Monthly Archives: September 2008

General, Politics

Some Daunting Numbers

I was just checking out the Census Bureau Population Report on Households. We are up to about 114M households in the US today, with about 2.55 persons per household. (Read the report if you want to see how they breakdown household compositions.) Of course, another Census Bureau report says we are at 116M households with a average of 2.56 people per household. I’m sure it all depends on what their definition of a household is, related vs non-related, etc.

With the National Debt at about $10,000,000,000,000, that runs to about $87K per household. The $700,000,000,000 bailout Rescue Plan that Congress is reviewing at present would add another $6K to average household debt. The median household income per year is about $50K per year. All that means is the 58M households make less than $50K per year and 58M households make more than $50K per year. So our national debt could be paid off in less than two years if nobody spent any money and just paid down the debt. In the meantime, the operating budget of the US for the next year is budgeted at $3,107,000,000,000, or $27K per household. (that doesn’t include the bailout figures). But US Households will only have to pay ~$19K each, for $2,200,000,000,000; $500,000,000 will be paid by other income sources. (Corporate taxes are expected to gather up to $339,000,000), and the remaining $400,000,000 will be tacked on to the debt. (Good ol’ Republicans, leaving their legacy ever deeper.)

I am finding it very difficult to find an ‘average’ household income. Everyone wants to list the median income. Whether the average is relevant, I am not sure. Incomes in the 5th quintile can be very skewed.

Economics, General, Politics

re: Executive Compensation

I have been hearing a bit that, as a result of the current financial meltdown, the salaries, the golden parachutes and the exorbitant compensation many (if not all) financial executives receive should be reduced due to their incompetence and malfeasance, especially if they expect the fed to bail them out.  On the other hand, the company/corporation and its shareholders are the ones that set the compensation and they are the ones that pay it out.

I would suggest that any annual compensation in excess of the US President’s salary be treated as taxable profit for the corporation.  So the corporation can still pay an executive $1M, $10M, $100M, but everything over $400,000 is taxed as pure profit. ( I also suggest that the President’s salary be no more than 10x the average household income in the US. )

I’m sure that these executives will try to  find a way around this limit – like ‘personal service contracts’ a la sport compensation packages – and I will leave it to the legislators to figure out how to deal with this violation of the spirit of the rule. Maybe something as simple as “executives can’t be contractors”. From my limited understanding of the corporate structure, executives are the ones that can commit a corporation to liabilities by signing a contract or agreement.

The other area of compensation that gets really outrageous is bonuses. I don’t know if bonuses can or should be tied directly back to the salary tax, but I would suggest that bonuses be deferred. An executive’s bonus should be based on how the company is doing 5, 7 or 10 years down the road, and not on what has happened in the past quarter or the past year. If a bonus is premised on an increase stock price, then let it be the stock price 5 years from now.  If the executive is no longer with the company, big deal, they, or their estate, still get the bonus.  Give the executives an incentive to lay a solid foundation for future growth rather than trying to game the system for a short-term spike in the market. That is a call for the board of directors and the shareholders, but maybe we can motivate them to go in that direction.

Politics, Preparing for the worst

it is still a lot of money…

$700 Billion, $700 Billion, $700 Billion.  Now matter how often I say it, that is still a lot of money.  Maybe if I try $.7 Trillion, $.7 Trillion, $.7 Trillion. Yeah, that’s not as bad, but it is still a lot of money.

Let’s see, about a week ago the Bush administration proposed buying up a lot of ‘toxic’ debt from various institutions to help free up the engine of the US economy. We, the American People, are being asked to bail out a bunch of de-regulated institutions who went and did what the lapsed regulations were meant to prevent.  $700 Billion. And we are being asked to blindly follow the dictates of the very people who created this mess and to decide very quickly, like by tomorrow, before we even know what the full scope of the problem is.  $700 Billion. I don’t think so.

