Tax, Regulate, and Subsidize

"The government's view of the economy could be summed up in a few short phrases:  If it moves, tax it.  If it keeps moving, regulate it.  And if it stops moving, subsidize it."

- Ronald Reagan

It certainly seems that this former President was at the top of his game in saying this, and that what was true over thirty years ago remains equally true today.

 
What brought these comparisons about was the recent revelation by JP Morgan Chase, that poor monitoring of a worse strategy of investment cost the bank some $2 billion of its own money in the last six weeks.  Now there was a day when $2 billion was real money, but those days are almost as far behind us as the Presidency of Ronald Reagan.  After all, JP Morgan Chase is a bank worth almost $2.3 trillion; which is a bit more formidable sum to consider, unless of course, you're a national government.

There are those now calling for the bank's CEO Jamie Dimion to resign from the Federal Reserve Board (if not from the bank), including a former Obama adviser and now Senatorial candidate in Massachusetts Elizabeth Warren.  Of course you all remember Ms. Warren's latest claim to fame, that of being 1/32 Cherokee Indian.  Now that claim has come into serious question, if not disrepute (in a distraction that radio personality Mark Steyn cleverly calls Fauxcahontas).  My math skills may be a little rusty, but Warren's potential error on her pedigree seems to be something on the order of 3% and JP Morgan's on the order of .01%.  But let's set that, along with her campaign pontifications aside.

We could take up instead those made by White House press secretary Jay Carney, using his pressroom podium as a bully pulpit to speak on why this situation is justification for the 'Dodd-Frank Wall Street Reform and Consumer Protection Act', and to make the case that its perhaps additional federal regulations of the banking industry should be taken up at the federal level.  Of course Mr Carney fails to point out that the type of trading being done by the bank was not covered under Dodd-Frank and that it was the bank and not federal regulators that caught the problem, but it's seldom that the a political candidate's spokesperson will let the facts get in the way of a bit of campaign rhetoric. So maybe we should set aside the statements of Mr Carney as well in the spirit of fairness (to what I don't know).

Since some are setting the federal government up as a fiscal watchdog, let's look instead at the numbers of a couple instances of recent money loss under federal oversight.  In it's most recent quarter of operation (admittedly 12 weeks and not 6), the US Post Office lost $3.2 billion.  What's more, it lost $3.3 billion in the fourth quarter of 2011, and $3.1 billion in the third quarter last year.  In fact, according to Business Insider, it has lost some $20 billion since 2007. Billions of dollars lost through the execution of a lousy strategy and poor monitoring that sound vaguely familiar, if considerably more egregious; and all of this oversight was performed by Congress.

But let's face it people even $20 billion is chump change in the great scheme of things (pun intended).  After all, isn't Congress responsible for oversight of the national budget?  Now, of course the Senate hasn't seen fit to exercise its responsibility of passing a budget in over 1100 days (3 years for those of you not using the Mayan calendar).  Even though the Senate has a clear Democratic majority however, I'm sure that the fault must lie with the Republicans. The House, to its credit, has passed a couple of budgets since evil Republicans, with their nefarious ringleader Congressman Paul Ryan, started proposing draconian cuts; but nothing has seemingly come of these efforts as in a spirit of bi-partisan compromise that does little more than allow the madness to continue.

So in the first fiscal quarter of 2012, the national debt has gone up not $2 billion, $3 billion, or even $20 billion; but a staggering $320 billion (at least according to the Congressional Budget Office).  In fact, at the time that this was posted, the National Debt stood in excess of $15.7 trillion dollars.  So let me get this straight.  The government that loses millions in green energy projects, billions each quarter on the Post Office, and hundreds of billions each quarter in the deficit increase of the federal budget would like greater control on how private businesses spend or invest their own money and show no outrage (or interest for that matter) over their own apparent fiscal irresponsibility. 

OK, then.  Well it certainly seems (based on these facts) as though the government has made its case, and earned that right to impose further controls using Sec of State Hilary Clinton's 'suspension of disbelief' view of the world.  (Sorry, the sarcasm key got stuck and this just typed itself.)

We are after all, certainly taxing the profits made by banks like JP Morgan Chase already, and have increasingly sought to regulate them.  There are those in Congress and the White House who would like even more regulation on 'too big to fail' banks. You know, perhaps with enough government regulation, we might just be able to move beyond stage two of former President Reagan's quote and the bailouts that have already occurred and truly begin to permanently subsidize banks with taxpayer dollars.   


     

The "C" Word

More and more in society we find ourselves faced with words that almost dare not be spoken in polite society, and sometimes not even outside of it. The 'N' word certainly fits in this category, unless of course you are a young African-American male greeting or chiding another young African-American male. The 'F' word also seems to draw considerable scorn, in spite of having the ability to describe an act of love (though I admit that it does so inappropriately and rather coarsely at best). There are other letters and other words associated with them that could be included as terms of obscenity (two come quickly to mind, one beginning with an R and another a D), but I think you understand the point of my introduction. I would now like to add yet another to this list of loathsome and disgusting words, this one beginning with the letter 'C'.

