to request his help against fighting a severe infection such as strep, staph, or even meningitis, one does not expect their doctor to limit the medicine’s dosage to a level that just barely keeps one from dying; one goes to get cured…

Here is an example of a conversation that one hopes never to hear in a hospital room:

Physician: “Your tests show us that your infection has now reached 99% of the lethal level… Untreated you cross the hundredth percentile in three days and die… We have determined that all you need is 2 micrograms of this antibiotic, which should just kill off 1% of the infection and keep it from growing any further.. As it grows a little, we will kill off a little, and thereby keep your total rate of infection from growing further and holding your lethal level at the mark of 99%. We are worried that if your body gets too much of this antibiotic, some of it may be wasted and pass through your system, and entering into your urine stream without being used effectively. Your insurance company, who I remind you is paying for your medicine, insists that we follow this procedure so they do not flush any of their future profits down your plumbing, if I may put it delicately.

Patient: “Nice meeting you. I’ll find a new doctor now.”

For those not clued in, the Physician represents those Republicans and conservative democrats more focused on waste than on survival. The patient is the global economy.

Survival makes mincemeat out of old priorities. Any paramedic who has pulled out a human being from a burning car, knows full well that there is a time and place to worry about a potential back injury. Burning the victim alive for fear one might damage his spinal cord, is a misappropriation of priorities. Any top gun pilot knows that when entering a dogfight with two boogies on one’s tail, it is not the appropriate time to worry about the taxpayer’s investment lying in each missile underneath his plane’s wings. Exiting the dogfight in order to save millions of dollars is a misappropriation of priorities. Every citizen should know a little about the Heimlich maneuver. When a guest sitting next to you is obviously chocking, and because of your indecision has begun to turn blue,… to not attempt to save him because your inexperienced pressure might break one of his ribs… is a misappropriation of priorities.

The global economy is in a desperate situation.. To not do what is necessary to fix it, because it may cause taxes to rise in our future, is likewise a misappropriation of priorities….

Here is a quick review of those points previously mentioned. 1) We need to appreciate the scale of our sickness: our economy from top to bottom is about stop working. 2) We need to understand that we, the American people as well as those scattered across the planet looking towards us for leadership, don’t care how; we just want the infection to go away… 3) If we don’t die, once healed we can deal with the costs down the road….

Just heal us.

It is no secret that our crises was aggregated by mortgages. Nor is it a secret that the American large banks are the ones responsible for leveraging-out our global economy on the junk of unpaid mortgages. The collapsing housing market itself is a small bump in the road. But basing our entire economic structure upon the marketability of those collapsed mortgages, with the premise that their value would always rise, is the real scam perpetuated by our domestic securities brokers.

What our securities industry did, today defies belief, logic, and common sense. What they did was market unpayable mortgages as being worth lots of money. Despite it’s insanity, those unpayable mortgages were further leveraged at rates 40 to 1 in some cases. As the “one” collapsed; so did the “40” loans which were collateralized with it…

Today people are out of work, because of the securities executive’s lapse of judgment. Today our automobile industry is expiring because of what these people did. Today most of Europe’s banks have been nationalized, because of what these people did… Tomorrow, our taxes are going to be out the roof…. because of what these people did…

As one looks at the facts of how we got here, one gets angry. As one gets angry one looks towards quick justice to punish those responsible. As one looks towards quick justice, lynchings of greedy financiers begin to look rather promising…. Make them pay with blood….

It wouldn’t be the first time. Heaven knows they deserve it.

But we can learn something from those societies who repaid years of poverty with the actual blood of those who financially raped them… Long after the bloodletting was accomplished, they were still in poverty… In fact, leaving no one left who was competent enough to run the finances of their nation, their poverty extended down to absolutely every one living within those borders, for generations after generations…

Recent memory of the Soviet and Chinese blood lettings are examples how such unfettered justice can bring any nation to its economic knees, forcing it into some form of totalitarianism just to maintain any sense of order. North Korea is another example of what happens when a nation is run on anger; as a result, living conditions there are deplorable.

Perhaps a better tack would be to take a conquered population, and use them to help ourselves from out from our quagmire.. To do so would require forgiveness, a trait often associated with America by others living on this planet…. Proof of the effectiveness of forgiveness can today be seen in the rebuilt economies of both Germany and Japan, and to some extent… South Korea. As we saw from our earlier chapter, helping these nations achieve and regain their former prosperity, was one of the best investments and execution of policy ever made by this nation.

Today, we now apply that same tact and wisdom to our own financial internal problem.. It is to our mortgage brokers who we must now turn to bail out our nation; forget our congressional delegations.

It starts with this simple question. What would it take to cause a household to spend again?

