New “Energy Bill” a 50% Tax Increase on Middle America

According to Martin Feldstein, the Energy Reform Act that has passed in Congress (but not in the Senate) represents the equivalent of a 50% tax increase to the average American Family.

The Congressional Budget office predicts that passage of this bill will dramatically increase the cost of living for all Americans, by an average of $1,600 per year. Since the average family of four, with earnings of $50,000 per year, now pays approximately $3,000 in taxes, this represents a hidden tax increase of 50%.

Next on the agenda is a new health care tax, again under the guise of "reform." This will help create a new government health care bureacracy and greater taxes.If our president and Congress want to raise taxes and costs, that is their right as our duly elected leaders. However, they should do this in plain sight, not by hiding behind "change."

I am saddened that the mainstream media has done nothing to bring this information to light. This president campaigned on raising taxes only on the "wealthy," as defined as those making more than $250,000 per year. So far, we have seen tax after hidden tax, primarily on the little guy. These new energy taxes will affect all Americans, particularly those living on fixed and moderate incomes. I repeat, these taxes and cost increases do not hurt the wealthy anywhere near as much as they hurt the rest of us. Where is the outrage?

I encourage you to follow the attached hyperlink to Feldstein’s article discussing this. In case you don’t know, Mr. Feldstein’s qualifications, I have copied a brief excerpt from his website. He is a Harvard professor who has advised several presidents on economic policy. He is a member of Mr. Obama’s Economic Recovery Advisory Board.


http://www.nber.org/feldstein/WELL.Feldstein.pdf

Short Bio:
Martin Feldstein is the George F. Baker Professor of Economics at Harvard University and President Emeritus of the National Bureau of Economic Research. He served as President and CEO of the NBER from 1977-82 and 1984-2008. He continues as a Research Associate of the NBER. The NBER is a private, nonprofit research organization that has specialized for more than 80 years in producing nonpartisan studies of the American economy.

From 1982 through 1984, Martin Feldstein was Chairman of the Council of Economic Advisers and President Reagan's chief economic adviser. He served as President of the American Economic Association in 2004. In 2006, President Bush appointed him to be a member of the President's Foreign Intelligence Advisory Board. In 2009, President Obama appointed him to be a member of the President's Economic Recovery Advisory Board.

America 9/11

On this, the eve of the 4th of July, I want to share the lyrics one of the songs I have written about freedom. If you are reading this, you probably know that I cherish the freedom we have as Americans. I also feel that we are losing that freedom, bit by bit.

I first wrote this song in the early 1980s, when Japan was kicking our butts economically. At that time, Japan was buying up some of our greatest resources. So, the first version of these lyrics dealt with the loss of many of the landmarks we hold most dear. The same thing is happening with China today. They just bought the rights to Hummer. They bought the rights to IBM PCs. They control the Panama Canal. They bought Global Crossing, which controls much of our international communications.

I altered the lyrics in 2001, after the 9/11 attacks. This is the version you will read below.

This song frames freedom in an historical context, denoting the sacrifices others have made, and the gradual erosion to our freedoms over time. 9/11 chipped away at our freedom even more.

Terrorism steals our freedom daily. Fighting it absorbs our resources. It spreads fear and robs us of our emotional well-being. If we do not address this issue today, while terrorism remains mostly off our shores, we may face it here, in ways that will make 9/11 seem like child’s play. Make not doubt, there are those that will try to detonate nuclear warheads in this country, just as they use car bombs today.


© Jay Lumbert
America 9/11

When I was just a boy
My dad would set me on his knee.
He'd say,
“Son, in this great land
You can be all you want to be.
Our nation's based on freedom,
Trust, and opportunity,
And there's nothing
That will hold you back,
From sea to shining sea.”

Our forefathers gave their lives
In the Revolutionary War.
And Abe Lincoln did the same
For the slaves we'd brought onto our shores.
They fought against the Kaiser,
And then Hitler and Japan.
And it was all so that their children
Could live in the Promised Land.

America the beautiful,
For amber waves of grain,
So giving and so dutiful,
Above thy fruited plains.
When I'd pledge allegiance to the flag
I would stand up tall and proud.
But America,
Where are you now?

It’s plain to see, democracy
Is envied by the world.
We raise our heads with pride
Whenever the Stars and Stripes unfurl
But our carefree way of life
Gets shaken to its very core
When terrorists use freedom
As their tool to wage a war.

What's happened to our liberty?
Did we let it slip away?
Or was it stolen while we
Chose to look the other way?
We used to be a beacon
Shining bright for all to see,
Not sifting through our ashes,
Looking back at Old Glory.

Today we face the choices
Our forefathers had to make
There are those that question if
We still have all it’s going to take.
The sacrifice, commitment
And the will to see it through
And the faith we will prevail
No matter what our foes may do.

America, stand up and fight,
Or we'll give it all away.
Freedom's earned,
It's not a right.
We must pay for it each day.
We can't earn freedom
Wishing things were as they used to be.
And then sitting back while terrorists
Take shots at liberty.

We all must band together
And there's so much to be done.
We must all declare a war until
Our victory is won.
Every worker, mother, father, child
Must sit down hand in hand,
And roll up their sleeves,
Together, we can resurrect our land!

America, stand up and fight,
Don't forfeit all you've won.
Our freedom’s running out of sight,
There's so much to be done.
But there's nothing that can stop us,
Don't believe the things they say.
We've overcome far greater odds,
We are the USA!

We've overcome far greater odds,
We are the USA!

We've overcome far greater odds,
We are the USA! © Jay Lumbert

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Can We Have Peace With Radical Islam?

I applaud Mr. Obama for taking initiatives to bridge the divide between the Muslim world and the West. If we don’t find a way to compromise in this matter, we will never live in a world without the fear of terrorism.

That said, I hope our president realizes that it doesn’t really matter what the majority of Muslim people say or do. The great majority of Iranian and Pakistani people could be solidly anti-terrorist. They could even be pro-west. But getting a government that joins the fight against terrorism (let alone a pro-west government) will be impossible without the blessing of their religious leaders.