Now while considering this word to be repugnant, I find that it's impossible to have a discussion of it without its use. So if you will pardon the mention of this rather opprobrious term for the duration of this posting, I would appreciate your indulgence as I take up discussion of the word 'Compromise'.

I know that this is probably not the one you expected to see; but its recent misuse and abuse has made it a particularly loathsome term that has seen far too much degradation to be spoken any longer in polite company. Ostensibly a word used to describe “a settlement of differences by mutual concessions”, it has been bastardized as a result of constant misuse by politicians and pundits in the media alike.  Having taken on an almost sacrosanct definition, this term is no longer deemed a method, but a goal instead. 

No longer can the term be used to describe “something intermediate between different things”, instead it has become a term describing little more than abject surrender. In order for one side or the other to now compromise in political debate, they must give up closely held beliefs, principles, and sometimes even common sense in the name of agreement in a tainted process that can later be lauded by elected officials as if it had meaning. In truth, it no longer matters what such agreement turns out to be, as long as it's reach 'in the bi-partisan spirit of compromise'.

How else should we view the Faustian bargain acclaimed by many on both sides of the aisle as the best compromise that could be reached in regards to raising the debt ceiling. Are we expected to applaud compromise when government celebrates its supposed spending cuts by going on a binge that raises the national debt by over $200 billion in a single day? Shall we cheer the House for whittling and watering down bills passed to the point of uselessness in the spirit of bi-partisanship? Will we commend the Senate for a form compromise that involved refusing to vote on anything? Perhaps we could provide a standing ovation to a chief executive whose idea of compromise is to insult everyone around him and then blame all but himself for not playing nice.

And what's the result of such shoddy compromise, a plan which neither garners the revenue increases that one side insisted upon, nor performs the real spending cuts that the other demanded for agreement. The truth of the matter is that as far as the Debt Ceiling is concerned, this contemptible compromise isn't worth the red ink that it's written in. One might even go so far as to say that the spirit of compromise which this attempts to represent is itself Compromised.  (“to expose or make vulnerable to danger, suspicion, scandal...”) 

The concept of compromise in politics has become nothing more than another unpalatable piece of the English language, unsuitable for use in any company, let alone a polite one. In its name the citizens of this country are far too often asked to accept idiotic, pointless, and sometimes downright evil choices in the spirit of something without meaning. The 'Compromises' reached by the Jackasses and Elephants in Washington are now little more than two thieves agreeing on what they consider an equitable split of the loot. Compromise has become so perverted and so offensive in nature that it would be far more accurate to use instead an equally reprehensible word beginning with 'C'; and one that likewise has no place in political discussion in this country, Capitulation.

(All definitions were provided by Dictionary.com.)

TFP Column: Other People's Money

"I loneliest time that I have ever spent was that waiting for inspiration." - me

Writing this week was more difficult than usual. I was facing a crisis of confidence, a lack of inspiration, and a writer's block larger than an SUV. 


Of course, deciding in the end to take on the subject of the coming debate on raising the debt ceiling in this country posed the additional concern of writing on a subject only slight more interesting to the general public than the varieties of crabgrass in the Midwest. 


'Good things come to those who wait' however (and unaccountably, to me as well); and I was finally able to string together a few words on a subject for the Toledo Free Press called "Other People's Money". It seems strange to me however that something that ought to be a hell of a lot more important to people than Arnold's 'love child' (since it involves the financial Armageddon of this country) doesn't seem to be; but then again, I'm in the midst of reading "The Federalist Papers" for entertainment, so who am I to judge. 


Since this link is going up before weekend edition of the TFP this week (and in fact right after the "Star" edition), I can't describe to you the wonderful and exciting things that it will contain. Of course, even if I could, I wouldn't; since that would ruin the surprise. So if you want to know, you're just going to have to spend some time catching up with Toledo's largest Sunday circulation newspaper, the Toledo Free Press.

TFP Column: The Gifts That Keeps On Giving

Having successfully launched its "Star" edition just days ago, the Toledo Free Press has gone back to the presses for its regular weekend edition. Toledo's massive budget deficit and the March 31 date of required balance are approaching like an oncoming freight train. 


Not surprisingly there are a couple of opinion pieces on the subject, mine included. Michael Miller has once more outdone himself again with a rather amusing take on a potential solution, with his "2010 Telethon For Toledo". I myself contributed a much humbler effort on the subject with "The Gifts That Keeps On Giving", attempting to trace this situation back to the mistakes of the previous administration. 


With the upcoming St Patrick's Day holiday fast approaching, I would also recommend to your attention this listing of all of the places that you can properly celebrate this auspicious occasion in Toledo. (I myself will be in church all day.) 


While the temperatures will be up this weekend, the rain will be falling. My recommendation would be to spend a little time working on your taxes (if you haven't already) and improving your mind with the Toledo Free Press.