Basically it would take a breather… a collective sigh of relief by everyone out there who is behind on their payments. What if ….. they were allowed to skip maybe a payment or two? Just to get some utility bills paid down, some credit card debt back under their cut-off lines, perhaps pay off the new heater, or new stove they were forced to buy. What if….. they were given 3 months with no mortgage payment and could then use that amount to catch up on their personal finances?

Then after three months, with their entire debt portfolio restructured, they could begin resuming payments and finally with sufficient money at their disposal, continue to pay off the entire loan including the added interest which accrued over those three months perhaps tacked on to one last payment at the loan’s end….

There is a surreal beauty in this arrangement. The homeowner who has fallen behind three months, can now catch up.. The homeowner who is out of work, can survive hand to mouth for at least three months without worrying about his mortgage. The homeowner who is still current on his payments, can take care of other financial matters, and pay off his unsecured (credit card) debt currently robbing him blind with its high interest rates. Those doing rather well, suddenly have an opportunity equivalent to a tax refund they weren’t expecting.. They can spend it pumping much needed money into the economy. Those investors (banks or mortgage brokers) who put up the money, actually turn out to make more off of the original loan than was ever anticipated due to the compounding of the three month’s interest,… giving them a much higher margin on their return… The economy of the United States of America, after 90 days, has completely emerged out of its recession.

More details…. please.

The idea was simple. Instead of solving the economic crises by looking at the macro scale, we went to the other end and asked this simple question to a number of families… What do you need to get back on track? Our moment of truth came when one family head said: ” Really, as long as my job holds out, all I need is to skip a couple of mortgage payments… After two months, I’ll be caught up” Naturally everyone in the room looked at each other and thought, “Damn, that would work for me too.” The more we thought about it and explored it from different angles, the better it looked from every perspective.

1) It frees up a large chunk of monthly family income.

2) It does not add to the national deficit.

3) It does not require any new investment.

4) It actually makes more money for those holding on to the titles.

5) It increases spending where we need it… on the household level

6) That spending can begin immediately, in most cases on the first day of each month.

7) It rewards those who have kept up on their payments; and brings back to neutral those who are behind; and freezes foreclosures.

8 ) Once put in place, it immediately reinstates confidence in America’s banking system.

This is almost too good to be true. In fact it took a lot of probing to find any negatives that might arise from this action.. The only negative impact which we could discover was that some small mortgage companies rely on monthly payments to meet their payroll.. If that action was counteracted by part of the $900 billion dollar stimulus package, there would be …. no negatives.

So we began to estimate the impact… to see whether its glowing results would hold up….

We should remind ourselves just how important the US economy is to the economic function of the global economy. To put it into perspective, the Federal government guarantees roughly half of the $12 trillion dollar US mortgage market through Fannie and Freddy: roughly $6 trillion. For comparison purposes only, the entire 27 member states of the European Union in 2006 had an annual GDP of slightly more than $12 trillion, so the $6 trillion already guaranteed by the Fed, would be half the GDP of the combined European Union economies, and almost three times the GDP of the Federal Republic of Germany.

So if our nation’s total mortgage amount is $12 trillion, the Federal Reserve reports roughly $500 billion per month is listed in this nation as a receivable from real estate…. Percentage wise, that is only 1/4th the consumer debt of this country which is almost $2 trillion dollars per month…

So let’s play: “what if” just as an intellectual exercise and see how a one month mortgage holiday pans out….

As of last summer, 11.46% percent of our personal income was tied up feeding our mortgages. If we were to establish a mortgage holiday, what we are discussing is the release of ten percent of our personal income, or roughly half a trillion dollars into the economy each month. There is no way the US Government with its annual intake of $2 trillion, could finance something so massive. But, just by extending everyone’s mortgage for just one month, presto, we suddenly have it in our financial system. Since the monthly GDP jumps between four and five trillion, we are speaking of a substantial jolt to our economy, sort of like an economic Heimlich maneuver with no serious side effects. And if we do this three month in a row, …. 1, 2, 3,…. the recession is gone.

How does this affect the mortgage industry? For one, they lose $500 billion each month for three, for a dip of 1.5 trillion… But, under this plan, all we did was just postpone the payments, not…eliminate them… That same 1.5 trillion WILL BE PAID at the end of the loan as well as the interest that accrued upon it.. Which means that an extra payment will probably be added… Instead of catching up on three payments, we will at the end of our loan’s original expiration date , probably pay four.. an affordable sacrifice to be sure… At a .5% monthly rate (6% annually), the interest on that 1.5 trillion amounts to $7.5 billion a month.

How does this impact financial brokers?

As we saw above each month the mortgage payments make up one fourth of financial brokers income.. The other three fourths are represented by loans to consumers and business. Therefore this action will put them 25% down for just three months… Too high of a cost, perhaps?

