he has them right where he wants them. All summer he has played their music and the little rats have followed him down to the ring. This week, the ring leader stood in front of all the little rats who were drooling over his every word...ah, the ROP A DOP
Religion of Peace a Destroyer of Peace
Friday, September 22, 2006
Friday, September 15, 2006
A letter to Senator Hatch
In response to the NY Bankruptcy judge's findings that above median income debtors can not provide money to charity, Senator Hatch's spokesman Peter Carr said that they would be looking into an amendment to the bankruptcy reform act, I have sent the following to Senator Hatch:
To Mr. Peter Carr and Senator Hatch regarding the finding of a NY Bankruptcy judge that above median income debtors can not propose a chapter 13 bankruptcy and allow for charitable contributions: Sen Hatch. Todd Zywicki sat in your committee and proclaimed the law needed no amendments. You stood on the floor of the Senate and claimed that after 8 years of compromise and changes and adjustments, amendments were only being offered by those that would oppose the bill in any form. Sir, the chickens have come home to roost. By almost all accounts rendered in the written opinions of bankruptcy judges faced with dealing with 'perfect' bill, it is an abortion. Initial reports are that over 97% of the people going through credit counseling have NO means to make any repayment. That is a HIGHER percentage of chapter 7 than existed prior to the BARF of 2005. Further, the argument that only a small portion of people would be affected by the 'reform' ignores the $90 rise in filing fees, the $50 cost of credit counseling and the higher attorney fees due to the substantial increase in reporting, documentation and liability issues. All increases in costs on the backs of those least likely to be able to afford them. Congrats Sen Hatch on a bill you helped shepherd for 8 years. The Trustees, judges and attorneys that have to deal with the aftermath will remember you kindly when you attempt to amend your pinnacle of bankruptcy legislation to cover your butt with those churches that rely on charitable contributions...oh wait...the impact is on so few people....why bother with an amendment....if they are above the median...they can afford to pay their bills, before giving money away.
To Mr. Peter Carr and Senator Hatch regarding the finding of a NY Bankruptcy judge that above median income debtors can not propose a chapter 13 bankruptcy and allow for charitable contributions: Sen Hatch. Todd Zywicki sat in your committee and proclaimed the law needed no amendments. You stood on the floor of the Senate and claimed that after 8 years of compromise and changes and adjustments, amendments were only being offered by those that would oppose the bill in any form. Sir, the chickens have come home to roost. By almost all accounts rendered in the written opinions of bankruptcy judges faced with dealing with 'perfect' bill, it is an abortion. Initial reports are that over 97% of the people going through credit counseling have NO means to make any repayment. That is a HIGHER percentage of chapter 7 than existed prior to the BARF of 2005. Further, the argument that only a small portion of people would be affected by the 'reform' ignores the $90 rise in filing fees, the $50 cost of credit counseling and the higher attorney fees due to the substantial increase in reporting, documentation and liability issues. All increases in costs on the backs of those least likely to be able to afford them. Congrats Sen Hatch on a bill you helped shepherd for 8 years. The Trustees, judges and attorneys that have to deal with the aftermath will remember you kindly when you attempt to amend your pinnacle of bankruptcy legislation to cover your butt with those churches that rely on charitable contributions...oh wait...the impact is on so few people....why bother with an amendment....if they are above the median...they can afford to pay their bills, before giving money away.
Tuesday, September 12, 2006
Debunking Bankrate's 12 Myths of Bankruptcy
Bankrate.com has posted 12 Myths About Bankruptcy. As we have a page on our site called 6 Myths of Bankruptcy I thought it would be an interesting read. After all, maybe there are some additions we could make to our page!
So imagine my surprise(not) when I started reading myths about the myths. Shall we?
This is our #4. In reality, most counties do publish the names of people or businesses that file bankruptcy. In our area, they are published in the one of the daily papers and in the monthly business magazine. It has been our experience that with few exceptions the names are published regularly. In Chicago, there is a separate legal publication that publishes all legal filings, including bankruptcy. The point trying to be made is that few people actually READ such notices. The three groups most likely to read the listings: creditors, advertisers (people selling credit repair scams) and the terminal (those people without a life).
They start off great, but end terrible. Judgments (what they claim to be legal settlements) are often dischargeable. If a credit card company gets a judgment against you, it is discharged in a chapter 7. Some judgments where you are assessed criminal damages to pay someone you have harmed do stay after bankruptcy. Only a good bankruptcy attorney can determine which judgments are dischargeable. Where fraud is concerned, talk to an attorney. Of course the biggest omission in their list is SECURED debts. Your personal obligation gets discharged, but plan on continuing to pay the mortgage or car loan if you want to keep them because the liens still exist against the property.
This is our #6. There are some states that do not have exemptions. In those states, FEDERAL exemptions apply. Ok, maybe I am just being picky here. But, what can be exempt was seriously curtailed with the new bankruptcy law. Among other things, the federal exemptions now limit you to ONE TV, one radio, one computer and one DVD/VCR (and clothing and household goods). Paintings bought at a store, golf clubs, guns and bikes (adults) are also more exposed under the new law. Although there are ways to deal with this change, a good bankruptcy attorney is necessary!
Our #5. First they are correct about getting credit in the future. Heck, we even have Chapter 13 clients getting refinanced while IN bankruptcy. But it does have an impact on your credit rating, history and the rates you will be offered. Be very careful with credit offers, scams are rampant. Oh, and their suggestion to obtain debt before filing, such a suggestion is ILLEGAL if made by anyone offering bankruptcy advice. However, this is one of the perversions of the new law. Example: Two single men, one earning $45k a year, the other earning $90k a year. Both wanting to file a chapter 7. Assuming the median income in their area is $40k a year, at initial glance, both have to file chapter 13 instead. Let's now compare debts. Our $45k earner rents, has a beater car and $80k in credit card debt. Our $90k earner owns a home, a new Hummer, a Harley, a Snowmobile, a $2k computer and all new furniture - all purchased with secured debt, and $25k in credit cards. After all calculations are done, our $45k earner has to pay $450 a month into a chapter 13 plan, but our $90k earner qualifies for a chapter 7. Sounds fair? It is the new law.
We ignore this one because we are a community property state. Debts are usually community property (there are exceptions - talk to a good bankruptcy attorney!) and therefore filing as a married couple makes sense. There are several community property states, check yours. But even here, we get one spouse filings. Give them this one.
Technically you don't need a dentist to pull a tooth. Technically you don't need an attorney to buy a home. Technically you don't need a doctor for a 104 fever. It is not hard to file bankruptcy at all! It is however very hard to get a discharge that covers all the debts that can be discharged without a good bankruptcy attorney. I'll give them this one, technically.
Our experience is that over 90% of people that file bankruptcy have had at least one of the 'life-changing experiences'. We have had gamblers, and an occasional "I'm going to beat the system' types (which we send packing BTW). But my nit-pick here is the 'struggled for months'. In almost every case, the time frame is years. On average 2.5 years. No credit here, they are adding a myth.
Bless you? Credit extension was a BUSINESS decision, appealing to your religious guilt is a way creditors coerce people to keep paying even at the expense of family or health. For decades businesses have used the bankruptcy card to justify higher interest rates. Anyone see interest rates GO DOWN this year? Nope. How many businesses get the government to bail them out of a bad decision? After 8 years of trying the credit industry got just that plum. Exactly how many $600 million dollar a year in profit businesses do you know care one bit about YOU? Bless you...HAH! No credit on this one just for pissing me off....