The 2010 Trade In

The city of Toledo's CSI (Citizen's Special Investigation) Task Force met last night for the first time to discuss ways to fix the projected $44 million city budget deficit. A number of things were discussed in order to close this monumental gap ($9 million of which appears to have been carried over from the "balanced budget" of the previous year), including a proposal to put some city owned properties up for sale. 


While I agree with the philosophy that municipalities have no place in the business of business and even less with being a landlord and property owner (other than municipal buildings of course), I am forced to question the timing of this thinking. 


First, putting real estate up any market in the US right now seems counter intuitive, as prices are down across the board. Putting property up for sale in the current Toledo market seems almost counter-intelligent, as the market here is horrible and there is little private money available finance commercial real estate purchases. It is doubtful that the city would be able to recover what they originally paid for such properties, let alone make a profit. 


Second, selling assets to pay for recurring debt is something that most financial advisers will tell you to avoid. Imagine for example that you own a car and would like to trade it in for another. You go to the dealer and negotiate a price, but when it comes time to sign you lease rather than purchase, using your existing car as a down payment to reduce the debt incurred. 


In the short term, you will sign a lease based on a smaller financed amount and have less debt; but in the long term you will have given up a fixed asset and when the lease is over you will have nothing to show for it. So too with this potential asset sale. 


True, selling The Docks, the parking garages, and some of the parkland will close the massive gap between revenue and expenditure that the city is looking at. Next year however, the gap will return, and the assets will be gone forever. While thinking outside of the box is to be applauded by the Mayor and this commission, no real "balanced budget" will be achieved until the city begins to operate like the taxpayers who fund it and they begin to spend only the money that they can expect to have coming in.

SOS - Save Our Seniors

Contrary to what my current employers would often like to believe (and what my picture here on the blog site might appear to show), I am not currently retired. I go to work every day, collect a paycheck every two weeks, and contribute to a retirement program for the day when I finally do get to set aside the care and strife of the daily grind. 

I have worked for a number of organizations in my career (some would simply say that I can't hold a job). One of them with a pension so criminally mismanaged that my net results for ten years of labor was little more than than enough to super-size a McDonalds value meal. I have worked far more years with organizations, as part of an ongoing trend, that had 401k plans. I fear that the perfect storm economy has hit those of us in my generation however, and pushed the expectation of those days of leisure as far out of reach as our long ago youth. 

A downturn in the market has turned my 401k into a 201k, increasing government debt pushes the benefit age of Social Security, Medicare, and Medicaid out beyond the horizon, and the "snow on my mountain" only adds to the increasing stress of trying to sell horseshoes and anvils in a world full of automobiles.

 
The truth of the matter is that anyone these days who is talking about early retirement is either a crook, or a union employee whose pension allows them to retire based not on age, but on years of service. Even many of those early retirees are more than a little concerned these days, as pension funds and health benefits are coming under increasingly close scrutiny by companies on the verge of bankruptcy.

 But have no fear my friends, I have a plan; and it is my full intention to increase the scope and scale of my bad habits in hopes of saving the day. I intend to smoke at least one cigar every day, not only celebrating the bliss of this relaxing lifestyle, but contributing valuable taxes to the government through the purchase of these leaf-wrapped beauties. 

I likewise intend to enjoy a glass of Guinness, wine, or whiskey on a regular basis; safe in the knowledge that when the government has finished taxing tobacco out of the hands of all but the most die-hard of smokers, they will attack alcohol with next with equally onerous levels of taxation. Not only will I be contributing (in my own small way) to the reduction of the crushing debt that government is placing itself under by my petty indiscretions, but I might likewise be contributing to the reduction in lifespan of a stogie-smoking curmudgeon. Perhaps by enjoying these harmful habits to the fullest extent while still able to, I will contribute to my own reduction of health for the future. 

I urge you to join me in this effort. With luck, we will be able to further contribute to federal debt reduction in our dotage by not living long enough to receive any of the benefits that we have contributed to (been extorted from is more like it) in many years of labor, and which the government will not in any case possess to distribute. Have no fear friends, I am neither preaching suicide nor feeling suicidal; but it sometimes seems that only by stating such a radical and extreme position that we can begin to stop the madness going on. It is only by shocking people out of the media fed lethargy that they appear to be suffering from that there is any hope of real change. It is only by presenting them with the patently absurd that the nature and seriousness of the situation is recognized.  

At some point people in this country are going to have to wake up and understand the consequences of actions that we appear to be taking far too lightly these days. Government debt does mean something, as does the inflation that inevitably follows. The path that we are on today leads to crushing debt and runaway inflation that all will have to pay for some day. For those of us following "the Greatest Generation", it means that we may find ourselves "the poorest generation"; robbed of our future by a Social Security Ponzi scheme foisted on us by the federal government on one side and by devastated personal accounts tied to a market that can never recover as long as it's managed by that same government on the other.

 If there are any people of good will out there today in public service, if there are any of you elected leaders who are are truly compassionate, if there is anyone left in government with a wit of common sense left, I beg you to save us from ... you before its too late.