The recent Iranian election is a good example of Arab politics in action. By most accounts, this was going to be a very close election. The hard-line, anti-west, Mahmoud Ahmadinejad was being challenged by a far more conciliatory Mir Hossein Mousavi. Mousavi’s candidacy was gaining momentum daily, fed by a kind of grassroots movement that literally propelled him into the national spotlight. It appeared that he might just overtake the incumbent leader, who was seen by many as an impediment to peace.

It comes as no surprise that a “close” election turned into a rout by the sitting president. Sixty million hand-written votes were “counted” in about twenty minutes, with the results being a resounding mandate for Ahmadinejad. When Iranians lined the streets in peaceful protest, Iran’s “Supreme Leader,” Ayatollah Ali Khamenei, “settled” the issue with one sermon and a crackdown ensued.

As Obama decried the crackdown, Khamenei cried that Obama was “just like Bush.” So much for conciliation.

The means to eliminating terrorism is not through government, but through religion. Terrorists do not care what their government leaders say; they answer to what they perceive as a higher leader – Allah.

If Muslim Imam’s ever told their “faithful” to stop terrorism, they would stop. If Muslim governments tell them to promote peace, the “faithful” laugh.

We are not in a war against Islam. We are in a war against a relatively small percentage that makes up radical Islam. These people are not directed or motivated by politicians.

The day that Islam’s “holy leaders” point to an enemy other than the United States and the “West,” our terrorism problem will be over. Until then, no amount of rhetoric, and no amount of political “peace-making” will make that change.

Exactly what do these radical leaders preach? And how do they get their power?

Many radical Imams preach for the eradication of the “Zionists,” Israel. Until Israel no longer exists, they will fight anyone that lends support to Israel. Khomeini was one of the most outspoken members of such clergy. His successor is much the same.

Many religious leaders adhere to the more extreme sections of the Qur’an that call for the murder of all non-believers. This extreme, literalism in their “Bible” is what Mr. Obama has to address. Just as the Christian Bible’s “Old Testament” preaches an “eye for an eye,” the Qur’an does much the same.

As Iran gets closer to producing nuclear weapons, the Middle East is growing more and more unstable. Iran already has the missiles that can deliver a warhead, and it wouldn’t take much to strap a warhead on one and launch it.

We have already seen that those in charge of nuclear programs can have radical beliefs that foment hate and destruction. The leader of Pakistan’s nuclear weapons program gave (or sold) critical technology to several rogue, anti-west countries.

If I were leading Israel, I would not stand by and allow Iran to produce nuclear weapons. No matter how remote the possibility of attack, the penalty of a “miscalculation of intent” is destruction. No leader wants to commit national suicide.

Iran has just re-elected a president (with the support of Khamenei) that wants to eliminate Israel. It won’t be long before the United States is thrust into the middle of this conflict.

We have a 60-year history of backing Israel, both in public and in private. We have made many unofficial promises to this nation, and they have acted as an important buffer for our interests in the region.

Our administration pretends that peace in the Middle East can be achieved if Israel gives more land to the HAMAS-led Palestinians. HAMAS is considered by much of the western world to be a terrorist organization. Their 1988 charter calls for the replacement of Israel with an Islamic State.

What Mr. Obama refuses to acknowledge, or fails to realize, is that Israel’s land is simply the current focus of terrorist aggression. HAMAS leaders claim that there can be no peace until Israel surrenders all of the land they acquired during the Six Day War.

Should the United States surrender the land from Texas to California to Mexico because we took it in war? Should we return the nation to Great Britain because we took it in war? Why should Israel act differently than the Unites States? Israel was attacked and they fought back. History is written and controlled by the victor.

Obama seems to think that if Israel returns all of the land, peace can be achieved. The truth is, no matter how much land Israel gives up, it will not be enough. The anti-Zionists will not stop until Israel has been eliminated. As long as we are duped to believe that peace can come from a simple land exchange, we will remain the laughingstock of the Islamic world.

Some leaders think that the elimination of Israel is the only way to achieve peace in the Middle East. They are seeking to cut our ties with Israel, and allow the Islamic world to do the dirty work. These leaders think that a world without Israel means a world at peace. These people don’t understand that Israel is merely the current target of the religious zealots. The moment Israel is replaced by an Islamic State, the radical leaders will set their sights on another target, most likely, the United States. We have plenty of pornography, corporate greed and colonialist tendencies to keep every Imam happy and pointing fingers. Make no mistake about this, radical Islamic leaders lose their power without a demon to blame for all of their problems. If Israel is gone, we are next in line.

Please understand that I am not Jewish. I am simply an observer of history and a keen student of human behavior.

If one looks at the history of Northern Africa and the Middle East, one will find that the region is dominated by tribal affiliations dating back hundreds of years. They also have a way of thinking that we (westerners) could never fully understand. Abdul Aziz ibn Saud was able to conquer Arabia (Saudi Arabia) with an “army” of less than a dozen men. All he needed to do was kill the current “king,” which he did by sneaking into the king’s mud palace at night and stabbing him. The moment this happened, the king’s former warriors, Saud’s former enemies, immediately switched their allegiance to him.

We saw a modern-day version of this when Iraqis fighting alongside American forces asked that captured Iraqi enemy soldiers be allowed to switch sides and fight alongside the U.S. led forces. Their personal ideologies are practical, not emotional. Most answer to a higher calling - Islam. Islam means to “submit” for the majority of followers. It is only the radical few that rule. These few rule with brutality and so-called “religious” fervor, claiming that they do the work of Allah. They believe that they are doing the work of their god.

Whether these religious zealots are elected or not doesn’t matter. The militant radicals in Islam do not follow their elected leaders. The follow their religious ones, and these men are usually the puppet-masters that control their politicians from behind the curtain.