Oh, those nasty bankruptcy lawyers.....trolling for clients....while credit card companies send out 5 BILLION OFFERS this year.... Yep, bankruptcy is a bad thing on your credit report...so is a repossession, a foreclosure, judgments and continued lates on payments....so when a bankruptcy is filed...the judgments go away, the lates stop and you get back on your feet financially. While there will be some hemming and hawing from the credit REPORTING side of things, all things being equal, if you take two people in exactly the same terrible financial shape, have one file bankruptcy and let the other continue struggling, guess who's credit score will be higher next year? You got it...the person that filed bankruptcy. And remember their #4? Never get credit again? Who do you think the credit issuers will give lend to next year? The person that filed bankruptcy, or the one still struggling?
It is not easily done, and as stated, there are conditions, but taxes can be discharged. Credit them this one.
Actually, the time frames with regard to Chapter 13 are more ...pliable... than that, but generally speaking they are right, you can file more than once. Prior to the law, we often filed twice for a particular type of client: homeowners. We would file a chapter 7 to get rid of unsecured debt, then a chapter 13 to deal with secured debt. It is still possible to the same under the new law, with some qualifiers and conditions. But I will call your attention to one repeat filer many will be familiar with: Donald Trump. There are reasons for bankruptcy, and damn it, leave religion out of it.....karma....shheesssh.
Ah, now the credit industry wants to let bankruptcy judges and trustees watch for fraud. See, before the new law passed, it's supporters claimed that the judges and trustees practically NEVER caught such fraud despite it's obvious widespread nature. And for many people that do file bankruptcy, many of them, maybe a majority, maxed out their credit cards in the year before filing without any problem in bankruptcy.
So. There are myths about bankruptcy, mostly promoted by the credit industry to keep you from filing. If you have these danger signals, you should be talking to a knowledgeable bankruptcy attorney. Because the most important myth to debunk is the one you read about somewhere.
So imagine my surprise(not) when I started reading myths about the myths. Shall we?
1. Everyone will know I've filed for bankruptcy.
Unless you're a prominent person or a major corporation and the filing is picked up by the media, the chances are very good that the only people who will know about a filing are your creditors. While it's true that bankruptcy is a public legal proceeding, the number of people filing is so massive that very few publications have the space, the manpower or the inclination to run all of them.
This is our #4. In reality, most counties do publish the names of people or businesses that file bankruptcy. In our area, they are published in the one of the daily papers and in the monthly business magazine. It has been our experience that with few exceptions the names are published regularly. In Chicago, there is a separate legal publication that publishes all legal filings, including bankruptcy. The point trying to be made is that few people actually READ such notices. The three groups most likely to read the listings: creditors, advertisers (people selling credit repair scams) and the terminal (those people without a life).
2. All debts are wiped out in Chapter 7 bankruptcy.
You wish. Certain types of debts cannot be discharged (erased). They include child support, alimony, government-issued or government-guaranteed student loans, and debts incurred as the result of fraud. It's also very unlikely that a judge will discharge legal settlements you've been assessed, such as money you've been ordered to pay to someone who sued you.
They start off great, but end terrible. Judgments (what they claim to be legal settlements) are often dischargeable. If a credit card company gets a judgment against you, it is discharged in a chapter 7. Some judgments where you are assessed criminal damages to pay someone you have harmed do stay after bankruptcy. Only a good bankruptcy attorney can determine which judgments are dischargeable. Where fraud is concerned, talk to an attorney. Of course the biggest omission in their list is SECURED debts. Your personal obligation gets discharged, but plan on continuing to pay the mortgage or car loan if you want to keep them because the liens still exist against the property.
3. I'll lose everything I have.
This is the misconception that keeps people who really should file for bankruptcy from doing it, says Chris Viale, chief operating officer of Massachusetts-based Cambridge Credit Counseling Corp.
"They think the government will sell everything they have and they'll have to start over in a cardboard box," Viale says.
While the bankruptcy laws vary from state to state, every state has exemptions that protect certain kinds of assets, such as your house, your car (up to a certain value), money in qualified retirement plans, household goods and clothing.
This is our #6. There are some states that do not have exemptions. In those states, FEDERAL exemptions apply. Ok, maybe I am just being picky here. But, what can be exempt was seriously curtailed with the new bankruptcy law. Among other things, the federal exemptions now limit you to ONE TV, one radio, one computer and one DVD/VCR (and clothing and household goods). Paintings bought at a store, golf clubs, guns and bikes (adults) are also more exposed under the new law. Although there are ways to deal with this change, a good bankruptcy attorney is necessary!
4. I'll never get credit again.
Quite the contrary. It won't be long before you're getting credit card offers again. They'll just be from subprime lenders that will charge very high interest rates. "There are innumerable companies that will provide credit to you," says California bankruptcy attorney and trustee Howard Ehrenberg. "I don't advise any of my clients to run out and run up the bills again, but if someone does need an automobile, they can go and will be able to get credit. You don't have to go underground or something to get money."
However, if you're planning to buy a house or a car, you might want to do that before you file. Those loans will be tough to get and the higher interest rate on such a large purchase would make a significant impact on your payments. Also, if you have a credit card with a zero balance on the day you file for bankruptcy, you don't have to list it as a creditor since you don't owe any money on it. That means, you might be able to keep that card even after the bankruptcy.
Our #5. First they are correct about getting credit in the future. Heck, we even have Chapter 13 clients getting refinanced while IN bankruptcy. But it does have an impact on your credit rating, history and the rates you will be offered. Be very careful with credit offers, scams are rampant. Oh, and their suggestion to obtain debt before filing, such a suggestion is ILLEGAL if made by anyone offering bankruptcy advice. However, this is one of the perversions of the new law. Example: Two single men, one earning $45k a year, the other earning $90k a year. Both wanting to file a chapter 7. Assuming the median income in their area is $40k a year, at initial glance, both have to file chapter 13 instead. Let's now compare debts. Our $45k earner rents, has a beater car and $80k in credit card debt. Our $90k earner owns a home, a new Hummer, a Harley, a Snowmobile, a $2k computer and all new furniture - all purchased with secured debt, and $25k in credit cards. After all calculations are done, our $45k earner has to pay $450 a month into a chapter 13 plan, but our $90k earner qualifies for a chapter 7. Sounds fair? It is the new law.
5. If you're married, both spouses have to file for bankruptcy.
Not necessarily. "It's not uncommon for one spouse to have a significant amount of debt in their name only," Hargrave says. However, if spouses have debts they want to discharge that they're both liable for, they should file together. Otherwise, the creditor will simply demand payment for the entire amount from the spouse who didn't file.
We ignore this one because we are a community property state. Debts are usually community property (there are exceptions - talk to a good bankruptcy attorney!) and therefore filing as a married couple makes sense. There are several community property states, check yours. But even here, we get one spouse filings. Give them this one.
6. It's really hard to file for bankruptcy.
It's really not. You don't even technically need an attorney. However, it's not recommended to go through the procedure without one.
Technically you don't need a dentist to pull a tooth. Technically you don't need an attorney to buy a home. Technically you don't need a doctor for a 104 fever. It is not hard to file bankruptcy at all! It is however very hard to get a discharge that covers all the debts that can be discharged without a good bankruptcy attorney. I'll give them this one, technically.
7. Only deadbeats file for bankruptcy.
Most people file for bankruptcy after a life-changing experience, such as a divorce, the loss of a job or a serious illness. They've struggled to pay their bills for months and just keep falling further behind.
Our experience is that over 90% of people that file bankruptcy have had at least one of the 'life-changing experiences'. We have had gamblers, and an occasional "I'm going to beat the system' types (which we send packing BTW). But my nit-pick here is the 'struggled for months'. In almost every case, the time frame is years. On average 2.5 years. No credit here, they are adding a myth.
8. I don't want to include certain creditors in my filing because it's important to me to pay them back someday and if the debt is discharged, I can't ever repay them.
