Who Is To Blame For The United State's High Level of National Debt?

There is plenty of blame to go around for our present debt situation:

1. Under Bush, we cut taxes and started 2 wars - and Obama continued this while
adding another 1/2 war (air strikes on Libya). During WWII, the folks at home made sacrifices, such as rationing, etc. that made them feel connected to the war effort. While we no longer need rationing, we should have ended the tax breaks after 911 - when we went to war.

2. The bottom line cause of the financial crisis was Greenspan pumping too much money trying to lessen the effects of the dot com crash. Booms and busts are a natural cycle in capitalism, and we keep trying to use the government to smooth out the down cycles.

3. Finally, we have had historically low interest rates for the last few years. While responsible homeowners locked in low, fixed rate 30 year mortgages, the government is still mostly stuck with short term debt. We should have been issuing less short term bonds and lots of 20, 30, and even 50 year bonds.

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"22,000 Tears" Visa Blunder - Should the U.S. Give Visas Through A Diversity Lottery?

Today, Yahoo had an article about how this year's diversity lottery experienced a computer glitch and awarded 90% of the first 22,000 (out of 50,000 openings) to people who applied in the first couple of days.

These people were elated that they won, and then crushed when the State Department said they will re-run the lottery. Immigration lawyers say they should honor these 22,000 results and randomly award the remaining openings from people who applied later.

I think that, since the government messed up, they should let these 22,000 people have their visas, remove their names from the pool, and re-run the lottery fairly (picking a new 50,000 from the left over pool).

But, like usual, I find the comments on Yahoo to be just as interesting as the articles. In this case, a lot of people think the whole idea of a random lottery to be dumb.

I actually like it and posted my own comment defending it:

Immigration to the United States has been a big factor in us being the world's only super power. In fact, there are some who argue that, going forward, our biggest competitive advantage against China and India is that we welcome immigrants and new ideas.

I think the Visa lottery is a good idea because:

1. It involves a relatively small amount of visas compared to those given out by other programs, that target skilled and/or wealthy immigrants.

2. The visas from those programs end up going to immigrants from just a handful of countries.

In other word, you can't centrally plan creativity and innovation. I think we are richer if we give artists, poets, dreamers, etc. from other countries a shot at 5% of the visas, rather than letting them all go to high tech companies bringing in computer workers and engineers from India, China, etc.

From my comment, please don't get the idea that I don't like computer consultants from India. My point is that they are well-represented. But, it is in the best interests of the U.S. to distribute a small percentage of visas randomly to people from countries that are under-represented from other visa programs, to diversify the pool.

This way, we increase our chances for allowing in someone who ends up contributing to our society, but would never have had a chance competing against skilled workers.

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Why The City of Chicago Pension Funds Are In Trouble

Last week, the Chicago Tribune had a two-part investigation into the city of Chicago's pension plans. The article is really disheartening because it shows how we have let incompetent individuals run things.

The whole country has probably heard that the state of Illinois is broke, and has unfunded pension liabilities. But this is about the city of Chicago itself. It has unfunded pension liabilities of either $20 billion or $40 billion (the politicians say $20 billion, but that is assuming an 8% average annual return, while the average return this decade of the pension funds has been around 4%).

The problem is that the politicians did not make required contributions to the pension funds - while also raising the employee's salaries and benefits. The politicians took the short-term, easy way out. They wanted to keep labor happy NOW, and who cares about decades from now, when they might be out of office?

The Tribune article looked at the example of the Chicago Teachers pension plan. Back in 1995, the plan was founded 100%. Then, in 1995, Mayor Daley took over control of the Chicago public school system, and he lobbied Springfield to allow property tax income (that went directly into the pension funds) to go to the school system's general fund.

In 1996, his administration went one better and got the law changed so that they didn't have to make a payment as long as the retirement fund was at least 90% funded. Because of the bull market, they didn't have to pay in for 10 years.

In 2006, they had to pay because the fund was below 90%. They contributed a little, then got the law changed again to let them make reduced payments for the next 3 years. Their excuse? Even though they didn't need to pay into the pension plan for 10 years, and thus got to keep an extra $1.5 billion, the school system spent it and was running a deficit.

Now, the fund is only about 73% funded and, by 2033, they will need to contribute $1 billion a year.

Some of the other pensions are even more seriously underfunded. Municipal workers are at 47%, police at 37%, and the fire fighter's pension is only funded for 30%.