Perhaps not. All across this country most businesses are down between 25% and 40% percent as a result of the derivative scam perpetuated by these financial institutions. And now that we have an option to pull ourselves out of the recession in as little as three months, with a $1.5 trillion boost to our economy that affects no one really and actually makes money over the long term of those loans still outstanding, and we fail to exercise that option because the whiners who brought us here, don’t want to suffer their share of the 25% of pain felt across this country?

Well? No pity from this quarter.

Today we are misguided in how we are dealing with the toxic mortgage crises… The U.S. Census chart 1152 shows us the problem, its cause and its solution.

Courtesy of US Dept of Census pub.1152 (Right click for full image)

Notice only a $2 billion dollar difference in the household sector between 1990 and 2007….Next look at commercial banks and the jump in their mortgage income from 2002 to 2007.. Notice how the heavily regulated savings institution sector was much more conservative. Next notice the GSE’s ( Fannie and Freddie) jumped 186% in one year between 02 and 03 and since have been cutting back.. Notice how the private pools and security issuers have swelled the market.. All the while the household sector remained constant.

This chart shows that the debt held by these pools is not real debt but was arbitrarily bid up by financial institutions over the past four years… In other words if I have $10 dollars of bad debt that I’m stuck with, that at maturation might be worth $20 someday, and I sell it to you for $15 dollars, after which you then bundle ten separate $20 dollars bundles of debt together that will be worth $200 dollars someday, and sell them for $175 to someone who buys ten $200 bundles and conglomerates them into a bundle worth $2000 but sells them for $1850….. well, you get the idea… and the product being sold is worthless by itself. We discover that fact rapidly when we finally reach the point where no one wants it…

So we are now at the point of discussing whether to bail out banks that bought much more then $1850 of that bad debt…and now that they know it is worthless, they want to sell it to the government (future taxpayers) at their costs….$1850…. Originally the number of $10 debts we used should have fetched $1000, but the bidding war has them now priced at $1850… Which means that: the $850 has already been pocketed as profit by those along the process.. So in the large perspective of things financial, all that this bank bailout amounts to is: …. taxpayers borrowing money at interest, to pay for the previous profits made by financiers…

Bottom line… since we need those financiers, we may have no choice… The alternative scenario, that of “The Great(est) Depression”, scares us even more….. For when 57.6% percent of home mortgages suddenly go into default, that creates a massive shock for our economic system to handle… No civilization ever studied, has remained intact after suffering an aftershock of that magnitude….

The problem and causes of this crises are now hardwired into those financial institutions. But embedded in this chart is not only the magnitude of the problem…. but a clue towards its solution as well. As one sees in this chart, the outstanding debt up to now has climbed… But getting an extension-of-three-months does nothing to alleviate or increase that amount of outstanding debt… For if no payments are forthcoming, and no additional loans are written across that time frame, the aggregate amount remains constant over the entire span of the three month holiday. The level of outstanding debt is not impacted by the policy of “not-paying-of-one’s-mortgage”, except of course by the interest that accrues over that additional amount of time… If you owe me $500 dollars and don’t make a scheduled payment, you still owe me $500 dollars, plus the interest. At the loan’s end, after all the principal is paid off and the additional interest is pocketed by the lender….. There is no overall negative impact.

So let’s review. If we give ourselves a mortgage holiday for three months, we put a stimulus amounting to $500 billion dollars per month into the hands of households. In three months, $1.5 trillion will have flowed though the consumer side of our economy. Jobs will need to be quickly added to accommodate that large influx of money into our system… Those earning money with these new jobs will of course be able to buy more, and the economy begins growing… This stimulus begins instantly on the first day of the month.. Everyone’s checking account is not deducted by their usual mortgage amount, and that money is instantly available to be spent towards other things.

Why three months? If two are necessary?

Again based on interviews with families, the data was presented in this fashion. During the first month, the most pressing bills, including utilities and collection agencies’ unpaid medical and credit card bills would be paid. As per the Bush tax stimulus check, the first month would show little spending. The second month would allow further catching up of other bills, and provide a little excess left over which could then be spent…. The third month, that entire extra amount would be available for spending… By the end of that third month, the economy would be roaring again…

I’m curious as to whether or not you the reader feel the same… In our interviews we came across no one who was not excited by this prospect… Further controlled studies can be done by others who want to compare the enthusiasm between receiving a stimulus check for $500 to that of not paying one’s mortgage for three months. Our results showed skepticism towards the tax check, and popular enthusiasm towards skipping one’s mortgage….

Would not paying your mortgage for three months get you back on your feet? And would you mind tacking on one more month’s payment at the end of your loan, for the privilege of getting your head above the financial flood swirling around us all?