Bless you for even thinking about such a thing. You're no longer obligated to repay them, but you always have that opportunity. If your conscience won't let you sleep nights because you didn't pay your debts, there's nothing in the bankruptcy code that prevents you from doing that once you're back on your feet. But bankruptcy is an all-or-nothing deal, so you have to include all your creditors in the petition.
Bless you? Credit extension was a BUSINESS decision, appealing to your religious guilt is a way creditors coerce people to keep paying even at the expense of family or health. For decades businesses have used the bankruptcy card to justify higher interest rates. Anyone see interest rates GO DOWN this year? Nope. How many businesses get the government to bail them out of a bad decision? After 8 years of trying the credit industry got just that plum. Exactly how many $600 million dollar a year in profit businesses do you know care one bit about YOU? Bless you...HAH! No credit on this one just for pissing me off....
9. Filing for bankruptcy will improve my credit rating because all those debts will be gone.
That sounds like an ad for a bankruptcy lawyer trolling for clients. Filing for bankruptcy is the worst 'negative' you can have on your credit report. Unlike other negatives, which stay on your report for seven years, bankruptcy can be there for 10 years.
Oh, those nasty bankruptcy lawyers.....trolling for clients....while credit card companies send out 5 BILLION OFFERS this year.... Yep, bankruptcy is a bad thing on your credit report...so is a repossession, a foreclosure, judgments and continued lates on payments....so when a bankruptcy is filed...the judgments go away, the lates stop and you get back on your feet financially. While there will be some hemming and hawing from the credit REPORTING side of things, all things being equal, if you take two people in exactly the same terrible financial shape, have one file bankruptcy and let the other continue struggling, guess who's credit score will be higher next year? You got it...the person that filed bankruptcy. And remember their #4? Never get credit again? Who do you think the credit issuers will give lend to next year? The person that filed bankruptcy, or the one still struggling?
10. You can't get rid of back taxes through bankruptcy.
Generally speaking, this is true. However, there is such a thing as tax bankruptcy, says tax educator Eva Rosenberg, known on the Web as Tax Mama. To get a shot at it, you have to file all your returns and the taxes owed need to be at least three years old.
It is not easily done, and as stated, there are conditions, but taxes can be discharged. Credit them this one.
11. You can only file for bankruptcy once.
You can file for bankruptcy more than once, but the bankruptcy law that went into effect in October 2005 lengthened the required wait between filings. You can only file for Chapter 7 bankruptcy once every eight years. You have to wait two years to repeat a Chapter 13 filing and four years between a Chapter 7 and a Chapter 13 case.
Of course, that doesn't make it a good idea.
"Multiple bankruptcies are really bad," Rosenberg says. "Many people get into the habit of once they've done it, it becomes a way of life. This is not good for your karma." Or your credit rating.
Actually, the time frames with regard to Chapter 13 are more ...pliable... than that, but generally speaking they are right, you can file more than once. Prior to the law, we often filed twice for a particular type of client: homeowners. We would file a chapter 7 to get rid of unsecured debt, then a chapter 13 to deal with secured debt. It is still possible to the same under the new law, with some qualifiers and conditions. But I will call your attention to one repeat filer many will be familiar with: Donald Trump. There are reasons for bankruptcy, and damn it, leave religion out of it.....karma....shheesssh.
12. I can max out all my credit cards, file for bankruptcy and never pay for the things I bought.
That's called fraud and bankruptcy judges can get really cranky about it. The trustee in your case will review all your purchases right before your filing. The trustee knows what to look for.
Ah, now the credit industry wants to let bankruptcy judges and trustees watch for fraud. See, before the new law passed, it's supporters claimed that the judges and trustees practically NEVER caught such fraud despite it's obvious widespread nature. And for many people that do file bankruptcy, many of them, maybe a majority, maxed out their credit cards in the year before filing without any problem in bankruptcy.
So. There are myths about bankruptcy, mostly promoted by the credit industry to keep you from filing. If you have these danger signals, you should be talking to a knowledgeable bankruptcy attorney. Because the most important myth to debunk is the one you read about somewhere.
Friday, September 08, 2006
Score one for Hatch
Dear Senator Hatch,
Congrats on the passage of the Bankruptcy Reform Act. According to the Federal Bankruptcy Court, Northern District of New York, your constituents that earn over the median income will no longer be able to deduct charitable contributions in calculating the required means test. Given that Utah has a significant Mormon population that actively tithes, their future inability will likely piss off the Church. No worries though...that vast reduction in the number of bankruptcies filed will have little impact on the Church receipts (oopss...filings are increasing and expected to reach pre-reform levels sometime next year)!
Again, congrats on a job well done for the banking industry!
Congrats on the passage of the Bankruptcy Reform Act. According to the Federal Bankruptcy Court, Northern District of New York, your constituents that earn over the median income will no longer be able to deduct charitable contributions in calculating the required means test. Given that Utah has a significant Mormon population that actively tithes, their future inability will likely piss off the Church. No worries though...that vast reduction in the number of bankruptcies filed will have little impact on the Church receipts (oopss...filings are increasing and expected to reach pre-reform levels sometime next year)!
Again, congrats on a job well done for the banking industry!
Sunday, September 03, 2006
Sectarian? Actually, religious war...
There has been much made over the Rumsfeld speech and the military report on Iraq over the last several days and I wanted to add a few words.
First: sectarian violence. This is members of one sect of Islam killing members of another sect of Islam. It is exactly the same as Protestants killing Catholics. What you say? Protestants are not killing Catholics? Yes, well, they were in Ireland. The scale is smaller but I don't recall the MSM calling it civil war....maybe the scale has something to do with it. The actual point I want to make is that the "sectarian violence" in Iraq is not calling for a split of the country. We do not hear of 'spokesmen' saying that if the Sunnis get their own country, they will stop killing people. We do not hear of Shite 'spokesmen' saying that if they get their own country, free of Sunnis, they will stop killing people. Hell, we don't even hear Kurdish 'spokesmen' saying if they get their own country...well, they are not killing anyone so what's the worry there. There is no civil war, there is ongoing religious based mass murder. Quit calling it sectarian violence...it makes it sound so, clinical. Call it what it is, Islamic violence. This is about two groups of Moslems killing each other over who has the right God sense. There is nothing civil about it.
Second. Fourteen of the eighteen provinces in Iraq are generally speaking, quiet. No more dying is going on in those provinces than goes on in Washington, New York, Detroit or Los Angeles on any particular day. The four provinces still fighting battles are those that were predominately Sunni controlled. Gee, surprise. Of course, we are not exactly on great terms with Shites..given their fawning over Iran. Still, there does appear to be a real political life in Iraq and we need to be more on that side than any other.
Third. Bush lied crowd: grow up. Joe Wilson has been so discredited, I surprised Mastercard hasn't hired him. No plan to win: we won already. The war to dispose Saddam was won and accomplished. Getting Iraq to the point of stability and ability to defend itself, we're working on it. Takes time.
Fourth. War on terror. I keep hearing that the left agrees we have a war on terror. However, their suggestions on how to deal with it all seem to revolve around talking to our friends and talking to our 'enemies' (and we shouldn't call them that because it just makes them mad and more prone to being angry...). Talking is so great....If we could have just talked to Atta...maybe he would have landed instead.
Last: Powell convinced the rest of the Administration that France was on board, right before France appeased Saddam. Rice convinced the rest of the Administration that France was on board, right before France appeased the Arabs. Does anyone else think that the State Department should get billing as the latest reincarnation of the home of the body snatchers? I want to know: does the State Department cafeteria only serve Perrier?
Victoria has been listening to Air America a lot over the last 10 days or so...therefore, of course, so have I. If Air America is any indication of the current mentality of the left, half this country has already surrendered.