Does this mean that the workers might lose their pension benefits? Maybe - but the Illinois state constitution was amended in 1970 to require that pensions to unionized government workers have to paid. So, slashing benefits may be unconstitutional. So, tax payers may be on the hook.

By the way, I don't think the workers are to blame. The main problem is the financial irresponsibility of elected officials.

Why do we have such incompetence?

I think the problem is that life is really hectic these days - people work long hours, then sit, burned-out, in front of their televisions at night.

Then, when it comes to voting, they either don't, or else just vote for the incumbents.

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National ID Cards for Illegal Immigration?

Some in Congress are advocating a national id card - justifying it by saying its necessary to combat illegal immigration.

There is a simple, minimal, and elegant alternative to national ID cards.

This uses the simplicity pattern of "rewarding correct behavior rather than creating bureaucracy to catch and punish".

In other words, instead of creating a national id card to catch illegals, reward the first illegal from each company who turns himself in:

1. Require all employers to post a notice in English and Spanish where workers can see it saying that the first illegal employee to turn in his/her employer gets a green card.

2. Any employers caught employing illegal aliens will get fined a % of quarterly revenue. This will automatically scale the fine to mean something for companies like Walmart.

3. If, as I suspect, it is found that employers really need the labor, then create a guest worker program that does not lead to citizenship. Have a certain size pool of worker passes, hand them out on a first come/first serve basis at the border (as long as they pass a finger print check for a criminal background). If they leave the country to visit home, they have 30 days to reclaim their guest worker pass, or else it goes back into the pool.

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Blagojevich

So our former governor wanted to go on the reality show, but the judge said no. But he still wants to promote it and get paid. I'm not surprised that the judge said no - when you think about it from his perspective, its funny: "Judge, I'm being prosecuted on Federal charges, and I want permission to be parachuted into the Costa Rican jungle.  I'll come back for trial, though..."

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More Republican "Family Values"

According to a recent Tribune article, Gary Skoien, Palatine Township GOP committeeman and former Cook county Republican chairman, sought a restraining order against his wife. She was charged with attacking him over the weekend after she discovered that he had invited two women to their Inverness home. Skoien said that two female friends were visiting around 1 am Sunday, when his wife, who had returned home a bit earlier, came downstairs and attacked him. The police report, though, says that his wife Eni became angry when she discovered that "Gary was downstairs in the children's playroom with two prostitutes." The report says she punched him and hit him with a guitar. (And, before anyone complains that I only pick on Republicans, I know that democratic politicians are hypocrites also - everyone knows about our former governor Blago)

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Troops to the Mexican Border?

They should just legalize drugs and get rid of this second Prohibition...   Looks like Mexico is becoming unstable like Iraq or Afghanistan , with all the drug wars and killing on the border.   The drug cartels are now crossing over and killing people on the U.S. side of the border.   Obama is considering sending troops   http://www.mcclatchydc.com/227/story/63800.html

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A Voice of Reason In Government: Ron Paul on D.L. Hugley's Show

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Bank Bailout Not Working

If they actually did think that the bailout was meant to help, I hope they now realize it is a waste of money.  I think the government will have to bite the bullet and acquire Citigroup (and maybe BofA), restructure and break it up, wipe out the shareholders, and make the bond holders whole.  Then, sell the restructured companies back to the public. From yesterday's Washington Post: Shares of Citigroup stock peaked in 2006 at $55.70, which gave the company a market capitalization (price of stock times number of outstanding shares), or value, of $277.2 billion. Today, Citigroup's market cap is $5 billion. But keep in mind that the federal government has already plowed $45 billion into Citigroup, which means the company is worth far less than the actual amount of cash it has received. Astounding. The bank has become a black hole. Cash goes in and never comes out. Citigroup and Bank of America are deemed by most analysts as being the sickest of the big banks -- the ones whose balance sheets are most poisoned by toxic assets.

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Wayne Allen Root's Economic Stimulus Plan

Robert Ringer included a guest post from Wayne Allen Root, last year's Libertarian vice presidential candidate.

The post highlights what Root would do about the economy:

1. One year income tax vacation for all Americans.

2. Phasing out capital gains taxes over a 5 year holding period.

3. No taxes on capital gains, interest, and dividends for Americans over 55.

4. A business tax cut.

5. No taxes on the sale of one's principal residence.

6. $7500 tax credit for employers who hire a worker.