As long as we continue to think that political treaties will have compliance by rogue terrorists we are doomed to failure. Thinking that political leaders will control terrorist activities in their respective nations is simply a farce. Look at Afghanistan. Their leaders have agreed to let us prosecute the war on terror within their country. We are sending more and more troops to try to stop the spread of terrorism and drug trafficking within the Afghan borders. This is taking enormous sums of money and a great toll on some of our finest individuals. We can be successful, to an extent, as long as we keep a large fighting force in Afghanistan. Unfortunately, the minute we leave the country, terrorism will sprout again like weeds.

We do not have the financial or human resources to prosecute this battle across every Islamic nation. What we are doing in Afghanistan, and what we did in Iraq, was to demonstrate that there are severe consequences to fomenting terrorism.

To any rational person or government, this might make sense. But we are dealing with religious zealots who follow Imams that promise seventy virgins in the afterlife to any man who dies for the cause. Not long ago, an advertisement was put up at the University of Tehran asking for suicide-bomber volunteers. More than a thousand students offered their services.

The more we fight terrorism, the more it fights back. So, what do we do?

The first thing we should do is support Israel. This is the right thing to do. It is also the most practical. Whether we want to believe it or not, Israel acts like a big shield for the United States against terrorism. They are also willing to do the things that our current administration will not do—that is to fight terrorism in a way that it understands.

The ultimate end to this “war” may not occur for another fifty years or more. The radical Imams and their followers will not quit, no matter how great the traditional pain and political pressure. Our prosecuting a sanitary war, as we have in Iraq, will do little, if nothing to stop the terrorists. Saddam Hussein understood this. What it took for him to consolidate power in his country, and prevent great civil unrest, was the wholesale slaughter of 1.5 MILLION of his citizens.

At this point this kind of action is inconceivable to us. Yet, don’t think that this could never happen. It was only sixty years ago that we did such a thing to end World War II with the Japanese. We warned them. We dropped a nuke. We warned them again. We dropped another nuke. Finally, they capitulated.

As heinous as this might sound, this kind of solution may be the only thing that terrorists actually understand. If Islamic terrorism becomes as rampant in this country as it is in Israel today, the American people will begin to demand it.

An equally likely “solution,” will be for us all to be controlled by Islam. This may sound ludicrous, but it is happening all over the world. Islam is now over 20% of the world’s population and growing. Since most religions do not have such a violent component, they tend to choose a path of peace, allowing the radicals to control more and more. This is what has happened in Islamic nations all around the world. It is beginning to happen in countries like France, were more than 20% of its population is now Muslim.

I pray that Mr. Obama is able to pull a rabbit out of his hat and bring about peace—just as the president does in my new book, The Presidential Pretender. Unfortunately, human nature is an awfully hard thing to fight.


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Cloud Computing: The Next Tech Revolution

There is a new technological revolution underway that will dramatically change our lives, much as the PC and the Internet did. It is called cloud computing.

There is a fierce battle over control of this turf, with trillions of dollars at stake. With the growth of computer usage, the explosion of app software, the increasing speed of the Internet and the ubiquitous use of wireless devices, the world is primed for this revolution, with unlimited potential demand, with fortune to the victors and failure to the losers.

Cloud computing allows us all to access superfast computer from anywhere. Just as I am writing this blog from a theater in Brockton, Mass, as I wait to see my daughters dance, I could be crunching numbers on a supercomputer with my Blackberry, using my voice like a keyboard. No more waiting for my computer to boot up, no more backing up my data, no more having to load new software, no more having to purchase faster and faster hardware. Everything will be automated. Like Jack Trance in The Alchemist Conspiracy, The Varicose Vigilantes and The Presidential Pretender, we will all have access to unlimited speed and power. We can have eyeglasses that provide the screen and connection. Everything can be voice activated. No more having to carry around these bulky laptops. We will still have screens that are as big as our laptops, but they will be holographic and will fit into a container no bigger and no more bulky than a small pen.

Needless to say, the battle for dominance in this arena is fierce. As the industry struggles to create standards and mobility between providers, the dominant early players are resisting. I see a new epic battle brewing, like Apple vs. Microsoft, Coke vs. Pepsi, Ford vs. Chevy or the Red Sox vs. the Yankees.

As I write this, the early leaders are Microsoft (no surprise) and Amazon. Look for companies like IBM, Google, AT&T and Verizon to join the fight in some way or another.

This is like the early days of the personal computer, when there were dozens of players, or automobiles, where there were more than a thousand car makers. In the end, though, only a few players, maybe even one, will matter.

This will all be happening at light speed, and it will usher in a whole new wave of business productivity. That’s good, because the way our government is removing business freedom, we're going to need it.

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Will Obama Create Jimmy Carter-like Stagflation? Forever?

I am seeing very ominous signs that our nation is heading toward a period of stagflation quite similar to what we experienced during the administration of Jimmy Carter.

Our government has opened up the money spigot to help avoid a global financial collapse. This, in itself, will be inflationary. Flooding the markets with excess cash causes inflation. Simple math.

Much of last year’s monetary action had to be implemented, particularly the actions by the Fed, in order to avert a true global meltdown, not the hiccup we actually encountered.

At the same time, the current administration is creating spending plans that go far beyond our means to pay. We are talking $1 trillion - $2 trillion deficits for as far as the pencil can see. This will force our government to go to the capital markets to borrow huge sums of money. In order to attract capital, we will have to pay higher and higher interest to entice investors to risk owning our capital.

In order to maintain workable interest rates, the Fed will find itself “forced” to print more money. This will add to inflation and worsen the problem.

Our administration’s solution to our growing budget deficits is “health care reform.” This is code for higher taxes and greater expenses. Obama plans to (attempt to) tax medical benefits that are provided by employers to their employees. Such a tax might raise between $100 billion and $200 billion per year.

At the same time, Obama will seek to nationalize health care, by promising a more streamlined, less-costly delivery system. Anyone who spends ten minutes examining the health care systems of such countries as Britain, Canada and you-name-it, will find that government bureaucracy only bloats costs and creates inefficiencies. To manage spiraling costs, governments are forced to ration care. It will take years to get a hip transplant, provided you are young enough for the government to pay for it. Cancer treatments with low probabilities of success won’t get funded. And doctors who order the least amount of testing, the ones who send you home with a brain tumor telling you it is just a headache, will become the government’s preferred providers. Our health care will go from being the best in the world to among the worst.