First: sectarian violence. This is members of one sect of Islam killing members of another sect of Islam. It is exactly the same as Protestants killing Catholics. What you say? Protestants are not killing Catholics? Yes, well, they were in Ireland. The scale is smaller but I don't recall the MSM calling it civil war....maybe the scale has something to do with it. The actual point I want to make is that the "sectarian violence" in Iraq is not calling for a split of the country. We do not hear of 'spokesmen' saying that if the Sunnis get their own country, they will stop killing people. We do not hear of Shite 'spokesmen' saying that if they get their own country, free of Sunnis, they will stop killing people. Hell, we don't even hear Kurdish 'spokesmen' saying if they get their own country...well, they are not killing anyone so what's the worry there. There is no civil war, there is ongoing religious based mass murder. Quit calling it sectarian violence...it makes it sound so, clinical. Call it what it is, Islamic violence. This is about two groups of Moslems killing each other over who has the right God sense. There is nothing civil about it.
Second. Fourteen of the eighteen provinces in Iraq are generally speaking, quiet. No more dying is going on in those provinces than goes on in Washington, New York, Detroit or Los Angeles on any particular day. The four provinces still fighting battles are those that were predominately Sunni controlled. Gee, surprise. Of course, we are not exactly on great terms with Shites..given their fawning over Iran. Still, there does appear to be a real political life in Iraq and we need to be more on that side than any other.
Third. Bush lied crowd: grow up. Joe Wilson has been so discredited, I surprised Mastercard hasn't hired him. No plan to win: we won already. The war to dispose Saddam was won and accomplished. Getting Iraq to the point of stability and ability to defend itself, we're working on it. Takes time.
Fourth. War on terror. I keep hearing that the left agrees we have a war on terror. However, their suggestions on how to deal with it all seem to revolve around talking to our friends and talking to our 'enemies' (and we shouldn't call them that because it just makes them mad and more prone to being angry...). Talking is so great....If we could have just talked to Atta...maybe he would have landed instead.
Last: Powell convinced the rest of the Administration that France was on board, right before France appeased Saddam. Rice convinced the rest of the Administration that France was on board, right before France appeased the Arabs. Does anyone else think that the State Department should get billing as the latest reincarnation of the home of the body snatchers? I want to know: does the State Department cafeteria only serve Perrier?
Victoria has been listening to Air America a lot over the last 10 days or so...therefore, of course, so have I. If Air America is any indication of the current mentality of the left, half this country has already surrendered.
Tuesday, August 29, 2006
A job...
I am looking for work I can do at home. If you need administrative help of virtually any kind, please let me know. Resume available upon request.
Now, as I think this post is generally off topic and a request for help, I think it is only fair I give something of value back to you. Below is a list 'definitions' I wrote the last time I was looking for work...
Now, as I think this post is generally off topic and a request for help, I think it is only fair I give something of value back to you. Below is a list 'definitions' I wrote the last time I was looking for work...
| Entry Level | Low pay, lotsa work, no future |
| Ability to work independently | No support staff, you're on your own |
| Experienced | No training provided |
| Team player | Boss gets credit, you get blame |
| Salary history required | We don't want someone we have to pay a lot for |
| Salary requirements | We don't want to read all the resumes we'll get...note: see above |
| Salary negotiable | We don't know how much to pay, or the more you can do, the less we can pay |
| Excellant benefits | The salary is below average |
| Flexible hours | Overtime and weekend required with no notice |
| Self starter | You must know the job in the first week |
| Room for advancement | We want to replace your future boss but pay less for the position |
| Casual environment | 1. Dress down on alternate Fridays 2. Personnel reviews done in company lunchroom or at company parties |
| Supervisory position | We'll blame you for the other people's screw ups |
| Leadership abilities | Your boss wants someone to cover for him while he golfs |
| Ability to take charge | Your boss works 60-70 hours a week and has been looking very pale lately |
| Boss' right hand | 1. Boss has two left hands, or... 2. Boss needs someone to do his work also |
| College grads encouraged | We hope you'll take anything to pay off your loans |
| Re-entering work force | You earn the same as you would as a stay at home mom without the cute smiles....or We'll pay you entry level rates and expect managerial experience |
| Managerial experience | You'll be expected to supervise a bunch of children |
| Diverse environment | We have one of everything here |
| Experienced only | You'll be the only one that can do the job |
| College degree required | We want to say that we have a college degreed person doing this menial job |
| Customer service | You'll have to answer the phones when the Receptionist is at lunch |
| HS Diploma or equvalent required | We need a warm body |
| Some college required | Teenagers need not apply |
| Advanced degree required | We mean it...you have to know something about this |
| MBA | We want a fast track program and you're it! |
| No experience required, we'll train | It's our way or no way |
| Some experience | We'll let you do the grunt work |
| 10 years experience | You teach us |
| Support busy manager | You make the coffee and pick up the laundry |
| Family environment | Babysit the bosses kids |
Saturday, August 26, 2006
A good economy?
My friend Tom over at BizzyBlog and I have slightly different opinions about the state of our economy. His opinion is that the economy is doing great and the doomsayers are taking molehills and making mountains out of them. I am by nature an optimistic person but because of our business, we see a lot of molehills.
First, foreclosures. When a family faces foreclosure, their financial condition is usually in very serious distress. Many people facing foreclosure have judgments against them for non-payment of credit cards, utilities or medical bills. The foreclosure is usually the last in a long line of non-payments. Still. Foreclosures occur even in the best economic conditions, so in and of themselves, they do not indicate a systemic problem with the economy. Despite the 70% increase in foreclosures nationwide during the first quarter of 2006, we are talking about less than one million foreclosures in a market of over 75 million. A relatively small percentage. In our area, we saw a similar foreclosure rate in our area, but it has settled down to about 30% increase for the 2.66 quarters of this year. Based on previous history, it will probably finish the year nearer 50% increase. A troubling issue, but we are talking about 2500 foreclosures in an area of about 850,000 people. Of those 2500 foreclosures, about half will actually be able to come up with the money to stave off the loss and keep their homes. This will of course lead most reasonable people to dismiss the issue as a molehill. But I do want to use one more stat to suggest it is a bigger problem. Last year about 14,000 homes were sold in the area, meaning about 10% were foreclosures. There is a current unsold inventory of almost 5,000 homes in our area. Foreclosure increases will lead to additional inventory and because of their nature, pressure on pricing.
The impact of foreclosures will not show up in many econ stats: people still need a place to live and most people evicted by foreclosure will end up in rental housing. Based on a general opinion, most people will net a reduction in housing costs freeing up money for other expenses.
Foreclosures and housing bubble? Markets that had significant investor involvement were getting very overheated last year and those markets are the ones experiencing 'bubble' like results. Other markets with moderate increases in values and sustainable growth seem to be weathering things just fine. Regional housing recessions are likely but not expected to spread - IMO.
Second issue: gas prices. We have several truck drivers as clients. Over the last 18 months, they have experienced almost 100% increase in fuel costs. Even average drivers have seen significant increases in fuel expenditures. Miles driven have not decreased (though the increase is minor) over the last year. I will be interested to see how the 'vacation' areas did over this summer.
I think we have a good economy. Two million people filed bankruptcy last year with practically no impact on the economy (or the profit margins of the credit issuing industry...kinda makes you wonder why they were all in a huff to get the law changed). Katrina practically wiped out New Orleans and parts of the Gulf Coast also with little or no economic impact to the country. However, there ARE problems.
Based on the refinancing, there was a net pre-tax savings of over $31 billion in 2003. That number was certainly higher in 2004 and 2005. Equity refinancing added almost $200 billion to the economy in each of the last three years, not an insignificant change. If however many of the refinancings were to ARMs or other non-standard mortgages (interest only for example) then interest rate increases will make it harder to refinance in the future and increase the demand upon family budgets. 3 year ARMs sold in 2003 are coming due for their increases and we are seeing contractual limit increases (2-2.5%). On a $150,000 mortgage, payments are jumping as much as 28%. Those that can, are selling their homes when faced with stiff increases, but the market has slowed. Home sales are down almost 5% over last year. This situation is worse in those markets that had active investor involvement driving prices.
