Saturday, August 28, 2010

Vote Against Your Congressman; I Will Vote For Mine

  Today it seems that we the people have a very low approval level of our congress and senate as a group,right below used car salesmen in bright plaid jackets who never stop talking. There seems to me to be outrage at our legislative body and the mood is to vote the incumbents out of office.I am all in favor of this but, will it happen? Yes to some extent but probably not enough to make the change we need.
 While the public mood seems to be anti incumbent ,when voters get to the pole they tend to vote for their current representatives because of name recognition and a poor understanding of their record.Basically voters are very undereducated.Do you know how your representatives voted on health care, the tax cuts ,and other major issues? Is your representative acting in the interest of your state or for all of us?Is your representative being unduly influenced by corporate america.Is he/she a crook?
 Take for example the current mess with rep. Rangel.Most probably believe that he is against corporate america,you know, more to the left.But based on his current investigation he is accused of giving tax breaks to a big oil drilling corporation in exchange for a big donation to a building in his district.I as I hope most voters think this is hypocritical ,illegal, and just plain wrong.But I do not live in his district so can not vote against him and I bet even money he has a good chance of being reelected if hes not in jail or maybe even if he is. This is because everyone in his district knows who he is ,sees his name on buildings,and feels he has done a good job for NYC ,but  what about the country?Remember , he votes on laws that affect all of us.
 Just the opposite occurred in the primaries in south carolina where a Mister Alvin Greene won the democratic primary for the senate.He did not have his name on any buildings or roads.In fact very few people had ever heard of him.He ran no  campaign at all ,never gave a speech or printed  posters or bumper stickers.While I think its great that a citizen with no power,or money can raise to such a level,it speaks volumes about the voters. We are not engaged.No one who voted for Mr. Greene had any idea where he stood on any issue yet voted for him.It is like betting on a race horse because you like his name.The people who voted for Mr. Greene should have their voter registration revoked until they become more educated on the candidate and the issues.We get what we vote for and then complain and moan when things don't work out so well.I have no idea how we better educate the voters to become more engaged . It is a matter of responsibility.
  Very frequently candidates make promises and this influences our vote.Some promises are just lies,others are real but are not doable once in office due to the candidates ignorance,some are tried and blocked.We must be aware of these promises and learn from them and hold the candidate  responsible.When JFK promised to put a man on the moon within the decade he energized the nation when we needed it and delivered on his promise.Nixon had a "secret plan to end the war" Not so sure about this one.Remember  the "no new taxes pledge" Oh well conditions changed.My favorite was Kerry who promised if elected"he would bring back all those good jobs that went abroad"This coming from a man who's wife'company had almost all of its manufacturing off shore,and its still there.Did we really believe this nonsense?Just not possible and we should have knownThen there are the perennial promises of fixing the school system and my favorite  energy independence.Todays promises are not working out so well.Fiscal discipline, c-span , close Guantanmo,open government,no more lobby influence,no more pork,no more high unemployment,the summer of recovery,American jobs etc.If we as voters believe all the promises then things dont work out we are quick to complain and to point the finger at the other side when we should point the finger at ourselves. We get what we vote for.
  So the result is that we all want change but we tend to vote for our own representative and change never really happens.