Increasing taxes on companies and our nation’s citizens has never been an effective way to increase long-term revenues. Lowering tax rates is far more efficient in creating greater long-term government revenues. If you leave a dollar in the hands of someone who invests their money rather than spend it, the money creates wealth, jobs and (ultimately) greater taxes to the government.

I believe that a government must have compassion for its people. I believe in a safety net for all citizens. But I don’t believe that politicians in Washington are better at managing money than the average U.S. citizen. The free markets are far more efficient at providing essential services than the government could ever be.

Obama is seeking to grow our government at an unprecedented rate. He is doing this deceptively, and few citizens actually realize how massive this undertaking has become. Much of this is being done with excessive deficit spending that will drive interest rates higher and higher, at the same time that his taxes stifle growth.

Tim Geitner has warned our Congress that the proposed budget deficits are dangerous for our economy. As projected, it will take less than ten years for the U.S. to lose its AAA bond rating. When this happens, we will be forced to pay hundreds of billions more annually to service our national debt. This may put us over the point of no return, from where we can never recover.

If we don’t do something about government spending today, our children and grandchildren will live in an America that is far different than the one we enjoy. Our dollar will buy little. Goods will be increasingly expensive. Tax rates will exceed 80% at the highest levels. Good jobs will grow scarcer. The American Dream will have become more like the American Nightmare.

The United States is the most productive society in the history of the planet. We enjoy the highest standard of living that the world has ever seen. We became that way with freedom of choice and a low tax base.

Our government’s current policies are rapidly taking away our freedom and putting in place fiscal policies that will demand higher and higher taxes.

I assure you, this is not a reactionary tirade by a right-wing ideologue.

I have been both a republican and a democrat during my life. I vote for both parties. Because of my own personal experiences, I believe in a number of so-called “liberal” policies. I know what it is like to face oppressive roadblocks in life, to suffer at the hands of others with no way out. I have broken my back and my neck. I know what things outside of our control can do our lives. I have been the beneficiary of the kindness of others, and I know how important this can be. Unless you have been there, you simply don’t know.

Many “conservatives” preach about self-sufficiency. They don’t want government subsidies or preferences. On its face, this sounds fair. But life isn’t fair. Sometimes support from others, even the government, is needed to overcome disadvantages, to allow for equality. I do agree, that all too often, government does this inefficiently, but it must be done by any moral society.

Sometimes, the government can do things that the private sector will not do on its own. We must provide the capital to develop technologies that are too far in the future for smart companies to invest in. Why would Exxon invest billions in a technology that might provide energy thirty years from now? Personally, I would like to see our government sponsor an alternative energy program (including nuclear) similar to the Manhattan Project. We are headed toward $4 gas, far sooner than anyone realizes today.

Having some “liberal” needs and tendencies does not mean that our nation should act irresponsibly, and create problems that cannot be reversed without draconian pain. This is where our nation is heading at the moment.

If Congress does not step up and curb spending…if the Obama administration doesn’t get their head out of the clouds by thinking that a new government bureaucracy will create spending efficiencies…if Congress continues to think that higher taxes will solve these problems…we are in for a whole lot of pain. Big-time pain. Something that will make the current “global meltdown” look like the good ol’ days.

The Obama administration has taken a “financial crisis” and used it to help grow the size and power of the government. Our dominant media is doing little to educate the public on how serious the ramifications of our current government policies will be. Personally, I don’t think they understand it one bit. Everyone is being blinded by how “good” we can be, how “compassionate” we are and how “peaceful” we can be with our enemies. While all this is going on, our nation is heading toward Niagara Falls in a barrel.

Like a magician using sleight of hand, our government is rapidly taking away the nation we grew up in and replacing it with third-world socialism.

Unless we realize this soon, and take action, we will all get to experience the stagflation we faced during the Carter administration. Unfortunately, our nation’s finances will have eroded so far by then, that we may not be able to recover and get our nation back. Would you like to live in Russia today? I wouldn’t. But that’s the direction that our nation’s captain is trying to steer our national ship.

Obama Cap-and-Trade: A Tax We Can’t Afford

The Obama administration is backing a bill going through Congress (Waxman-Markey) that would cap U.S. Co2 emissions at 83% of 2005 levels by the year 2020.

While this is an idea that sounds good to the politician, it is a policy move that will severely tax the American people, it will cost American jobs and it will do little to reduce global carbon emissions.

The U.S. Congressional Budget Office has estimated that it will cost the average American household $1,600 per year to reduce CO2 emissions by 15%. American families are struggling as it is. It will increase the prices of American-made goods, causing us to lose more jobs. It will shift production overseas to countries (like China) that have no restrictions on CO2 emissions. It may even increase overall global Co2 emissions, the opposite of its intent.

At this time, U.S. carbon emissions represent about 25% of global emissions. A 15% reduction represents about a 4% drop in world CO2 emissions, assuming the products are still made in this country. However, the tax (yes, it is a tax) would cause more overseas production, in areas that pollute many times more than we do for the same output. The net result will be a lower U.S. wage base, more unemployment and no less global pollution.

In reality, this bill represents little more than a power grab by Washington, giving politicians the ability to trade CO2 credits for votes. Nothing more.

GM Bankruptcy Another Union Payoff

General Motors went into a controlled bankruptcy today, with the government pledging another $30 Billion of our tax dollars to subsidize union labor. The unions have also become the company’s largest (apart from the government) shareholders.

GM’s union workers still receive close to $50,000 per year in higher pay (including benefits) than Honda, Toyota, Nissan & BMW, etc. workers in non-union states. I see nothing in the current negotiations that is going to significantly reduce that union labor cost below $150,000 per worker.

Anyone who buys a car, both new and used, must pay more because of this. We also need to pay more in taxes because of this. That’s where the bailout money comes from. And this $30 Billion will grow into $100 Billion (or more) before it is over.