As we looked at all the data and perused all of the options we could anticipate, this model became the closest thing in recent memory to that metaphor commonly used by today’s politicians: a win, win, win situation… And it pulls the economy out of its doldrums without that tremendous amount of government borrowing that percentage-wise, rivals our nation’s indebtedness during and after WWII…..

The concept is new when used on this scale, but it is really based on ancient tried and true principals found at the heart of our financial markets. It’s simple.. If one is bankrupt, it is better to get a little breather, than lose everything… Our global economy is bankrupt. Getting a loan extension on the U. S. Home Mortgage debt for everyone at the same time is unheard of, but can, if chosen, be accomplished rather easily. Extensions are processed daily for individual loans around the country. Even Donald Trump’s empire would not be here if this type of extension had been forbidden during the late 80’s. We are just extending the loan for three months, and making every financial institution more money by doing so…

So who is out there who might oppose this?

Our best guess? Moralists, idiots, and bigots. The rest will see this opportunity as being beneficial to themselves, to their unemployed neighbors, to the stability of our financial institutions, to the country of the United States of America and eventually to the global economy as this nation pulls its head out from under the cloud of recession far faster than anyone ever imagined was possible…

All by just postponing three months of everyone’s mortgage.

How do we do this then?

We came up with three ways, each dominated by a branch of the Federal Government.

Congress could briefly debate and vote overwhelmingly to postpone all single family mortgages for three months. But there may be some bogging down on some of the details.

Or the President could sign an Executive order and issue a directive that his Justice Department would not pursue and would overturn any lower court case punishing non payment of mortgages that occurred during the three month holiday… Effectively no one could collect from an unpaid mortgage, because under US Commerce laws any state ruling contrary against the three month mortgage holiday, could be overturned by Federal Court…

Finally the courts themselves could take it upon themselves, case by case, through either a judge’s or juries’ decision, that not paying one’s mortgage payment during the declared mortgage holiday was not only legal, but one’s patriotic duty.

In any of the three scenarios anyone attempting to collect upon a holiday mortgage payment, would be guaranteed to ultimately wind up paying all court costs, making the attempt to collect, pragmatically fruitless.

Secondly, there is precedent for closing financial down financial institutions and stock markets, whenever the market is spiraling out of control… Upon his inauguration, FDR promptly closed all banks until further notice. Surprisingly none of those closed banks lost money while they were closed… Only open banks facing runs, lost money.. Likewise, we remember the closing for several days of the New York Stock Exchange after 9/11…. While the market was closed, no stocks lost value… The same principal holds forth in putting mortgage lenders on holiday… Ultimately, as it did with banks and the markets, it restores confidence in the entire financial sector.

The moratorium placed on three months of home mortgage payments will get the attention of every financial markets. Coupled with other parts of the stimulus package, and with forecasts that in three months the entire American economy will be back to normal, as well as knowledge that financial institutions stand to make an additional month’s income on all outstanding mortgages, our lending institutions will appear well positioned to reap any future profits… People will certainly be less skittish about dealing with commercial banks, as the money begins to cycle around and around… once again…. If you had the choice of investing either in the US or China, after that $1.5 trillion began flowing….. the United States, would certainly appear the safer bet…..

One additional benefit from arising from a three month mortgage holiday, is that it forces banks into more lending to both businesses and automobile purchases… If no income is incoming from mortgage payments for three months, then all new loans default to becoming the primary method of generating income. Every bank would be forced to scramble in order to find those new customers who were trustworthy, willing and able to borrow its money…. Those who simply sat on their assets for three months while doing nothing, would fail.

So even though the description itself has become a cliche, if there ever was a “silver bullet” developed that would kill a recession dead, it would be this one… : a three month holiday on paying one’s mortgage….. Just try thinking of what you could do if you didn’t have three months of mortgage, and you can plainly see… it would boot up the economy without swamping our children with governmental debt.

Chapter 12: The Stimulus Package

If the rate of return is higher than the rate of the cost… you make money!. — kavips

Controversial as it is, we MUST use government funds to reinvest in infrastructure, especially where there is too little a return to interest private investment….

As was previously mentioned, there is no such thing as spending pork in a “bailout bill”… The idea behind this package, must not be lost. … This bill’s sole purpose is to put money directly into the economy…. Whether that money goes to the arts, to schools, to refrigerators, or to Quakers and Presbyterians, it really doesn’t matter… We all benefit from it’s infusion. Anyone receiving some of this stimulus package’s income will use it to buy among other things: Soda, potato chips and gasoline… That is the key… As the economy picks up from all this spending, confidence returns, and we are on our way. This package is about S P E N D I N G….