Wednesday, August 25, 2010

Our Government Is Not Helping

  Our government is doing more to hurt the problem than help.The constant infighting and partisanship  is creating public resentment and great uncertainty and uncertainty is the real problem holding back economic growth.
 So what are those uncertainties that are holding us back?The number one is the debt.A large national debt , now up close to 90% of GDP has a crippling affect on growth as consumers and businesses are afraid to spend and invest.Our debt could get to the point where we get into the same situation as Greece  which led to major cuts in government spending,high interest rates fear and even riots.Do not think this can not happen in the USA,the laws of economic forces play the same in Greece as here.Our president recently attended the G10 summit on the world financial situation where all attendees but one committed to a goal to reduce government debt.Our president committed to a 50% less ambitious goal sending the message that he is not serious about reducing debt.
 Are we all now sick of the political finger pointing ? Everyone wants to blame someone else or some other political bent from Bush back to Regan.I for one am offended when I hear about the " failed policies of the past".Our economy is so big and so dynamic that its close to impossible to point to one event and signal it as "the problem"All policies from government spending to the tax code to the value of the dollar and many , many others affect the economy.For example its pretty certain that the prime rate set by the fed has a fairly clear cut affect on growth and inflation but the time lag is less clear and if combined with for example a tax code change then the relationship becomes less direct .
 When our president ran for office he pledged no more pork/earmarks but in his first budget there was plenty, as usual. Surprisingly earmarks make up about 0.5% of spending they give unnecessary power to the politicians and generally waste money. When questioned about the earmarks  the president's reply was "next time" Again the message is clear, no one is serious about the debt.It is this attitude ,special interests ,a desire to help select groups,vote buying and the attitude that we will never run out of money and if we do we will borrow or tax the rich ,that allows the budget to go out of control and that is why we have no growth.The problem today is not "its the economy stupid"  it is    'IT IS THE DEFICIT STUPID"
 Moving on there are other uncertainties that impede economic growth.The next big one it the current tax code. That is to continue the Bush cuts for the rich.{see seperate blog} We have known for years that the tax codes expire at the end of the year yet we are nowin late august and have no idea what they will be next year.How does anybody make future spending plans under such circumstances ?I thing many individuals and companies fear that ,due to the deficit,taxes may possibly go up for everyone.This creates fear ,uncertainty and a resistance to invest and spend.
 And finally there is the health care bill.I agree with our president that health care costs and there increases that far outpace inflation are a major problem hurting future growth. I never understood how, while in debate, we keep hearing that the bill will cost X billion dollars and save Y billion dollars .Does not make sense to me. What I strongly believe is that no one really knows what the bill's impact will be and I also believe that no one in washington has read the bill in it,s entirety.What I do believe is that in the desire to get something passed, a much less than ideal bill was passed.I really do not see much in the bill that actually works to reduce future costs. I was equally offended by some of the back door negotiations to gather votes for the bill when we were promised transparency.Also remember when the president ran for office he pledged that under his administration he would make it easier for us to buy less expensive drugs from canada. Well it did not happen. Why ,because he made a deal with the drug companies to donate free drugs for 10 years to those who could not afford them.For those who believe that this is an example of corporate america running the country you have a good point.But I point out that the president did not have to make the deal.The question then becomes does corporate america run this country or does government allow them to? And what happens after the ten years? I guess the poor dont get their medications and the rest get to buy easier from canada.
 As a business man I listen to and read as much as I can about what is going on in washington.It is clear to me that most of those in washington ,especially our leader do not like big corporations,believe that small business,private enterprise ,or the evil word profit are the enemy.Under these conditions  how can we expect private enterprise to take risk and make the investment to help grow the economy
 So the message of this section is uncertainty is the problem and our politicians can fix that if they would only work together for our collective best interests.

What Are We Doing To Fix The Mess?

 As of today we are not doing much as Americans to fix this mess.Right after the financial crisis Tim Geithner  put into place the financial rescue plan and I applaud him for his judgement in such a potentially dangerous situation that threatened world financial collapse. While I generally do not favor  bailouts as such, I thing he did the correct thing under the circumstances.The debate over which institutions to help and which not to help could go on forever but the situation at the time did not allow for much time to debate the issue.
  We also bailed out the auto industry which I opposed. I think if a company mismanages itself as the big three definitely did for so long, then it will fail and it should.Our government will not bail out your business or mine if we make mistakes and fall on hard times so why the auto industry and where is the line drawn? Well you and I do not pose a threat to the economy if we go under and we do not employ a very large number of union voters, I mean union workers. The ripple effect of Gm and Chrysley going under would have been a brief economic shock at the wrong time. But had they failed the total number of cars sold in the U S would have been little changed.They would have been bought out of bankruptcy  and probably have continued.While today it appears that G M at least may actually recover ,with lower costs and debt and maybe we the people might get our money back I still thing we should have let the natural process take its course.
 Next came the hastily conceived, inefficient and wasteful stimulus program,the results of which we will never truly know.My guess is that it probably saved some jobs and created some but most only temporarily.The bail out to the states for police and teachers ,apparently the only ones laid off when states are short of funds,and of course union voters sorry workers was and is only temporary.Building roads and bridges is money much better spent.First we need them,they take a long time to complete thus employing people longer,  and have bigger multiplier effects so we get more bang for the buck What happened  is that within 6 months the states needed and were given 45 billion more in aid to keep those union workers  [ got it right this time ] and we are still building roads.So what does this do? It sets up the scenario which basically creates a new welfare system for the states.The states have to bite the bullet make hard choices and balance their budgets.It wont be easy and it will be painful but we must do it.Why should people in a well run state ie Virginia pay federal taxes to bail out a poorly run state ie California? The next time the states come to washington asking for more money we must say no. Our government Principally our president is basing his answer on his political points instead of financial concern for all of us.I do not want to see police and teachers fired. I think possibly if the states get a big fat NO  when they ask for a bailout they might search for other ways to make it work.  They could spread the pain and put state workers on forced, unpaid leave a day or two per month such as california is now and I have a good idea that there is a lot of overhead that could be cut ie administrators, supervisors even assistant principals.
 The Fed for its part is keeping interest rates very low and liquidity high which under normal situations would tend to boost economic growth but its not responding as fast as we would like for other than normal circumstances.
  And our politicians are continuing to extend unemployment benefits. At the risk of being seen as a heartless right wing waco, I think this is enough of the extensions. The extensions tend to create a dependency state of mind among the unemployed. Where is the incentive to get employment when the attitude is created  " why get a job that pays little more than unemployment ?" The money spent on unemployment would be better spent on reeducation.The extension of bennefits also has a very negative impact on the deficit which retards future growth.
 In the private sector the banks are beginning to make loans but very selectively.This is part of an overreaction to the financial crisis and part of the cycle of bank lending trends.With time it should improve.Banks have to make a profit and they do not if they do not make loans.It is possible that if the fed. raised rates modestly it would increase the bank costs and thus encouragement to make more loans.
 Other than that mentioned, not much else is being done to improve things.But there are a lot of things going on that are actually impeding future growth.