7. After the tax vacation, institute a reverse flat tax.

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Simple, Elegant Solution to the Mortgage Crisis?

So far, throwing billions of dollars at major banks like Citigroup does not seem to be working.

This is because mortgages are continuing to default, causing the bank's mortgage backed derivatives to deteriorate further.

I wonder if we can't solve this problem elegantly, without spending any more money.

Why can't the government stop foreclosures by requiring the banks to rework mortgages with variable terms?

A variable-rate mortgage is where the rates change, depending on the interest rate.

Instead, why can't the banks work with individual homeowners and simply change the terms until they reduce the monthly payment to something the homeowner can afford?

For example, change the term from 30 years to 40, 50, 60. Heck, even go out to 100 year mortgages in some cases, if needed.

You could argue that the homeowner would not live long enough to pay off a 100 year mortgage, but the point is this would be a mathematical abstraction to keep the homeowner in the house, and stabilize the mortgages underlying the derivatives.

Chances are, these long term mortgages, like all mortgages, will end up getting paid off within 20 years when the owners refinance or move.

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How To Understand The Stimulus Bill

Shortly after class, an economics student approaches his economics professor and says, "I don't understand this stimulus bill. Can you explain it to me?"        the professor replied, "I don't have any time to explain it at my office, but if you come over to my house on Saturday and help me with my weekend project, I'll be glad to explain it to you." The student agreed.        at the agreed-upon time, the student showed up at the professor's house. The professor stated that the weekend project involved his backyard pool.        They both went out back to the pool, and the professor handed the student a bucket. Demonstrating with his own bucket, the professor said, "First, go over to the deep end, and fill your bucket with as much water as you can." The student did as he was instructed.        The professor then continued, "Follow me over to the shallow end, and then dump all the water from your bucket into it." The student was naturally confused, but did as he was told.        The professor then explained they were going to do this many more times, and began walking back to the deep end of the pool.        The confused student asked, "Excuse me, but why are we doing this?"        The professor matter-of-factly stated that he was trying to make the shallow end much deeper.        The student didn't think the economics professor was serious, but figured that he would find out the real story soon enough.        However, after the 6th trip between the shallow end and the deep end, the student began to become worried that his economics professor had gone mad. The student finally replied, "All we're doing is wasting valuable time and effort on unproductive pursuits. Even worse, when this process is all over, everything will be at the same level it was before, so all you'll really have accomplished is the destruction of what could have been truly productive action!"        The professor put down his bucket and replied with a smile, "Congratulations. You now understand the stimulus bill."

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Citigroup Not Purchasing New Corporate Jet...

…after criticism from the Obama administration said that such jets aren't "the best use of money at this point"…

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John Thain is getting Subpeonaed in NY about the billions in bonuses Merril Lynch paid out before Bank of america got its latest bailout...

http://www.charlotteobserver.com/597/story/499083.html

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Obama's Nominee for Treasury Secretary Misfiled His Taxes Using TurboTax

Timothy Geithner, president of the New York Federal Reserve, is Obama's choice for Treasury Secretary - which oversees the IRS. Both Republican and Democratic congressmen like his background but, he has been put in the hot seat because he messed up his taxes several years ago, and had to pay penalties. The interesting thing is that, even though he is a financial big shot, he did his taxes himself, using off-the-shelf TurboTax. Personally, I think messing up on your taxes and then overseeing the IRS can be a good thing, if it motivates him to push for simplifying taxes.

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Billions of Dollars and Politicians