In the previous chapter we made an allusion that this stimulus package was like WWII pulling us out of the Great Depression, just this time without a war… Whereas then we geared up to make guns by borrowing massive amounts and investing it in ships and steel, this time we are doing exactly the same thing, but buying butter… It worked quite well then. Heaven help us… It had better work again now…

Like all pieces of legislation, this bill includes a few bad parts that were required for the insurance of a smooth passage, making it palatable among several Republicans… Those “bad apples” of which I speak are the 30% of the portion of the bill dedicated to tax cuts… Most of us intuitively understand how increased spending will help our economy.. That does not need much discussion since even a tiny child can grasp the fact that if someone has money, and wants what you have, they will spend it… Today only a few of those in an ever shrinking pool, dare argue that government spending is bad… Us with common sense know better….

For the sake of argument when I imply that massive governmental spending is good, I am speaking only about the present, right now in 2009,… and not another 30 years down the road when we again will have to trim off government excesses… At some future point to be determined, the argument of pulling government spending out of the marketplace and thereby allowing more efficient private operations to occur, will again have some merit…. And if we can all cross our fingers, hopefully with the large infusion caused by today’s stimulus plan, we may reach to that point much sooner than the thirty years it took us the last time (1933-1963).

Right now, strictly because of our crises….spending is good… Tax cuts are not…

Since we all know that massive government spending is good during times when credit has dried up, we will instead focus first on why tax cuts are bad, and why tax cuts drag down the growing of our economy out from beneath its crises. For those who have read each of the chapters up to this one, this may be a little bit of a review…..

First, let’s begin with just what exactly is a tax cut… For starters, is it a mechanism that opens market activity by driving down prices for all? Or…. is it a shill being used to suck up more wealth from the bottom four/fifths of the population and placing it into the hands of the top percent? And if it does, is that good for our economy?

Let’s begin with the words by South Carolina’s Senator DeMint on This Week February 1:

“And all of us believe that the way to move our economy forward and protect jobs is to infuse more money so that consumers have more to spend, businesses have more to invest, buy capital equipment. But there are two ways to do that…. One is for the government to take it out of the private sector through taxes and then decide where it’s going to go through political manipulation, as they’ve done in the House. The other is just to leave more money in the private sector for consumers to spend”

That last line could sound convincing if only it were true….

The obvious reason for being cynical about that remark, is that it is the same argument that has been proffered since the year 2000 and for the past eight years worked rather poorly. Look at us today. How “booming” is our economy?

If that philosophy couldn’t work over the previous 8 years when we had a budget surplus, money to spend, and a capital rich economy,…. why would anyone think it would work today when we lack each and all of those necessary tools?

They added tax cuts, huh?

Ever wonder how many people pay taxes and how many don’t? Ever wonder how those totals correspond to income?

The answer to the first question: from the Tax Foundation

In 2004, a record 42.5 million tax returns – one-third of all returns filed – had no income tax liability because of the available credits and deductions in the tax code. This is a 42 percent increase in the number of zero-tax filers in just four years. In addition to these zero-tax filers are the 15 million individuals or households who do not earn enough to file a tax return. Overall, nearly 58 million taxable households are outside of the income tax system. These findings raise serious questions about the future of the U.S. income tax system. Are any future tax cuts, or even tax reforms, possible when the lion’s share of the tax burden is increasingly borne by a shrinking pool of taxpayers who – at least on paper – appear to be “upper-income”? And will the expanding pool of non-payers demand even higher income taxes?

Back in 2004, one person in three did not pay income taxes…

Let’s jump back one second to remember tax cuts. Here is a refresher on how tax cuts work. You work. Your employer withholds your taxes from your pay….You file your return. Through tax cuts you have enough deductions to get all of your withholding returned to you… You get a check. You go out and spend it …..

Now if you are in the one third that does not pay a penny of income tax…. and this year you bought a house, a car, got a $1000 middle class tax credit, from whose pocket will those stimulus tax cuts come? Can you file a negative total for your tax amount and get all your credits to come your way at Uncle Sam’s cost? If your tax owed is $4200 and all your credits add up to $8400, can you get all of your withholding and an additional $4200 back, on top of what you paid in?

No?

So who on earth will benefit from the stimulus package’s tax cuts?

The upper two thirds who are paying taxes: that’s who… And here is the problem that tax cuts cause… Since one third of Americans do not pay taxes, our budget is funded by those two third who are… America’s tax burden has been shifted to the wealthy who pay almost all of our taxes. Cutting their taxes, drastically brings less money into the treasury; less money that will be required to pay for the spending that this stimulus bill requires…

If we give the upper group additional tax breaks, what will those upper two thirds do with their extra money? The problem with receiving large amounts of money is that one can only spend so much… and then what… There is no other choice but to invest it… And as we can rightly see, investing in a domestic factory barely giving a margin of 3% is pointless when one can invest overseas and get a return over 25%, because over there, one does not bother with labor laws, environmental laws, and purchasing raw material is cheap…. As we saw by what happened these past 8 years, our wealth went off shore.