Over the last 5 years, real estate has driven a lot of our economy. A slowdown in housing sales and construction, already underway in many markets, will lead to increased unemployment as the fall progresses. Unable to refinance and faced with higher gas and maybe mortgage payments, retail sales may slow also - though there is little indication of that occurring yet. Consumers are getting pinched.
We have a good economy, but certain pillars of that economy are showing serious signs. High fuel prices are going to force prices in many parts of the economy higher. Unable to refinance and facing higher mortgage payments, consumers will be unable to sustain their current spending habits. A slow down in housing will increase unemployment. Every good economy ended, sometime. In hindsight, the writing was on the wall.
Remember this: By the end of the year, 500,000 families will have lost their homes.
The question for us optimists is: are we looking at the wall now, or keeping our backs to it...
First, foreclosures. When a family faces foreclosure, their financial condition is usually in very serious distress. Many people facing foreclosure have judgments against them for non-payment of credit cards, utilities or medical bills. The foreclosure is usually the last in a long line of non-payments. Still. Foreclosures occur even in the best economic conditions, so in and of themselves, they do not indicate a systemic problem with the economy. Despite the 70% increase in foreclosures nationwide during the first quarter of 2006, we are talking about less than one million foreclosures in a market of over 75 million. A relatively small percentage. In our area, we saw a similar foreclosure rate in our area, but it has settled down to about 30% increase for the 2.66 quarters of this year. Based on previous history, it will probably finish the year nearer 50% increase. A troubling issue, but we are talking about 2500 foreclosures in an area of about 850,000 people. Of those 2500 foreclosures, about half will actually be able to come up with the money to stave off the loss and keep their homes. This will of course lead most reasonable people to dismiss the issue as a molehill. But I do want to use one more stat to suggest it is a bigger problem. Last year about 14,000 homes were sold in the area, meaning about 10% were foreclosures. There is a current unsold inventory of almost 5,000 homes in our area. Foreclosure increases will lead to additional inventory and because of their nature, pressure on pricing.
The impact of foreclosures will not show up in many econ stats: people still need a place to live and most people evicted by foreclosure will end up in rental housing. Based on a general opinion, most people will net a reduction in housing costs freeing up money for other expenses.
Foreclosures and housing bubble? Markets that had significant investor involvement were getting very overheated last year and those markets are the ones experiencing 'bubble' like results. Other markets with moderate increases in values and sustainable growth seem to be weathering things just fine. Regional housing recessions are likely but not expected to spread - IMO.
Second issue: gas prices. We have several truck drivers as clients. Over the last 18 months, they have experienced almost 100% increase in fuel costs. Even average drivers have seen significant increases in fuel expenditures. Miles driven have not decreased (though the increase is minor) over the last year. I will be interested to see how the 'vacation' areas did over this summer.
I think we have a good economy. Two million people filed bankruptcy last year with practically no impact on the economy (or the profit margins of the credit issuing industry...kinda makes you wonder why they were all in a huff to get the law changed). Katrina practically wiped out New Orleans and parts of the Gulf Coast also with little or no economic impact to the country. However, there ARE problems.
...cash-outs from refinancing to total $162 billion for the year but, as rates continue to rise, the figure would fall back to $69 billion for the whole of 2006. In 2004 homeowners extracted $140 billion in equity through refinancing their homes.http://www.mortgagenewsdaily.com/852005_Cash_Out_Refinancing.asp
Based on the refinancing, there was a net pre-tax savings of over $31 billion in 2003. That number was certainly higher in 2004 and 2005. Equity refinancing added almost $200 billion to the economy in each of the last three years, not an insignificant change. If however many of the refinancings were to ARMs or other non-standard mortgages (interest only for example) then interest rate increases will make it harder to refinance in the future and increase the demand upon family budgets. 3 year ARMs sold in 2003 are coming due for their increases and we are seeing contractual limit increases (2-2.5%). On a $150,000 mortgage, payments are jumping as much as 28%. Those that can, are selling their homes when faced with stiff increases, but the market has slowed. Home sales are down almost 5% over last year. This situation is worse in those markets that had active investor involvement driving prices.
Over the last 5 years, real estate has driven a lot of our economy. A slowdown in housing sales and construction, already underway in many markets, will lead to increased unemployment as the fall progresses. Unable to refinance and faced with higher gas and maybe mortgage payments, retail sales may slow also - though there is little indication of that occurring yet. Consumers are getting pinched.
We have a good economy, but certain pillars of that economy are showing serious signs. High fuel prices are going to force prices in many parts of the economy higher. Unable to refinance and facing higher mortgage payments, consumers will be unable to sustain their current spending habits. A slow down in housing will increase unemployment. Every good economy ended, sometime. In hindsight, the writing was on the wall.
Remember this: By the end of the year, 500,000 families will have lost their homes.
The question for us optimists is: are we looking at the wall now, or keeping our backs to it...
Thursday, August 10, 2006
Give me liberty or give me...
Plenty of people are writing about the foiled plot, I shall not add to the din.
I have heard, after some shock has worn off, the same refrain from the left about liberties and security:
"He who would trade liberty for some temporary security, deserves neither liberty nor security"
And I am really tired of the thought process that thinks that any attempt to protect people is a slippery slope to a police state. So, I sat down with the above saying and let it roll around in my pretty little head and I now have some responses to the dweebs:
1. He who would sacrifice security for liberty, seeks to act against his neighbors freely.
2. Liberty without security is like freeing the tiger from his cage, he will neither thank you, nor withhold his hunger.
3. Liberty is not freedom without security.
4. The monster at your door is not seeking security and sacrificing liberty, it is seeking your life; open the door at your peril.
5. Liberty without security is anarchy.
6. My security establishes a limit on your liberty, not mine.
Although 6 is my favorite, I leave you with the following thought:
Every night I lock my doors, I trade liberty for temporary security; do you want to give up YOUR locks?
I have heard, after some shock has worn off, the same refrain from the left about liberties and security:
"He who would trade liberty for some temporary security, deserves neither liberty nor security"
And I am really tired of the thought process that thinks that any attempt to protect people is a slippery slope to a police state. So, I sat down with the above saying and let it roll around in my pretty little head and I now have some responses to the dweebs:
1. He who would sacrifice security for liberty, seeks to act against his neighbors freely.
2. Liberty without security is like freeing the tiger from his cage, he will neither thank you, nor withhold his hunger.
3. Liberty is not freedom without security.
4. The monster at your door is not seeking security and sacrificing liberty, it is seeking your life; open the door at your peril.
5. Liberty without security is anarchy.
6. My security establishes a limit on your liberty, not mine.
Although 6 is my favorite, I leave you with the following thought:
Every night I lock my doors, I trade liberty for temporary security; do you want to give up YOUR locks?
Tuesday, August 08, 2006
It's the premise...
I was taught a long time ago that when debating someone, the first person to agree with their opponent's premise, loses.
1. What military purpose do the rockets fired by Hezbollah serve? None. They are random shots into civilian areas. They are too rudimentary for anything other than 'terror'.
2. Hezbollah says they will continue to fight until every single Israeli is off Lebanese soil. That's great, but Hezbollah currently is holding two Israeli soldiers hostage in Lebanon. Israel would be HAPPY to leave if Hezbollah would just return their two soldiers - UNHARMED.
Every single sentence out of official Israel should start with the question in #1 and end with Israel's agreement to leave as soon as the two soldiers held by Hezbollah are returned. My preference is that nothing be said between those two points.
1. What military purpose do the rockets fired by Hezbollah serve? None. They are random shots into civilian areas. They are too rudimentary for anything other than 'terror'.
