Category Archives: Economics

Economics, General, Politics

Occupy Stardel

There are a number of items I would like Congress to implement to start the economic justice pendulum heading back to sanity.

  • Restore Glass-Steagall at a minimum.  Keep Commercial and Investment Banks separate. Keep both of them out of the Insurance business. There may be some more regulatory restrictions that have a demonstrated need since the 1930’s but get us back to the 1990’s first.
  • Review and reset SEC regulations every 7 years. All those smart guys on Wall Street like to game the system and it would behoove us to reset the games parameters as they stretch the limits.
  • Prohibit Federal employees and contractors from working in the financial industry for at least 7 years after they leave their Federal job or contract.
  • Un-recognize all Nationally Recognized Statistical Reporting Organizations (NRSRO). Reinstate recognition only to those organizations that are not paid by the parties they are reporting on.
  • Pass a law that explicitly states that corporations are not “People”.
  • Pass a law that only citizens can contribute to political campaigns and that all donations must be made available to a readily search-able database, maintained by the FEC, within 48 hours. I would like to extend this even further and say that only registered voters can donate to political campaigns but I will settle for citizens to start with.  I don’t know that any contribution caps are needed  if there is transparency about who is buying the candidate but we should not preclude that option if needed.
  • Any corporate compensation in excess of the President’s annual salary shall be counted as corporate profit and taxed as such.  No deductions.

I believe this agenda falls under the mandate of the United States:

We the People of the United States, in Order to

  • form a more perfect Union,
  • establish Justice,
  • insure domestic Tranquility,
  • provide for the common defence,
  • promote the general Welfare, and
  • secure the Blessings of Liberty to ourselves and our Posterity,

do ordain and establish this Constitution for the United States of America.

 

 

 

 

Economics

Cheaters ever Prosper

OWS’s Beef: Wall Street Isn’t Winning It’s Cheating | Matt Taibbi | Rolling Stone.

Matt Taibbi has an excellent rant on a big why behind Wall Street.

…we hate the rich? Come on. Success is the national religion, and almost everyone is a believer. Americans love winners.  But that’s just the problem. These guys on Wall Street are not winning – they’re cheating. And as much as we love the self-made success story, we hate the cheater that much more.

We cheer for people who hit their own home runs in this country– not shortcut-chasing juicers like Bonds and McGwire, Blankfein and Dimon.

 

Economics

If

If you have an underwater mortgage, say $120,000 mortgage on a house that is assessed at $80,000, and you are making the mortgage payments on schedule, and you ask the bank to refinance to a lower rate and the bank can’t do that because you are asking to finance a loan that is greater than the collateral, does this make sense? You’re still willing to make the payments on the $120,000 amount but you would like to pay at today’s interest rates.

Why can’t the bank work with you on this? The fiscally responsible action is for you to walk away from the loan, leaving the house and the debt in the bank’s hands. This is what all those Wall Street entrepreneurs would do. Of course it isn’t the ethical thing to do, but what do ethics have to do with fiscal responsibility?

Economics, Politics

Taxing

I would like to propose a few taxing proposals.

First is to take federal social insurance (Social Security, Medicare and Medicaid) off the books and let them be funded by a straight 20% payroll tax. Those payroll taxes go straight through to the trust funds and don’t go through the Congress. Congress can oversee the Trustees. I would also suggest that Medicare/Medicaid will provide universal coverage.

Let’s get rid of the itemized deductions, give every household a flat deduction of $75,000, calculate the non-social insurance expenses for the government and figure out how much revenue we need to collect to cover the difference.  Then calculate what we need to tax everyone to meet our goals.

As an example: We have $13T income in the US. With the 20% payroll tax the Social Insurance Funds are collecting $5.2T (employer matching). That should cover the annual medical costs and retirement funding with no problem.We have ~$9T in flat deductions, leaving about $4T to cover the federal budget. Taking the Social Insurance costs out of the picture we have about $2T to cover. So a 50% tax on everyone’s income over $75,000 will cover the budget with no deficit. And the Corporations don’t have to pay any taxes!

Or we could arrange for the personal income tax to cover 3/4 of the budget and Corporations to cover 1/4 of the budget. Then we have $0.5T coming from Corps and $1.5T coming from the people with a 37.5% tax rate.

I am sure there are some tweaks that need to be accounted for. What about folks whose income doesn’t come from payrolls? They need to contribute to the Social Insurance funds. And what about 1 person households and 2 person households and 10 person households, etc? Do they all get the same $75,00 deduction? Some more pondering is needed.

Economics

Capitalism Redefined

I heard an interview of Roger Martin the other day on Business Daily and he pointed out that the idea that companies are in business in maximize the shareholders short-term profit is just because someone said so. There is no reason that this should be the driving goal of capitalistic businesses.

I suppose that over the years the idea of short-term profits has become the loudest voice in the room.What if we changed that to reward 10-year growth? A company’s executives and board put together long-term goals and drive the company in that direction  and they are rewarded for reaching those goals – in 10 years. Bonuses will be paid to you or your estate whether you are still with the company. And if the 10-years goals are set every year, potential investors can see how well the management is doing and decide if they want to invest or invest more. There are no extraordinary bonuses based on past year’s performance or non-performance.  Profits/dividends can still be distributed annually, but the focus on performance is long-term.

It will require a paradigm shift to get away from immediate gratification ( I hate using that term but I think it actually works here.) I can’t imagine the current crop of business managers will move willingly in this direction. So much easier to game the system in the short-term. I don’t know how we could go about introducing this as a common business practice. Possibly use the SEC to reward the long-term planners? Disincorporate companies that don’t line up? Talk to the states that  incorporate companies and get them to change their rules?

Whatever, let’s put it on the table. I’m sure there are a lot of considerations to include. Maybe 7-year planning rather than ten (let’s not go to 5-year planning).

Economics, Politics

Social Contracts and Will

Elizabeth Warren and liberalism, twisting the ‘social contract’ – The Washington Post.

 

I wonder if George Will is being deliberately obtuse? He has taken Warren’s statement on the social contract and extends it into a collectivist political agenda.

The collectivist agenda is antithetical to America’s premise, which is: Government — including such public goods as roads, schools and police — is instituted to facilitate individual striving, a.k.a. the pursuit of happiness.

The individual striving is enabled by the government infrastructure and it is fair and equitable that any success in the pursuit of happiness provide some payback. And the greater the success the greater the payback should be. Or as Warren refers to it – pay forward.

 

Economics, Politics, Preparing for the worst

Uncertainty

 

 

 

 

 

 

 

 

 

Regulatory uncertainty: A phony explanation for our jobs problem | Economic Policy Institute.

There is some talk about the uncertainty of government regulation slowing down or stopping ‘business’ from investing their several Trillions of  dollars in the growth of the American economy.

So instead of uncertainty, why doesn’t business assume the worst. The government will establish regulations that will prevent American Citizens from being:

  • Poisoned
  • Killed
  • Defrauded
  • Threatened
  • Mistreated
  • Terrorized
  • Disadvantaged

And that will put the public good over the corporate good.

Assume the worst and everything doesn’t come true is gravy for your bottom line.