Here is an interesting email I got forwarded: How many zeros in a billion? This is too true to be funny. The next time you hear a politician use the word 'billion' in a casual manner, think about whether you want the 'politicians' spending YOUR tax money. A billion is a difficult number to comprehend, but one advertising agency did a good job of putting that figure into some perspective in one of it's releases. A.  A billion seconds ago it was 1959. B.  A billion minutes ago Jesus was alive. C.  A billion hours ago our ancestors were living in the Stone Age. D.  A billion days ago no-one walked on the earth on two feet. E.  A billion dollars ago was only 8 hours and 20 minutes, at the rate our government is spending it. While this thought is still fresh in our brain, let's take a look at New Orleans.  It's amazing what you can learn with some simple division. Louisiana Senator, Mary Landrieu (D) is presently asking Congress for 250 BILLION DOLLARS to rebuild New Orleans . Interesting number..  what does it mean? A.  Well... if you are one of the 484,674 residents of New Orleans (every man, woman, and child) you each get $516,528. B.  Or... if you have one of the 188,251 homes in New Orleans , your home gets $1,329,787. C.  Or... if you are a family of four...  your family gets $2,066,012. Washington, D. C  < HELLO! > Are all your calculators broken?? Accounts Receivable Tax Building Permit Tax CDL License Tax Cigarette Tax Corporate Income Tax Dog License Tax Federal Income Tax Federal Unemployment Tax (FUTA) Fishing License Tax Food License Tax Fuel Permit Tax Gasoline Tax Hunting License Tax Inheritance Tax Inventory Tax IRS Interest Charges (tax on top of tax) IRS Penalties (tax on top of tax) Liquor Tax Luxury Tax Marriage License Tax Medicare Tax Property Tax Real Estate Tax Service charge taxes Social Security Tax Road Usage Tax (Truckers) Sales Taxes Recreational Vehicle Tax School Tax State Income Tax State Unemployment Tax (SUTA) Telephone Federal Excise Tax Telephone Federal Universal Servi ce Fee Tax Telephone Federal, State a nd Local Surcharge Tax Telephone Minimum Usage Surcharge Tax Telephone Recurring and Non-recurring Charges Tax Telephone State and Local Tax Telephone Usage Charge Tax Utility Tax Vehicle License Registration Tax Vehicle Sales Tax Watercraft Registration Tax Well Permit Tax Workers Compensation Tax STILL THINK THIS IS FUNNY? Not one of these taxes existed 100 years ago... and our nation was the most prosperous in the world. We had absolutely no national debt... We had the largest middle class in the world... and Mom stayed home to raise the kids .. What happened? Can you spell 'politicians!'

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The CIA, Afghanistan, and Viagra

The CIA is winning cooperation from older warlords with multiple wives by handing out free Viagra... In the case of the 60-year-old warlord - the head of a clan in southern Afghanistan who had not co-operated - operatives saw he had four younger wives. The pills were explained and offered. Four days later the agents returned. "He came up to us beaming," the Post quoted an agent as saying. "He said, 'You are a great man.' "And after that we could do whatever we wanted in his area."

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New FDIC Exhibit to Commemorate Its 75th Anniversary

The Chicago Tribune recently had an article describing that the FDIC has a new exhibit tracing its history. It is in honor of its 75th anniversary, but the exhibit seems appropriate, given today's credit crisis.

The exhibit is free, and located at the FDIC (550 17th St. NW) in Washington D.C.

The exhibit begins with a look at the financial panics of the late 19th and early 20th centuries. Then, it tells how the FDIC was created after 9,000 banks failed in the Great Depression.

Interestingly, there are a couple of Illinois connections:

1. The first FDIC payment was in 1934 to Lydia Lobsiger, a customer of Fon du Lac State Bank of East Peoria, IL.

2. During World War II, the FDIC re-located to Chicago to free up office space for the war effort until the Pentagon was built.

Also, the FDIC has temporarily owned some interesting properties - due to acquiring bad loans from failed banks:

During the 1988 and 1989 football seasons, the FDIC owned 12% of the Dallas Cowboys, due to the failure of FirstRepublic Corp.

They once owned the 1983 horror movie "Grizzly 2: The Predator", starring Charlie Sheen and George Clooney.

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Now Indian-Americans and Schaumburg's India House are a Key to IL Governor Allegedly Trying to Sell Senate Seat

What a small world - now the restaurant / banquet hall where Rasika and I got married  (India House in suburban Schaumburg) is mentioned as a key to the Blagojevich scandal over selling Obama's senate seat. It looks like a prominent group of Indian-Americans, who support both Blagojevich and Jesse Jackson Jr., tried to arrange fund-raising for Blagojevich in return for Jackson being appointed to the Senate seat. There was a closed-room power lunch at India House on October 31, with Blagojevich present.

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Palin, Africa, and Her Wardrobe

It looks like McCain aides are complaining about her even more - now that the election is over. They say she didn't even know Africa was a continent, and she might have spent more than $150,000 in donor money on designer clothes.  It looks like she also pressured underlings to put clothes on their credit cards, and she might get audited now by the Republican Committee's lawyers.

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