But let’s say the idiots in Congress decide to further mortgage the future and attempt some sort of bailout. I would suggest that we don’t pay more that $.10 on the $1, and that we don’t buy any derivatives*. This purchase should only limited to base mortgage securities.  With Fannie Mae, et. al. we already have half the mortgages in the country.  Then once we have all these sub-prime mortgages, we can renegotiate with the original mortgage holder for $.50 on the $1.  And We, The People, can make a bit of profit and maybe let folks keep their homes.  Of course, the drawback is that it will take 30+ years to close the books on this.  Maybe once we have restructured all these mortgages from sub-prime to prime, we can bundle them up as security instruments and sell them back to the free marketplace?

And we will take our national debt from $9.7 Trillion to $10.4 Trillion. When you say it that way, maybe it isn’t a lot of money. Oh, but wait, don’t we still have another $400 billion to add to the debt in the next budget? $10.8 Trillion – let’s round it out to $11 Trillion –  we can live with that.

Or maybe the institutions that are going to sell these securities to us at $.10 on the $1 can avoid the middle-man, take the write-offs and renegotiate with the mortgage holders directly for $.50 on the $1.

*Whatever we do, we should not buy derivatives, at least not until a majority of the country has passed an introductory calculus course.

Economics, Liberating Thoughts, Politics, Preparing for the worst

Whose Economic Policies Work Best?!?

Personally, I consider the National Debt to be the greatest threat to the future well-being of the United States. Followed closely by deficit spending. Given the economic news of the past week, with the Federal Government doing its best to socialize losses, I expect the debt will continue to grow. (Did you know the National Debt is about to hit $10 Trillion? That’s Trillion, with a Tr.)

Avedon compiled a review of past administration economic results that Dwight Meredith studied “Just For the Record” – covering 1962-2001.

The link has some specific numbers and links to other interesting pages.

A bit of Summary:
Continue reading Whose Economic Policies Work Best?!? →

Economics, Preparing for the worst

Why Keep Your Landline

I saw this commentary in Telephony Online.

I still have a landline to my house. I sometimes ask myself why am I spending the $25 a month to keep it.

One of the main reasons I keep it is that the phone company provides a separate power source for the telephone from the commercial grid power. If the snow and ice take down all the cables on the poles where power and phone overlap (about 1/4 mile to my place) then I am out of luck. But  if the power line goes down elsewhere, I should still be able to get dial-tone on the phone.  And if the commercial power goes out, the odds are the cell phone tower has also lost power and unless the wireless companies have gone to the much added expense of providing a long-term battery backup to the cell tower, your cell phone is dead.

It seems like once every year or two we get a major power outage in our area and I can look across the valley and see the darkness. Something breaks far away and everything in the area will take a power hit until the electric company can reroute the power. Last year I think we were out for over 24 hours because ice took down some power lines 10 miles away. It took the utility that long to reach the break because of the storm.

And I have several different type telephones including ones that don’t need to be plugged into a wall socket to work.

The redundancy of having cell phone and landline is a bit of added comfort when you are going to be stranded in a blizzard.  (As I write this it is 80′ and sunny)

Politics

McCain still thinks economy is strong

YouTube – McCain still thinks economy is strong.

I would like to hear John McCain’s explanation as to what the fundamentals of our economy are. Will any of the debate interviewers ask that question and work to get an answer to the question?

For that matter, I would like to hear Obama’s answer to that question.

Between McCain and Obama, which one is more likely to “fix Wall Street”? I’m definitely not betting on the Republican. And I haven’t heard anything to make me think the Democrats will either.

General, Liberating Thoughts, Politics

Trying to make history : AFA professor eyes run for Lamborn’s U.S. House seat

Trying to make history : AFA professor eyes run for Lamborn’s U.S. House seat : Local News : Local News : Colorado Springs Independent : Colorado Springs.

I had a chance to meet Hal last night. He is a very engaging speaker – recounting his adventures up at the DNC in Denver. And he has some good ideas on what Congress needs to be working on, check out his web site –

It’s the Alexander Hamilton bit that worries me…I tend to be more Jeffersonian…