What the government should do is to allow GM to hire non-union labor without the threat of a strike. This way, they will pay a fair wage, as determined by market forces, and they will once-again become competitive.

Each U.S. automaker must pay somewhere between $1,500 and $2,500 for each car in “legacy” and excess-labor costs, before the car even hits the assembly line. No wonder the U.S. makers can’t compete. If they were the only producers, they could pass the cost along and no one would be the wiser. Unfortunately for them, they must compete with other car makers, who don’t have these costs. When a car retails for $18,000 there is no profit margin when you add $2,500 to your costs.

The hidden plan is to bring about government health insurance. If the taxpayer picks up the insurance cost, the auto makers can reduce their legacy costs by about $1,000 per car.

While nationalized health care is being put forward as a “cost cutting” measure, it will do no such thing. Nothing done by the government is done at a lesser cost than the competitive, private sector.

While the rhetoric for nationalized medicine sounds good, the practice will be devastating to many Americans.

If we want to insure everybody, that’s one thing. Maybe we want that. Put it to the voters to increase our taxes another few thousand dollars per year, because that’s what it will cost. If we want it, we’ll vote for it and pay for it. But trying to lull us all into thinking that a “one-payer” system will “save” us money is flat-out criminal. This is a lie and it should be exposed.

This isn't cruel-hearted. It's the plain truth. I do believe that a civilized society needs to provide care for all of its citizens and I am willing to help pay for it. But I don't want my government and trial lawyers in charge of it.

The other GM strategy is to force the non-union auto makers to unionize. This would push competitors’ costs up by at least $1,000 per car (in addition to the projected $1,300 per car that the new CAFÉ standards will cost), with escalating costs after that. This would make U.S. car makers competitive again. Unfortunately, we will all have to pay the cost.

There are bills making their way through Congress that will make it virtually impossible to avoid the unionization of auto makers in the south. We hear nothing about this in the media, but we should be.

The Obama GM solution is for us all to have nationalized health care and unionized workers for their competition. The end result is that we will all pay another $2,500 more per car. Is that what you want?

Where is the outrage here? When hundreds of thousands of people are losing jobs and cutting expenses to make ends meet, why should GM still pay $150,000 per year for a union worker without a college degree? Isn’t $100,000 enough?

I have no problem with union workers being paid a fair, competitive wage. But the unions need to understand that this is a global economy, and that what they do affects us all. They shouldn't ask us to pay for their excess wages and benefits. At some point, the normal American citizen is going to get fed up with the selfishness and pig-headedness by union bosses. Americans will finally see that there has been a $100 Billion payoff (by the government) to unions and say “enough.”

That day can’t come soon enough.

Get Ready for the Quantum World

In most of my writing, I like to explore the edges of reality. There is so much that we don’t see, and what we do perceive is not always what actually exists.

In conducting research for my upcoming book, The Presidential Pretender, I studied a number of leading-edge scientific areas. One of those areas was energy. This is an area of great confrontation in the world, woven deeply into the fabric of our nation.

We are a world that is dependent upon fossil fuels ─ oil, gas and coal. Without them, the engine of world commerce would grind to a rapid halt. However, these fuels are causing damage to the planet. Just how much is up for debate, but there is no doubt that fossil fuel emissions are a growing problem, perhaps one that could lead to the demise of mankind.

We could eliminate much of this problem with nuclear power. But there are safety issues, both real and imagined that have kept the nuclear industry in the starting blocks for the past two decades.

Solar, wind and geothermal provide potential solutions to our energy needs. But we are hampered by an enormous loss of efficiency as we try to convert this energy to a form we can use.

Why is it that a simple plant or bacteria can convert sunlight to energy so much more efficiently than we can?

Enter quantum physics.

The reality that we experience occurs as we perceive it. Every object has a location. Time proceeds in a linear manner, from past to present to future.

The quantum world is different, at least in theory. As in my writing, the quantum world exists in possibilities. And it is becoming more and more apparent that this reality is as real, or even more real, than the one we perceive.

In the quantum world, any given particle (such as an electron) has a chance of being in a whole range of locations at any given time. In essence, this means that the particle can occupy many locations at the same time. An electron of one molecule could actually hop to another molecule and back, something that doesn’t occur in classical scientific law. These particles may actually do so at a speed that is greater than the speed of light. (Do we see Star Trek here?)

Scientists are finding more and more empirical evidence that this type of behavior occurs with most, if not all matter. And it goes a long way in explaining how photosynthesis in plants or bacteria can retain more than 95% of sunlight’s energy, while man can only harness a small fraction of that. How can a single cell organism convert light to energy far more efficiently than any machine we can construct? We are only dealing with the reality that we see, not the one that actually exists. There is far more to life than we can even imagine.

These same hidden forces are at work in our physical makeup, particularly in the brain. How is it that we can experience things so “real” in our imagination? It is only a “quantum leap,” one small step for the brain, one giant step for mankind.

As scientists begin to unravel the mysteries of science, we will be hearing more and more about the real world, not just the one we see or perceive.

In The Alchemist Conspiracy, Trance stumbles upon the Philosopher’s Stone, the Elixir of Life. Who’s to say that we aren’t far from actually discovering the actual formula? Think of this. We know that Resveratrol can turn on the longevity gene, allowing the body to halt, or even reverse, some of the aging process. If we add something that helps our stem cells to replicate, we might actually have a formula that would allow us to become virtually immortal.

Just as we cannot come close to duplicating the efficiency that nature provides transformation of light to energy, the same may hold true with turning lead to gold. A hundred years from now, this may be as natural as turning coal to electricity.

The stuff of science fiction becomes the reality of tomorrow. In the future, we must all be prepared to experience a reality that many see as impossible today.

The Next World War?

You may be wondering why Mr. Obama is allocating peacekeepers and money to Afghanistan/Pakistan. Here is why:

First, if Bin Laden is alive, this is where he is. For a politician who is keenly focused on public opinion and legacy, the capture of this terrorist is like finding the Grail.