2. Hezbollah says they will continue to fight until every single Israeli is off Lebanese soil. That's great, but Hezbollah currently is holding two Israeli soldiers hostage in Lebanon. Israel would be HAPPY to leave if Hezbollah would just return their two soldiers - UNHARMED.
Every single sentence out of official Israel should start with the question in #1 and end with Israel's agreement to leave as soon as the two soldiers held by Hezbollah are returned. My preference is that nothing be said between those two points.
Thursday, August 03, 2006
If it bleeds, it leads...
...but where is the blood?
In the top of the hour news on Fox at 11 am central, a report was aired about an Israeli 'incursion' into Gaza in the early morning hours. Near the end of the report, we are treated to the usual people being rushed into a hospital for treatment. Flash to a little girl (10-11yr old) with a red print dress. She is on a bed and the doctor/nurse/attendant puts a clump of gauze on her forehead right at the hairline and begins wrapping her head. As everyone KNOWS, a head would bleeds profusely. Yet, there is no blood on her face, her dress or in her hair. There is no indication that her hair is even wet. The picture lasts 3-4 seconds and then we see her again being carried by someone, her head wrapped in gauze. Again, we see no blood in the dressings.
I have often wondered about news coverage. But the coverage of the events in Qana have made me very suspicious of 'injury' coverage. This report from Gaza appears to be an attempt to claim another 'unwarranted' injury of a child.
BTW, the little girl was alert, looking right at the camera and not crying.....curious no?
In the top of the hour news on Fox at 11 am central, a report was aired about an Israeli 'incursion' into Gaza in the early morning hours. Near the end of the report, we are treated to the usual people being rushed into a hospital for treatment. Flash to a little girl (10-11yr old) with a red print dress. She is on a bed and the doctor/nurse/attendant puts a clump of gauze on her forehead right at the hairline and begins wrapping her head. As everyone KNOWS, a head would bleeds profusely. Yet, there is no blood on her face, her dress or in her hair. There is no indication that her hair is even wet. The picture lasts 3-4 seconds and then we see her again being carried by someone, her head wrapped in gauze. Again, we see no blood in the dressings.
I have often wondered about news coverage. But the coverage of the events in Qana have made me very suspicious of 'injury' coverage. This report from Gaza appears to be an attempt to claim another 'unwarranted' injury of a child.
BTW, the little girl was alert, looking right at the camera and not crying.....curious no?
Sunday, July 30, 2006
The right time for a cease fire?
Israel should consider a cease fire the second Nasrallah of Hezbollah publicly pleads for one,
AND NOT ONE SECOND SOONER.
AND NOT ONE SECOND SOONER.
Thursday, July 20, 2006
Has it gotten quiet?
The reporting out of Iraq has gone almost silent. Either the fighting is over or all the press has left. Hmmmm.....
Take a short breather guys, the fighters have no one to play too so they will probably sit back and wait. Done with the break....time for a quiet push...
I support our troops and their efforts, whether or not the camera is on.
Take a short breather guys, the fighters have no one to play too so they will probably sit back and wait. Done with the break....time for a quiet push...
I support our troops and their efforts, whether or not the camera is on.
Wednesday, July 19, 2006
War is hell
People have been complaining about the heat here....it is 30 degrees hotter in Iraq and Afghanistan and our troops carry packs and body armor. Quit complaining.
Did you know people die in war? NO? It happens. Every day unfortunately. Most of the time, it is the bad people, and sometimes a few of the good people, but too often, it is the people trying to get out of the way. It is not right, not good, not nice. But war is hell and as long as people give aid by allowing bad guys to hide among them...well, more people than ought are going to get hurt.
Now, I am not saying that every time a fighter runs into a residence the people are aiding them, but you do have to wonder how many times an IED goes off on the same section of street before someone quietly turns in the house where aid is really give.
I hope it happens more than I hear. It does appear to be happening more. Apparently, the Sunnis that have been calling for insurrection and terror against our troops for the last 3 years have gotten the message that when you keep the lion's cage in your bedroom, it is not safe to dangle your feet off the bed....
I support our troops and hope they soon can get out of hell....because sooner than you can imagine, it is going to be freezing there again...
Did you know people die in war? NO? It happens. Every day unfortunately. Most of the time, it is the bad people, and sometimes a few of the good people, but too often, it is the people trying to get out of the way. It is not right, not good, not nice. But war is hell and as long as people give aid by allowing bad guys to hide among them...well, more people than ought are going to get hurt.
Now, I am not saying that every time a fighter runs into a residence the people are aiding them, but you do have to wonder how many times an IED goes off on the same section of street before someone quietly turns in the house where aid is really give.
I hope it happens more than I hear. It does appear to be happening more. Apparently, the Sunnis that have been calling for insurrection and terror against our troops for the last 3 years have gotten the message that when you keep the lion's cage in your bedroom, it is not safe to dangle your feet off the bed....
I support our troops and hope they soon can get out of hell....because sooner than you can imagine, it is going to be freezing there again...
Tuesday, July 18, 2006
Sacrifice and honor
It will come as no surprise that our troops serve every day with honor. With very few exceptions, I have refrained from any discussion of situations where a or a couple of soldiers did not do so. I acknowledge that a few of OUR soldiers have violated the law, on the battlefield and off and have done so with dishonor. They have and will be punished as it appropriate. I have refrained because those that do not honor our troops use every such opportunity to smear our troops and I do not wish to give them any ground to stand on.
For the few times it has occurred, I would remind my 3 readers(!) that the sacrifice and honor of our troops is NOT diminished by such acts, but reinforced by the willingness to air the issue and adjudicate appropriately. The other side of this conflict has no such honor or willingness, instead proclaiming their vile acts as something worthy of praise.
I prefer to praise the sacrifice and honor of our soldiers and do so daily.
For the few times it has occurred, I would remind my 3 readers(!) that the sacrifice and honor of our troops is NOT diminished by such acts, but reinforced by the willingness to air the issue and adjudicate appropriately. The other side of this conflict has no such honor or willingness, instead proclaiming their vile acts as something worthy of praise.
I prefer to praise the sacrifice and honor of our soldiers and do so daily.
Monday, July 17, 2006
Our war
I do not want to get overly caught up in what is going on with Israel right now. It is absolutely part of the war on terror, but for now, it is not our fight. If Syria and/or Iran get overtly involved (IMO they are covertly involved now) then it is a different story. For now, I want to concentration on our battles, our piece of the global war.
I support our troops and their efforts.
I support our troops and their efforts.
Sunday, July 16, 2006
The United States in Bankruptcy?
Although I am very interested in economics and intended this blog to cover certain economic issues, I have not written very much on the topic. This morning, a Google alert informed me that the Federal Reserve announced that the United States was headed for bankruptcy. Now everyone knows I have a soft spot for bankruptcy, so I read with interest the story. First, the story indicates that the headline comes from a paper written by a researcher from the Federal Reserve Bank of St. Louis. Although the paper does not indicate any association by the author with any Federal Reserve Bank. Be that as it may, the initial story points to the paper here and off I went.
Laurence Kotlikoff is a Professor of Economics at Boston University and a research associate at the National Bureau of Economic Research.
Kotlikoff makes the following issue a central premise to his findings:
"..whether or not technology will continue to advance is an open question."
His scenario/model:
The amount of corn produced is determined by the labor and capital available. Capital is determined as the amount of corn that can replanted for future harvests. Of course, a certain amount of corn is necessary to feed the aging population that no longer contributes to the labor required to produce the corn.
By restricting productivity increases, only labor changes are going to have an impact on his two cycle process. The need for more people to increase production is a long term failure as at some point the number of people that have aged out of the production cycle will grow well beyond the ability to obtain more people to feed the labor pool. This is of course analogous to the retiring baby-boom generation that he seeks to model. The simplicity of the model is consistent with his need to constrain almost all the variables except the ones he is most interested in:
labor productivity and capital.