Those proposing tax cuts will bemoan the argument that “tax cuts benefit only the wealthy” , and argue instead that it should be those who bear the brunt of paying taxes, who ought to be the first in line to get the tax relief…. But when they bring up that point, the follow-up question to ask them is this: ok, then, …so which income levels do most of the buying that drives the economy?

Evidence shows that most of our economy is driven by the bottom three fifths.. The very ones who will NOT get much of a tax cut, for they are already paying little or no taxes.

Another problem with tax cuts: they cannot be targeted to a certain area to achieve a certain goal. Giving out tax cuts? So what can you do? Can you legislate how everyone will spend their tax check? All 117 million households?

Official Government Announcement: “This year we want all recipients of a tax rebate to invest in Ohio.”

Really?…… I mean…… really?

I hope that you are beginning to see the myriads of long-term problems that tax cuts create… I know tax cuts sound good… “Wow”… “money to spend”…” great”…. But a closer look at who does the spending and what happens to wealth as it accumulates upwards towards the top echelons, makes one understand exactly what went economically wrong over the past 8 years… Tax cuts simply transfer more wealth into the hands of the wealthy which continues a very unhealthy trend.

It is unhealthy because of this one facet: the wealth that lies increasing in the coffers of those who are well endowed, is being stolen away from the echelons of workers who are not. Over the past 8 years, the average income of the bottom fifth, second fifth, and third fifth, all declined... The fourth fifth’s income was steady, and the top fifth’s level soared… This is opposite from the Clinton years, where income level increased in each economic strata, all at the same time. Based on actual growth of income, most would argue the Clinton Plan is the better plan and should be included somewhere in our national goals. We must restructure the tax code so EVERY income level improves…. including the wealthy.

What? Have the rich get richer? That is no problem, as long as the poor get richer too….. which if I may remind you one more time… is exactly what happened during the last decade of the twentieth century…..

So who spends the government’s money? The first question to ask is this: what do we mean when we say someone has “received” government spending? In this report, any time you use a government service, the amount of money it costs the government to provide that service to you, is counted as part of the government spending you receive. For example, if you use Medicare to pay for a hospital trip, you “receive” the amount that trip cost the federal government. Similarly, if you enroll your children in public schools, you “receive” the amount it cost the government to educate your child. If you have two children enrolled, you receive twice that amount. And so on.

So when we shake out all costs, the bottom 3 quintilles or bottom 60% receive more spending than they pay out in taxes… The top 40% pay out more in taxes than they receive in benefits from any spending.

When all government spending is included, households in the lowest quintile received about $8.21 in spending for every dollar of taxes paid. Households in the middle quintile received $1.30, and households in the top quintile received $0.41 for every dollar of taxes paid.

This chart shows us how Americans spend their money… Through this chart one can see that the top percentile spends more than does the lowest or the middle in each category. But, the percentages spent are a much lower portion of their income….The bottom percentile spent $3193 dollars on food for a year… The top spent $10,243 dollars on food across the same time period… The food percentage of the lower groups income was 32%… The percentage of income devoted to food by the top echelon, was 6.8%….. In housing, 54% is spent by the lower quintile; 14.4% is spent by the top group…..

If you want to flood the chambers of the economy with a mixture of fuel and air, in order to jump start the economy as fast as possible, you have to get the money down to the bottom level as fast as possible… They are the ones who spend it.

Or put another way…. If you wanted $9 billion dollars to go towards helping jump start the food industry, giving out a $9 billion tax cut, which would go to those still paying taxes, would only jump it by 6.8% of that $9 billion: $612 million….. But if you target that same $9 billion as spending (EIC payments) and distributed it to the lowest fifth of income, then 32% of that amount, or almost 2.9 billion dollars hits the target that you wanted… Our food industry gets a $2.9 billion dollar boost graciously paid for by those in top group who are still paying taxes.

Let’s try housing….. The same amount, $9 billion dollars spending spent at 54% puts 4.9 billion into that market… As a tax cut, less than $1.3 billion dollars would reach the target….