Second, this is where the serious terrorist training camps are located. The Madras schools are teaching hatred of America to millions, Afghanistan and Pakistan is where they go to train. This is where they learn the killing skills.

In all probability, this area, where Afghanistan, China, India and Pakistan all converge will be the epicenter of World War III. If we don't work to prevent this now, we may not be able to avoid it ten or fifteen years from now.

I hate to say this, but while mankind has advanced at light speed during the past two thousand years, our emotional development remains in the Stone Age. So do many societies in this region of the world.

If we don't do something about nuclear proliferation and development, as the president does in my upcoming book, The Presidential Pretender, this area will remain a nuclear tinderbox. This is the kind of situation where Jack Trance would be called to do his thing.

There are patriotic men and women who actually do this sort of thing, risking their lives in the shadows, without fanfare or public recognition. They face high odds of death and do it with pride, just so we can be safe.

The next time you go to sleep without worrying that a bomb or bullet is going to kill you in the night, give thanks to these silent peacekeepers that toil and die for us every day.

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www.jaylumbert.com

Good News: New Medical Advances Are Extraordinary

We haven’t been seeing a lot of good news these days, so I thought I might brighten things up by focusing on some good things that are happening.

There are extraordinary advances occurring in medical technologies that will dramatically change the face of medicine.

Robot assisted surgery now allows top surgeons to operate from half a world away, with minimally invasive techniques that let heart patients return to the activities of living within days, not weeks or months.

Metamaterials are allowing us to see single cell organisms (like viruses) I high definition color, not the X-Ray type images we see with electron microscopes. This will allow researchers to actually "see" the results of new cures.

It won’t be long before nanobots will be programmed and injected to perform heart or brain surgery, or to clean up clogged arteries. We may also use them to remove the calcification of Alzheimer' patients.

Researchers are perfecting ways to grow us new hearts and lungs and kidneys from our own DNA. This is already being done, particularly with bones and joints.

We will begin to debate the ethical dilemma that will come with this, just how far we should go with playing God. I won't deal with this here. I would rather focus on the good things coming in our lives.

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www.jaylumbert.com
www.shaksperbooks.com

Good News for Varicose Vigilante Seniors on Alzheimer’s

Last week I read about a promising new treatment for Alzheimer’s Disease. It involves some ground-breaking work by Mark Pepsys, professor of medicine at University College in London.

For the past 30 years, Mr. Pepsys has been working on curing diseases that are caused by the abnormal buildup of amyloid protein. This protein is a key cause in the development of Alzheimer’s, as it gums up the works of the brain. In the 1990s he developed a drug called CPHPC that removes SAP, a blood protein that sticks to amyloid and prevents enzymes from dissolving it. This allows a kind of crust to form in the brain cells, (think of it as hair filling up your shower drain) that eventually stops brain function in certain areas, such as memory.

Mr. Pspsys gave CPHPC to five Alzheimer’s patients and the results were quite encouraging, to the point where this might pose as a medical breakthrough. It appears that Mr. Pspsys is getting some major pharmaceutical companies to show interest in his (hoped for) clinical trial of 80-100 patients. This trial, should it get funded, may prove to be the first real breakthrough in Alzheimer’s treatment.

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www.shaksperbooks.com
www.jaylumbert.com

Less Weight, Less Global Warming

There have been some studies coming out recently that draw a direct link between being overweight and adding to greenhouse gasses.

www.cnn.com/2009/HEALTH/04/20/thin.global.warming/index.html

People who are overweight eat more food. It takes energy to produce this food and this causes greenhouse gasses. When millions of people are overweight, this adds up to a lot of gas, about ONE TON of extra CO2 per person per year.

If you believe in man-made global warming, if this is your issue, think twice before you eat. That extra donut could make the problem worse.

I figure that if we all stopped went on a massive diet, we would be able to reduce the world's temperature by at least a tenth of a degree in the year 2110.

So, the next time you need a reason not to eat something good, think about the planet and how we are warming it up. Then again, a warmer planet will help us grow more food. Growing food isn't bad, is it? I say eat the ice cream and enjoy it!

Obama's McDonald's Stimulus Working

McDonald's announced their quarterly earnings this week. Same store sales are more than 4% and so are earnings.

As I predicted, Obama's stimulus plan is going right to our stomachs rather than to product. This is an unintended (but predictable) consequence to Obama's choice to reduce payroll taxes rather than send everyone a check.

I wonder if he knows how much this will add to greenhouse gasses and global warming?

Obama's Coming New York Times Bailout

The New York Times has been experiencing a consistent loss in readership and advertising revenues. With its first quarter loss of $74.5 million, the Times is teetering on the edge of failure.

The Times has $1.3 billion debt and unfunded pension liabilities of $625 million. Given its “free” cash position of $34 million (this subtracts the $260 million set aside to retire 2010 debt that comes due), it doesn’t appear that the Times has much of a future. Could be just a matter of months.

Looks like a time for an Obama bailout.

The New York Times gives Obama a daily massage and pep talk. There is no organization that is more solidly in his camp. There is no organization (except for MoveOn.org) with as much influence. There is no organization that colors his mistakes and hides his flaws with a daily air brush. Obama needs the New York Times like the military needs enemies. They are joined at the hip and feed off the same foods.

Look for the administration to begin a “Save the Gray Lady” campaign any day now.

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www.jaylumbert.com
www.shaksperbooks.com

Obama Hypocracy on Nukes

While I celebrate Mr. Obama’s right to govern, I am continually amazed at the enormous disparity between his words and his actions.

While the mainstream U.S. media keeps massaging him as if he is the Chosen One, Obama is doing things through executive order and summit promises that are the opposite of his words.

The latest of these issues is Obama’s pledge to rid the war of nuclear weapons. While his rhetoric sounds great, behind the scenes his administration is signaling to Iran that they will do nothing to stop them from processing spent nuclear fuel into weapons grade material.

In my new book, The Presidential Pretender, the U.S. president (the pretender that America thinks is president) actually does create a framework to reduce the worldwide risks of nuclear annihilation.