These limitations doom the 'society' he seeks to model. Such a restricted model is not capable of mimicking even the most basic issues facing our economy and government. Any model seeking to deal with labor must include some way to deal with technology issues. Kotlikoff's initial premise clearly defines both his bias and his failure.
Kotlikoff understands the issue, but refuses to consider it: "The point at which a country goes bankrupt depends, in general, on its technology and preferences as well as it's openness to international trade."
Once Kotlikoff makes his case that the increasing non-working population dooms society, he addresses the only issue left to him: capital. I found the leap he makes to be very unsatisfying. First, he considers the elderly population to be the 'creditors' in his scenario. He takes his formerly open economy allowing trade and credit flows and closes it. This little slight of hand includes the change of creditors from inside the economy to outside it. Now we have foreign creditors and his model restricts their ability to fund our economy. He supports this by asserting that foreign creditors will have no incentive to lend to the government because it has already proven its inability to produce sufficient for its own growing needs.
Of course, his original creditors subsist on the production and they have an interest in its continued existence. Failure is not an option, they can not just cut their losses and move to greener pastures. Conceptually, Kotlikoff can not allow the continued expansion of capital in his model if he seeks the conclusion he first set out to prove. The creditors have no alternatives to his 'economy'. By moving the creditors outside the closed economy, he can allow them the freedom of choice his original creditors (the non-working elderly population) do not have.
Kotlikoff further complicates matters by assuming the government will have been told by it's constituents (the soon to be or already elderly) to set their cut of production as high as possible. There is no feedback on this position, nor limits. While I might agree our social security system has certain similarities to Kotlikoff's model on this issue, it does not consider that some elderly will have hoarded some of their earlier production and have an alternative source in their non-working years. As the non-working population grows and demands an ever increasing cut of production, younger workers rebel, cease working, capital can not be borrowed and the system fails, bankruptcy.
He uses Argentina as an example of a country at or near bankruptcy for almost a century. He makes no attempt to address any systemic differences between the US and Argentina over the last 100 years. An analysis that would probably render the comparison useless and might even call into question the structure of his model.
In his first note, Kotlikoff uses the phrase "steady-state". This caught my attention because it indicates he is aware of attractors and non-linear/chaotic behavior in economic systems. He further acknowledges that the initial conditions determine whether the system will establish a steady state or crash. Only the elderly's cut of production determines the results of his model and only an increasing or very high cut produces the result his is concerned with.
The next section of Kotlikoff's paper concerns debt as a benchmark. He objects. It is the future production burdens that concern him. But in his original model, it was the elderly and their production burden as creditors he waves out of existence in favor of creditors with claim on production in the form of debt. As long as the debt is being serviced, investors will continue to lend. Consider that my opinion, but the billions lent to the US economy over the last 20 years would seem to give me some support.
Kotlikoff finally exposes himself:
"unfortunately the focus on government debt has no more scientific basis than reading tea leaves or examining entrails. To see this, let us return to our small open and entirely bankrupt Country X, which,when we left it, was setting h [cut of production] at the maximally expropriating value (1+r)w/r. Can we use Country X's debt to discern its insolvency?
"Good question, particularly because the word "debt" wasn't used at all in describing Country X's fiscal affairs. Neither, for that matter, were the words "taxes" or "transfer payments". This, by itself, indicates that the value of "debt" as a precursor or cursor of bankruptcy, namely zero."
This is simply amazing. Because he didn't use the word debt in his analysis, debt has no meaning to it.
Kotlikoff stated early in his paper that "government must further limit what it can pay it's creditors." I am unsure what Kotlikoff would classify as "pay it's creditors" other than as a debt. Whether it is in the form of usury or a cut of production, a demand upon the production of a country is a debt owed. Using a number to keep score is actually more consistent in these days of digital notes and agreements than it might have been, say in Mesopotamia.
Kotlikoff opens his paper with a paraphrase definition of bankruptcy from the Oxford English Dictionary: "is the United States at the end of its resources, exhausted, stripped bare, destitute, bereft, wanting in property, or wrecked in consequence of failure to pay its creditors?"
The answer is of course no. The paper could have ended in the first paragraph, but that is not what and Kotlikoff has determined. Kotlikoff believes countries can go bankrupt, but debt is not a factor, only the burden on production can determine a country's bankruptcy state.
I have addressed only the initial premise of Kotlikoff's paper and it would take many more pages to do so to the rest, but let me leave you with the following quote and some final comments:
"...the proper way to consider a country's solvency is to examine the lifetime fiscal burdens facing current and future generations. If these burdens exceed the resources of those generations, get close to doing so, or simply get so high as to preclude their full collection, the country's policy will be unsustainable and can constitute or lead to national bankruptcy."
Kotlikoff does not address insolvency and the United States. His concern is unfunded obligations and their increasing size. I and a great number of conservatives share his concern but his claim of bankruptcy while ignoring every facet of its definition prevent any serious consideration of his recommendations to 'solve' the problem. (And I agree with two of the three he makes.) Is the United States bankrupt is a catchy headline and would surely scare some, but after 16 pages, Kotlikoff failed not only to answer the question but to even address it.
Finally, please consider me a complete idiot. Trillions of dollars is big numbers so let me use smaller ones. If my annual income was $12,000 a year and I had $33,000 in assets, how much in future obligations would be ruinous. Not current obligations, but future ones. If I had $6,000 in current debt, could I add $500 in debt per year? According to Mr. Kotlikoff I am bankrupt. I am sure Todd Zywicki would be interested.
Laurence Kotlikoff is a Professor of Economics at Boston University and a research associate at the National Bureau of Economic Research.
Kotlikoff makes the following issue a central premise to his findings:
"..whether or not technology will continue to advance is an open question."
His scenario/model:
The amount of corn produced is determined by the labor and capital available. Capital is determined as the amount of corn that can replanted for future harvests. Of course, a certain amount of corn is necessary to feed the aging population that no longer contributes to the labor required to produce the corn.
By restricting productivity increases, only labor changes are going to have an impact on his two cycle process. The need for more people to increase production is a long term failure as at some point the number of people that have aged out of the production cycle will grow well beyond the ability to obtain more people to feed the labor pool. This is of course analogous to the retiring baby-boom generation that he seeks to model. The simplicity of the model is consistent with his need to constrain almost all the variables except the ones he is most interested in:
labor productivity and capital.
These limitations doom the 'society' he seeks to model. Such a restricted model is not capable of mimicking even the most basic issues facing our economy and government. Any model seeking to deal with labor must include some way to deal with technology issues. Kotlikoff's initial premise clearly defines both his bias and his failure.
Kotlikoff understands the issue, but refuses to consider it: "The point at which a country goes bankrupt depends, in general, on its technology and preferences as well as it's openness to international trade."
Once Kotlikoff makes his case that the increasing non-working population dooms society, he addresses the only issue left to him: capital. I found the leap he makes to be very unsatisfying. First, he considers the elderly population to be the 'creditors' in his scenario. He takes his formerly open economy allowing trade and credit flows and closes it. This little slight of hand includes the change of creditors from inside the economy to outside it. Now we have foreign creditors and his model restricts their ability to fund our economy. He supports this by asserting that foreign creditors will have no incentive to lend to the government because it has already proven its inability to produce sufficient for its own growing needs.
Of course, his original creditors subsist on the production and they have an interest in its continued existence. Failure is not an option, they can not just cut their losses and move to greener pastures. Conceptually, Kotlikoff can not allow the continued expansion of capital in his model if he seeks the conclusion he first set out to prove. The creditors have no alternatives to his 'economy'. By moving the creditors outside the closed economy, he can allow them the freedom of choice his original creditors (the non-working elderly population) do not have.