It’s human nature… if one does not have enough money to survive, if one receives even a little, it gets spent almost immediately… But if one has plenty, and one is not pressed to buy something right away, one would wisely spend less now, pocket that money into some form of savings, and little or not “stimulus” would occur…

That is why “tax cuts” do not drive the economy… They drive investment, but that virtual world has its own set of rules, which does not create new growth nor improve efficiency among the growth we already have…. Tax cuts create large amounts of money with nowhere to go… In principal tax cuts could work to salvage the economy if those who received them just spent wildly as did their lower income neighbors… To do so, the top quintile would need to spend 34% of their average income or $50,987 dollars worth of food….. At an average household of 3.1 persons, each person would need to eat $16,447 dollars worth of food… Now how is that going to happen?

Another trivial fact that was rather surprising was listed under charitable contributions. The bottom quintile gives away 10.56% of their income to charity and the top quintile donates 4.6%. (It IS harder to go through the eye of a needle)…..

Bottom line is that IF the goal of a stimulus bill IS to stimulate the economy, it is better to spend the money on the lower three fifths, than it is to grant tax cuts to either of the upper two fifths. In the top echelon at least 31.4% of that amount is guaranteed to flow away from the areas needing a stimulus and get locked down into private pension payments or paying down one’s mortgage principal… neither of which generates further spending, unlike buying a pack of doughnuts…. This lack of continued investment into our economy means that 31.4% of the money given out through tax breaks has now met a dead end… It has been sucked out of the economy…..

However the lower quintile person who spends their entire check in one store, causes that store to buy, the factories to sell, the assembly lines to roll, the employees to get paid, who then spend their entire check all over again and the economic process begins to gear up steam….

Tax rebates cause money to get sucked out of the economy… If one seriously wants to get the economy moving again, it is better to continue taxing the top group and just hand that money to the lower group with no strings attached. The economy will be fixed in no time…

Today’s tax rebates are the largest amount of pork this nation has ever seen. They simply do not work to stimulate the economy, unless provisions are also instituted along with that tax break on how it must be spent… Since that is a political impossibility, it just makes more sense to collect the money, and then decided how to dispense the money to those who can be counted on to patriotically spend everything they get….

Even as one closely reads DeMint’s comment, one grasps that he knows this fact all to well and is just mouthing policy that has come to represent his party… “To leave more money in the private sector for consumers to spend..” We see from the chart, that the money is already there… The top echelon is simply choosing NOT to spend that amount on goods and services… Giving them more money will only make things worse….

The chart shows the impact of Federal spending on our lower quintile… The household consumption in the bottom fifth, is almost double what the household income turns out to be…. How can it be double? Their consumption is twice as much as they make… That is due to our federal infusion of money collected from the wealthy, and laid at the feet of the poor….

Spending or tax cuts? Which has the bigger bang?

We discovered some literature about the Great Depression that sought to explain its exceptionally long length as proof that governmental spending projects did not work.. Our research showed the opposite.

The data that is available today, if I can put it briefly, shows that Roosevelt was hesitant towards going full steam towards the Keynesian plan until WWII forced his hand…. In local areas such as the Tennessee River Valley which did have an abundance of projects all close by in the same geographical area, the economy fared better than it did across the nation as a whole… The argument that tax cuts should have been instituted as soon as the market crashed, falls short as soon as one sees the highest marginal tax rate of the thirties was equally low as it is today though out the entire administration of Herbert Hoover during the three years after the crash of ’29 up to Roosevelt’s inauguration. After three years when it was obvious that tax cuts did not work, America threw out the Republicans in Congress, and the rate was jumped up from 25% to 68%. Some stalwarts still contend that not keeping that tax rate ridiculously low prolonged the Depression. Compared to us, they had a tax cut…. It did not work… Massive borrowing to have massive spending on the war…. did…

Those crying for more tax cuts are speechless when presented with this data. The highest punitive American tax rates ever (94%)…. occurred when the country’s economy was booming (1944-45) from massive spending for the war…. The second highest tax run, from 1950 – 1963, ran alongside some great economic years; their highest marginal tax rate was 91%!

I don’t know why this evidence is only coming to light now… The historical record sufficiently provides enough historical data to imply that in the real world, cutting tax rates is bad for the economy, and raising them as high as possible, causes the economy to rapidly expand….

The reason is simple.. If you as a business, had high tax rates (91%), you’d take back some money you had earmarked for profit and reinvest that back into your company… Doing so makes economic sense to you and your board of directors. For if you don’t, you lose 91% of what you made. Instead, you reinvest it… building up your net worth. That investment into oneself is what creates economic activity. Additional personnel must be hired, additional buildings must be built, and additional projects must be funded… The economy grows best ….. not when you reward people for taking money out of it… but when you provide them with a reward for putting their money back into it…

Taxes reward responsible behavior. They do it the “free market” way. Expanding one’s business under higher taxes is cheaper than reporting excessive profits.

So what is the net fallout in a Depression of increasing taxes?

Money does not get reported as income. Which would you rather have: an economy that was broke and not working, or one thriving in all aspects other than the amount of profit being reported to the IRS….