Saturday, August 21, 2010


There are several reasons how we got where we are.

   The biggie is the housing bust.Starting in mid 1998 housing prices started to climb at very fast rates , peaking at the beginning of 2006 then crashing.During the run up in prices the common mentality became driven by greed. How could we go wrong? Well a lot of people got caught with the hot potato.Demand dried up ,home values dropped and many found themselves with a mortgage value higher than the property value.Also many got caught with home equity loans and hit hard with those adjustable rate mortgage adjustments.Additionally abandoned and foreclosed houses on the market further drove values down.This is what started the recession.People felt poor,and stuck and the building industry with its suppliers had to cut back dramatically.

  So everyone wants to blame someone but who is responsible? At the risk of upsetting those on the far left I blame Bill clinton, George Bush senators and congressmen on both sides ,greedy bankers,underwriters,realtors, appraisers and undereducated consumers.
  It was in late 1999 that Clinton pushed for repeal of the Glass-Steagale bill and loosened standards of The Community Reinvestment Act  [CRA].The graph below clearly shows the growth of the housing bubble,the pop and fall thereafter.So are we to conclude it is all Clinton,s fault? Not so fast.The passage of the bill happened while the republicans controlled congress and had very strong support from both sides with only 9 senators being opposed.So then we can conclude that it was one of the few occasions where both parties came together in a fine jester of doing good for the country.But as time proved their collective move started the beginning of the big financial meltdown which brought us to where we are today.Why were our partisan legislators in such great agreement on this? The banks made much higher profits on the loans under the CRA where money is lent to minority neighborhoods and businesses.Guess what,the banking industry lobbyists put on a full court press graciously making excessive contributions of hard and soft money and each party party was treated equally and the American public got the shaft and the bill.So again to those who think corporate america runs the show you are correct ,to a point,but government america  is selling itself out and we the people with it.This not a left vs right issue its more we the people,who pay the bills,vs they the government.


  It used to be that to qualify to buy a home you had to be able to put down 10 to 20 % in real money and the monthly payments of principle,intrest,insurance and taxes should not exceed about 30% of your monthly income which you had to prove was real.This worked very well for many years and housing prices stayed more or less stable appreciating at a rate close to inflation.  BUT the Clinton administration, in a noble effort, decided to deregulate the banking industry and encouraged them to make loans to consumers that had trouble making that downpayment and those monthly payments. Well banks are in the business to make money and they cant if they make high risk loans.So along comes American ingenuity in the name of mortgage back securities.Today we refer to them as toxic assets and this led to the failure of the big wall street banks and investment firms that created them.Basically  the banks ,encouraged buy the govenrment made loans to people who had no chance in the world of being able to pay them back. The banks couldnt sit on the loans because of the risk  so they got bundled and sold .when the buyers found out that they were not what they thought they had to write them down in an ever increasing downward spiral of home values. this led to the financial crisis and even the bankruptcy of iceland.

  So  Bill Clinton started it and George Bush was happy to see it continue as on the upswing it led to a robust economy and increased revenue to the government.Due to his inability to see the future and probably ineptness,he allowed congress ,both parties,go on an uncontrolled spending spree which along with two expensive wars led to dangerously increasing budget deficits.There was no control on spending  .
 Of course the chance to make a profit and pass off the risk attracted the attention of greedy bankers realators and even appraisers and underwriters. At the time these transactions in asset backed securities were not regulated simply because they were a new type of security.