Obama will bluster about reducing nuclear stockpiles. As our current nuclear treaty with Russia expires, he will create great-looking sound bites that will make it look like something positive is actually being done. The truth is, both the U.S. and Russia have thousands of outdated nuclear warheads that would never get used, even in the event of a war. Obama and Putin (the real acting Russian president) will agree to destroy many of these and call it a win for the world. This is bull.

The most important nuclear talks should be centered on how to prevent Iran from building bombs. Their leader has vowed to create the next holocaust, as is predicted in the Quran. From it “Islam will rise from the ashes.” He will do it unless he is stopped, and that means now. The talks with Russia are a smokescreen and a sham, while the real threat to the western world is allowed to grow stronger every day.

I expect that Israel will be forced into doing Obama’s heavy lifting here, and I sure hope that he supports them, rather than taking the coward’s way out, as he is today.

Market Meltdown - I Warned in 2002

I ran across one of my Market Updates from May, 2002 this morning, and it struck me how easy it was to see the future. I even warned about the trillions of dollars of derivatives being purchased by the banks.

The depressing thing about this is that I worry that my current predictions of America's future might come true as well. While I still think that American technology, capital and freedom will keep our nation solid, I fear that we are moving rapidly to a high-debt, socialistic state that will decrease the standard of living for us all. We will still have great lives, but it will become harder and harder for our children and grandchildren to keep this balloon afloat.

Blame for the mortgage meltdown can be spread everywhere, to conservatives to liberals to greedy capitalists and toothless regulators. Obama, individually, had little to do with the problem. The biggest blame must go to Wall Street for excessive greed, to Congress on both sides of the aisle, to fraud at Fannie Mae, to Alan Greenspan for fueling the fire, to George Bush for not crying loud enough and to Bill Clinton for trying to end "corporate greed" (by eliminating the tax deduction for salaries over $1 million, which triggered the big wave of stock options and a short term business focus.).

I have tried to go easy on our new administration. Lord knows, George Bush disappointed most of us, on both sides of the political aisle. Mr. Obama was elected and he deserves the opportunity to attempt to implement his agenda. However, I am continually amazed at how flat-out naive he can be. Whether it is arrogance, ignorance, or poll-driven politics, Obama is walking us down dangerous paths that even the intrepid should fear to tread. Iran may go unchecked until they nuke someone, hopefully not New York. Our national debt will rise to a point where we'll be crippled by debt payments. Business will suffer because capital is being taxed away from the people that create jobs.

I understand that this is all being done with the objective of "fairness." That still doesn't change the fact that these policies come with a very steep price that most of us do not understand, especially politicians.

I will attempt to keep my criticism of Washington to a minimum, while I pick at the edges of social trends. I do believe in the U.S. Constitution and the right of the victor to get his/her chance to implement legislation. Our nation was founded on the belief that conflict is healthy and necessary to govern in a way that is best for all. While I celebrate Obama's ascension to the political throne, I also celebrate my liberty to assert my contrary opinions.
Here is what I wrote:

Market Update – May 10, 2002

Big Asset Class Disparity

Here is what I see happening in the financial marketplace.

Some of you may have received my market analysis on January 26, 2000 that warned of the coming collapse of the tech stocks. Those of you fortunate enough to listen to me allocated a good portion of your growth assets to the small value sector. During the past two years, the small value sector is up more than 35%, while the growth sector is down more than 20%.

I see the same huge market disparity today as I did back then. The market sector where I see the greatest opportunity is in Emerging Markets. Traditionally, emerging market stocks act like a yo-yo. They can be up or down 50% or more in any give year. Emerging market stocks represent one of the highest risk categories of stock investments, and potentially the one of the highest returns as well.

I believe that a portfolio should always be well diversified across many asset classes. Yet, sometimes it makes sense to do a little strategic tinkering with the overall mix. That time is now. Let me explain.

Of 192 emerging market funds I analyzed, the average Price to Earnings Ratio was 18.6. (The average share is trading at 18 times earnings per share.) The average U.S. growth mutual fund (of 3,345 analyzed) holds stocks that are selling at an average of 31.9 times earnings. The expectation inherent in a P/E ratio is that stocks with a high P/E ratio are expected to grow more rapidly than those with a lower P/E. Stocks with a high P/E can also fall farther and more rapidly than lower P/E shares if earnings growth slows.

The Price to Book ratio for emerging shares is a much more conservative 3.2 versus 4.9 for U.S. growth stocks. May we be so bold as to see emerging market stocks as value shares? They are priced that way.

Now let’s look at trailing earnings growth. The earnings growth of our emerging company shares have grown at an average of 28.9% (through April 30, 2002) for the past three years. Our U.S. counterpart shares have earnings growth of just 14.9%. Get the picture? Emerging shares have twice the earnings growth, and are selling at half the P/E. This is a highly unusual disparity.

For those investors with a long-term perspective, who don’t mind taking some risk, emerging markets might represent a huge buying opportunity. Would I place a big, big bet here? No. I don’t recommend big bets in any asset class. However, for investors with excess assets over and above their needs, a 10% to 15% holding of emerging market funds might pay off handsomely.
I must warn you that investment returns are not guaranteed and all stock investments involve risk—so invest with care.

GLOBAL & DOMESTIC OUTLOOK

Those of you who know me know that I am bullish on America, and bullish on the long-term prospects of the U.S stock market. I expect that the S & P 500 will average slightly below normal for the next decade, but not as anemic as the 1970s. Moreover, I think investment managers who do the bottoms-up research will outperform the averages.

I don’t want to alarm anyone, however, but if you have an investment horizon of less than 10 years, you ought to take heed of these next few paragraphs. Even if you have a long-term investment horizon, you should at least be aware of the potential risks during the next few years.

The world economy walks on a financial razor’s edge. U.S. corporate debt is now in excess of $5 trillion. Company debt has been growing at a much faster rate than our Gross Domestic Product (GDP). This kind of leverage can magnify risk and return.