Raising corporate taxes in this case is being done in order to NOT suck money from out of businesses and NOT whisk it away somewhere into the government’s vacuum… No, just the opposite!…. Raising corporate taxes needs to be done so that business can keep its money inside that business, and NOT. send if off to the IRS!

The IRS loses nothing the first year… If the business went belly up, the IRS gets nothing… If the business invests all its profit back into itself, the IRS still gets nothing… The difference is that in the second scenario, we all have jobs and we are paying our taxes…

So if one wants to have fun, what I am actually saying to all of you, is that those economic benefits which we have always heard as one day coming to us from tax cuts… are actually achieved because the amount of taxes that are being collected, is now less…..and it was made so by imposing a rather prohibitive, punitive cost to the reporting of high income and excessive profits … So you see, I am for tax breaks!… Yes?… But they must be achieved in a manner that forces a company to reinvest what would have been profit, back into itself… The most effective method that we have found for accomplishing that, is to raise a corporations tax rate high enough so it makes sense to do just that….

The Stimulus package is about S P E N D I N G….. Due to the cyclic nature of our economy, there is no right or wrong area in which to have it spent…. All money enters the economy and quickly gets spread around where it needs to go…… It makes sense that if we are injecting money into our economy, that we inject it wisely in areas that continue to have improvement and contribute value to us and our progeny…. One can spend money digging holes and filling them up again… Yes, all those jobs will be done by real people who will spend their money…. and our economy will still get a big bang from it…

Or, ………….. we could spend that money on something worthwhile and long lasting, perhaps something like building cheap wind energy, and instead of having a series of refilled holes in the ground, we could have something that continues to save us tons of money every day that it runs….

Either path will lead us to what we need: having borrowed money jump start our economy… Far better to have something lasting to look at when it comes time to begin paying back our loans…….

When Dick Cheney Speaks: You Can Bet On It

The official results do not come out until later. But preliminary evidence has now proved beyond all doubt that no recession this grave has been experienced during the lifetime of anyone younger than 69 ( a good number by the way).

There are signs that those in the know like to watch, which tell the future years down the road and those signs now point to a Great Depression. It would be wise to note, that these “shades of what may be to come” as mentioned in Charles Dickens Christmas story can still be altered by changes in future events…

The fate was solidified with this which occurred on today’s last broadcast of CNN’s Late Edition. Vice President Dick Cheney, known among betting men, as “the man who is always wrong”, today declared “that its premature to call it the worst economic crisis since the Great Depression.”

Being the one to know, Mister “He-who-is-never-right”; with a record of wrong choices a mile long, some of which include statements such as: “I am the best person to serve as the Vice President of the United States”; “Deficits Don’t Matter”; “Be Afraid, Be Very Afraid”; “There are stockpiles of WMD’s in Iraq and we will find them”; “We have to make America the best place in the world to do business”; “We will in fact be greeted as liberators”; …… always seems to make sense at time, but after ample time has passed, seems to have strung us along, fully knowing what he was saying was not backed up by facts, and each time seems to have bettered himself financially by having us believe in what he says, and take him for his word.

So if we look at his record, we see that he was wrong on Iraq, wrong on Afghanistan, wrong on Iran, wrong on Israel, wrong on Syria, wrong on Georgia, wrong on tax breaks, wrong on the deficit, wrong on securities deregulation, wrong on the economy, wrong on global warming, wrong on renewable energy, wrong on Enron, wrong on education, wrong on environmentalism, wrong on ethics, wrong on Executive privilege, wrong on gasoline prices, wrong on immigration, wrong on privatization,wrong on racism, wrong on what’s best for America; we can only assume by his track record that he is also wrong when he says it is too premature to call this episode equal to the Great Depression. Of course you can go against conventional wisdom and bet against him, ……… but the odds of winning are long…… way too long……

As his track record shows, he is fully aware of the facts, and each time he makes such a brash statement, it is ultimately proven to be wrong and designed to throw us off. Therefore the best option to take away from his last interview as Vice President on CNN is to accept the premise that we ARE in a Great Depression, and pull out all stops now to stop its slide, ….. before it is too late… That means pulling out ALL stops, so that the opposite of this foreboding last statement by Cheney is not given its chance to come due:

“The days of looking the other way while a despotic regime tramples human rights, robs it’s nations’ wealth, and then excuses it’s failings by feeding it’s people a steady diet of hatred … are over.”

As of this writing we have 8 days and twenty hours before it really does comes true………. Let’s not jinx ourselves by listening to any arguments being made by Cheney’s compatriots now arguing against the passage of Obama’s “Economic Jump Start”. Remember all along, they were just as wrong too……..