 Finally uneducated and are greedy consumers were the ones who bought houses they had no chance of being able to support.I personally am aware of a Haitian immigrant who has no drivers license,is a dishwasher,travels on a bike and in foreclosure. He did not want to give up his nice $650000 home with a pool.I do not know for sure but suspect he put nothing down and probably received a check to move in.The poor guy was duped in a criminal way.There were also a lot of uneducated people who simply did not understand the concept of adjustable rate mortgages.

 So this is basically how we got into this mess.Relaxed lending,without risk to the lender,the trading of unregulated asset backed securities,a housing bubble blow up,followed by crashing home values,decreased consumer confidence,crashing demand for all goods and raising unemployment resulting in decreased tax revenues combined with increased government spending and the resulting increase in the federal debt.

What Kind Of Mess Are WE IN ?

The Big Mess

  As WJC coined the phrase "Its the economy stupid" Yes thats true today as then but its pretty complicated and made worse so by political polarization, some class warfare,finger-pointing,and major disagreement over how to make things better.

 Unemployment is high at 8.5% ,underemployment is high, and those that quit looking for work is high.together they are a formidably and demoralizing force.While this is bad in its own right,  what is more bothersome as that the old fixes that worked in the past ie time and the business cycle, low [historically] interest rates , increased money supply, and government stimulus just have not worked as well as in the past.

 There are some good but weak signs.Some jobs in the private sector are being created,manufacturing is picking up, hours worked are expanding but none of this at a clip that will result in any noticeable pick up in employment numbers.The only sector adding jobs at a fast pace is government employment which i see as nonproductive.

  We also have the high rate of mortgage delinquency, foreclosures, high personal debt. [ we are not savers ] reduced personal wealth [housing collapse ] and other assorted issues but these are the biggies.

Why Post This Blog ?

Why Am I doing This ?

    I am an American first. I love this country and the principals it was founded upon.I care deeply about the future of this country.We have been the envy of the rest of the world which might have something to do with why there are those who dislike us and want to see us fail. Lately we have not done a very good job of projecting the right image not just from foreign involvement but through our own internal mishaps.

  I feel that our country has fallen of course and is headed to the wrong place where we may no longer be so proud of ourselves.I am very upset with what has been happening to our country and truly fear the possible future for ALL of us.

 Yes  I do wish I could make a meaningful change in our course but am realistic to know that I can do little to do so short of voting responsibly,contributing to candidates and attempting to inform others .I realize that it is almost impossible to get others who are committed to their point of view to actually change but sometimes I enjoy the debate .And there is always the chance that people,who may not have a strong position may be swayed by my point of view .

  But my real reason,my hidden agenda is that I am so furious about the current situation and fearful of the future that I feel I have to do more than complain so I find this exercise as therapy.

  I do not expect the reader to agree with my observations and ideas and am not insulted  [too much ] if they disagree vehemently but I feel better simply by organizing my thoughts in writing and making them available to others.

My Political Views

Political Views

   I consider myself  a moderate although I imagine many to the far left will view me as a far right nut.I do not feel that I am however. Actually I strongly oppose the views of the far right and the far left.I hold positions on both sides. On the left I support gay rights,oppose the death penalty,am prochoice.On the right I support a strong military but used responsibly. I support capitalism,free trade , and fiscal responsibility.

  While I believe government has an important role to play in many areas, I resent government intrusion into areas where it should not be.I believe that capitalistic forces will play-out the best when allowed freedom from too much government intervention.I believe that citizens of this country must take responsibility for there own actions and that these actions are a result of education,experience,family and faith influences and socioeconomic influences.

Of course I believe that we all have a right to our on opinions and to express them openly.The problem I see is that so many opinions are not always based on fact usually through a lack of understanding and this seems especially true when dealing with political issues.

About killarney tim


     I am a husband, father and grandpa. I live in florida in the winter and the North Carolina mountains in the summer.I have been an entrepreneur most of my life and continue to own a manufacturing business which I founded and my son now runs.

   my education is   BA economics, MS environmental engineering, MBA mgmt. &econ .

   By most measurements I am considered rich although I do not feel that I am ,do not act like I am but realize that I am blessed.

   My passions are ; travel especially to unique foreign cultures, horseback riding,jumping and trips,fishing,and reading nonfiction.