Kotlikoff further complicates matters by assuming the government will have been told by it's constituents (the soon to be or already elderly) to set their cut of production as high as possible. There is no feedback on this position, nor limits. While I might agree our social security system has certain similarities to Kotlikoff's model on this issue, it does not consider that some elderly will have hoarded some of their earlier production and have an alternative source in their non-working years. As the non-working population grows and demands an ever increasing cut of production, younger workers rebel, cease working, capital can not be borrowed and the system fails, bankruptcy.
He uses Argentina as an example of a country at or near bankruptcy for almost a century. He makes no attempt to address any systemic differences between the US and Argentina over the last 100 years. An analysis that would probably render the comparison useless and might even call into question the structure of his model.
In his first note, Kotlikoff uses the phrase "steady-state". This caught my attention because it indicates he is aware of attractors and non-linear/chaotic behavior in economic systems. He further acknowledges that the initial conditions determine whether the system will establish a steady state or crash. Only the elderly's cut of production determines the results of his model and only an increasing or very high cut produces the result his is concerned with.
The next section of Kotlikoff's paper concerns debt as a benchmark. He objects. It is the future production burdens that concern him. But in his original model, it was the elderly and their production burden as creditors he waves out of existence in favor of creditors with claim on production in the form of debt. As long as the debt is being serviced, investors will continue to lend. Consider that my opinion, but the billions lent to the US economy over the last 20 years would seem to give me some support.
Kotlikoff finally exposes himself:
"unfortunately the focus on government debt has no more scientific basis than reading tea leaves or examining entrails. To see this, let us return to our small open and entirely bankrupt Country X, which,when we left it, was setting h [cut of production] at the maximally expropriating value (1+r)w/r. Can we use Country X's debt to discern its insolvency?
"Good question, particularly because the word "debt" wasn't used at all in describing Country X's fiscal affairs. Neither, for that matter, were the words "taxes" or "transfer payments". This, by itself, indicates that the value of "debt" as a precursor or cursor of bankruptcy, namely zero."
This is simply amazing. Because he didn't use the word debt in his analysis, debt has no meaning to it.
Kotlikoff stated early in his paper that "government must further limit what it can pay it's creditors." I am unsure what Kotlikoff would classify as "pay it's creditors" other than as a debt. Whether it is in the form of usury or a cut of production, a demand upon the production of a country is a debt owed. Using a number to keep score is actually more consistent in these days of digital notes and agreements than it might have been, say in Mesopotamia.
Kotlikoff opens his paper with a paraphrase definition of bankruptcy from the Oxford English Dictionary: "is the United States at the end of its resources, exhausted, stripped bare, destitute, bereft, wanting in property, or wrecked in consequence of failure to pay its creditors?"
The answer is of course no. The paper could have ended in the first paragraph, but that is not what and Kotlikoff has determined. Kotlikoff believes countries can go bankrupt, but debt is not a factor, only the burden on production can determine a country's bankruptcy state.
I have addressed only the initial premise of Kotlikoff's paper and it would take many more pages to do so to the rest, but let me leave you with the following quote and some final comments:
"...the proper way to consider a country's solvency is to examine the lifetime fiscal burdens facing current and future generations. If these burdens exceed the resources of those generations, get close to doing so, or simply get so high as to preclude their full collection, the country's policy will be unsustainable and can constitute or lead to national bankruptcy."
Kotlikoff does not address insolvency and the United States. His concern is unfunded obligations and their increasing size. I and a great number of conservatives share his concern but his claim of bankruptcy while ignoring every facet of its definition prevent any serious consideration of his recommendations to 'solve' the problem. (And I agree with two of the three he makes.) Is the United States bankrupt is a catchy headline and would surely scare some, but after 16 pages, Kotlikoff failed not only to answer the question but to even address it.
Finally, please consider me a complete idiot. Trillions of dollars is big numbers so let me use smaller ones. If my annual income was $12,000 a year and I had $33,000 in assets, how much in future obligations would be ruinous. Not current obligations, but future ones. If I had $6,000 in current debt, could I add $500 in debt per year? According to Mr. Kotlikoff I am bankrupt. I am sure Todd Zywicki would be interested.
Disproportionate
Disproportionate response? Sorry, I am all for overwhelming destruction to rain down upon the heads of those STUPID enough to stick a sleeping bear with a stick with the INTENTION of pissing it off.
When what's his name got dumped on with a 500 lb bomb, some here said that was overkill....frankly, I wondered why they didn't use 1000 lbs. Shock and awe.....you stick a beehive and you will not get a couple of bees chasing you, it is the whole hive.
Fighters in Afghanistan and Iraq have learned that it is much safer to set a bomb and run than stand and fight. Hezzbollah is learning the same lesson.
Overwhelming force. Anything less is toying with a defeated animal....put it out of it's misery.
Thank you to our troops and for your service.
When what's his name got dumped on with a 500 lb bomb, some here said that was overkill....frankly, I wondered why they didn't use 1000 lbs. Shock and awe.....you stick a beehive and you will not get a couple of bees chasing you, it is the whole hive.
Fighters in Afghanistan and Iraq have learned that it is much safer to set a bomb and run than stand and fight. Hezzbollah is learning the same lesson.
Overwhelming force. Anything less is toying with a defeated animal....put it out of it's misery.
Thank you to our troops and for your service.
Saturday, July 15, 2006
Uncle!
Our daughter was playing with neighbor kids, they were shooting each other with those heavy duty squirt guns that carry....a gallon?! It is very hot and a good way for them to cool off. I stepped out onto our deck to watch them for a moment when my daughter dropped her depleted gun and was continued to be drenched. She called for the mom of the other kid to get her kid to stop. I yelled at her not to complain. We talked a little later and I said, if you are going to play the game, then when you start losing, you need to surrender, not complain to a higher authority! Teach them Uncle and surrender when you are beaten. She didn't like the prospect of having to surrender but I reminded her, she wants to play the game, she has to accept the consequences.
Hezzbollah has a bunch of 'friends' that are complaining. Hezzbollah started the game, they have to accept the consequences. Frankly, if Israel wants to turn southern lebannon into a waste land, I have no problem with it.
Our troops understand that the game has consequences, I haven't heard a peep out of any of the soldier bloggers complain about the unfairness of IEDs or their positions. I also don't expect anyone to cry uncle.
My support is 100%.
Hezzbollah has a bunch of 'friends' that are complaining. Hezzbollah started the game, they have to accept the consequences. Frankly, if Israel wants to turn southern lebannon into a waste land, I have no problem with it.
Our troops understand that the game has consequences, I haven't heard a peep out of any of the soldier bloggers complain about the unfairness of IEDs or their positions. I also don't expect anyone to cry uncle.
My support is 100%.
Friday, July 14, 2006
Our troops and the glare
The glare of the anti press is off our troops in Iraq and Afghanistan. For the moment, it is on Lebannon and Israel. Hopefully, while the press is occupied, the fighters in Iraq will get a more intense look at the dark end of our barrels: don't worry, won't be dark for long...
I support our troops and their efforts. Despite the lack of press, our attention is not diverted from your efforts.
I support our troops and their efforts. Despite the lack of press, our attention is not diverted from your efforts.
Thursday, July 13, 2006
Not our troops, but it is our fight
They sneaked over the border, killed a bunch of soldiers, took two as hostage. They might not have been our troops, but they are fighting the same fight.
I doubt they will live, but if Gaza is any indication, Hezzbollah is about to get a world of hurt on them.
Leave no man behind. Honor demands nothing less.
I support our troops, and I support Israel's right to honor.
I doubt they will live, but if Gaza is any indication, Hezzbollah is about to get a world of hurt on them.
Leave no man behind. Honor demands nothing less.
I support our troops, and I support Israel's right to honor.
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