Companies like Nextel, PSINet, Xerox and 7-Eleven have incurred huge amounts of debt, particularly when measured against their cash positions. A number of such companies will fail during the next few years.

The recent stock market downturn has erased a huge portion Americans’ life savings, perhaps by as much as half. At the same time, consumers have been refinancing their homes at a record pace (due to the dramatic fall in interest rates) and have been spending this equity just as fast. This trend has kept the country from entering a significant recession, but it has dramatically eroded personal wealth. Not good.

A downturn in real estate prices, coupled with a leveling of interest rates will dramatically reduce consumer spending and could create a drag on economic growth.

The telecommunications industry is swimming in debt. Global Crossing defaulted on tens of billions of dollars of debt. This may be only the beginning. We may see company defaults exceed a hundred billion dollars. This too will keep the economy sluggish.

There is $400 billion in venture capital loans outstanding, and a big portion of that could be headed toward default.

Banks are holding huge amounts of hedge securities, or “derivatives.” Derivatives are volatile and can be quite risky. U.S. banks hold trillions of dollars in derivative securities that could turn south.

Japan, the world’s second largest economy, is now mired in debt. Japanese banks hold more than $1 trillion in debt, much of it non-performing. As a nation, Japan has wrung up national debt at a staggering rate. Until recently, the Japanese government has allowed its banks (by funding them) to continue operating, despite the fact that many of them are technically bankrupt. There are signs that Japan may stop this policy, something that will force Japanese banks to unload huge amounts of U.S. stocks and bonds.

China is an awakening financial giant. In the 1960s, 70s and 80s Japan flooded the U.S. market with cheap goods. Over time, Japanese quality improved to exceed that of equivalent American goods. This one-two punch was harmful to the American economy, as our domestic imports increased and our balance of payments deficit ballooned precipitately. The technology revolution put an end to Japanese dominance, since their culture of cooperation versus innovation could not cope with the new style of business. Not so with China.

The Chinese people are extraordinarily capitalistic. As the shackles of Communism are slowly removed, China will become a powerful economic rival to the U.S. Unburdened by concerns over pollution and human rights, China will continue to produce goods and services for a small fraction of the cost to their U.S. counterparts. Look for the Chinese stock market to fare well in the upcoming years. Then look for Chinese economy to give us a serious run for our money by the end of the next decade.

Finally, there is oil. There are no signs that the Middle East tensions will ease anytime soon. The war on terrorism will go on, as it should. This puts us over an economic barrel when it comes to oil. If OPEC decides to raise prices or drop the production of oil as a show of Arab solidarity, and this continues for months, this will cause a spike in prices and a dramatic slowdown in the economy.

The U.S. has the domestic oil reserves to be energy self-sufficient. Much of this can only be recovered at higher prices, and a lot of it is under protected lands in Alaska and the Gulf Coast. We need not worry about our long-term energy needs, but we should be aware that we are dangerously vulnerable to a sort-term oil crisis.

THE GOOD NEWS

Now that you know the downside, let’s talk about the upside.

Productivity American companies continue to enjoy historically high productivity increases. While some experts disagree, I expect this trend to continue strongly for the foreseeable future, as technology advances continue to allow employees and businesses to operate more efficiently.

Technology

Because of our individualistic culture, our system of higher education, and our capitalistic economy, the U.S. continues to dominate world technology. The global marketplace is driven by technology. Twenty years ago it was possible for the Japanese to copy an American product, and then build it for less. Today, product cycles last just a few months. It is impossible to copy and reproduce. This gives America a strategic advantage that is virtually impossible to overcome. This translates into profits.

Within the next few years, hopefully, we will be driving SUVs that get 40 miles per gallon. New cars will be equipped with a new power system that utilizes fuel at twice the efficiency. This will help keep oil prices down, continuing the long-term trend of oil price growth that is significantly under the long-term rate of inflation.

Capital

There is a great pool of investment capital in this country—far more than any other. Money makes money. It always will. Money will continue to find its way to new, innovative business ideas that will drive our economy forward.

Social Structure

The European companies and governments have been giving workers more and more entitlements like guaranteed health care, shorter working hours, etc. This has put a drag on the ability for European businesses to compete in the world arena. European taxes have increased as well. This hampers the source of new investment capital for business growth. The same has occurred in Canada. This has allowed U.S. companies to maintain a competitive advantage over our competition, which will continue for the foreseeable future.

Medical Breakthroughs

Get ready for medical advances that will dramatically reduce the costs to society. Genetic technology will bring about cures for many diseases that will reduce human tragedy and bring about economic opportunity. People will live far longer. There will be economic costs brought about by our aging population, but the costs will be outweighed by benefits of medical advances. A cure for cancer would bring about an economic renaissance like nothing we have ever seen, and can barely imagine.

AIG Bonus Problem: Simple Solution

The $165 million that AIG is paying in bonuses to the same executives that forced the $160 government billion bailout is the ultimate in hubris.

I understand that much of these bonuses are due to “contractual” obligations of the company. Wish I could get a job where I lost my company billions and made millions to do it.

While the Obama administration and Congress seem powerless to do something about this, the solution is quite simple.

Establish a conduit, where executives can refuse their bonus and have it go directly to the bailout funds that are being used to fix this mess. Or, have it go to help fund unemployment benefits. Then, publish the names of each executive that does not redirect his/her bonus to the fund. Then let the “marketplace” of public awareness do its thing.

Many people appear willing to cheat in anonymity, while few care to do it in the public spotlight. As Shakespeare might have said, “Let these people suffer the slings and arrows of fate.”

Problem solved, I assure you.

Obama Stimulus "Pork" For McDonalds

In the most recent Obama stimulus “tax cut” bill, the administration opted for a reduction in payroll taxes of about $10 per week, rather than sending everybody a $500 check.

Now, rather than taking a $500, $1,000 or $1,500 check to a retailer and buying something, individuals will have a little spare change during the month.

In my 20+ years at building and servicing 401(k) plans, I have had the opportunity to work with tens of thousands of retirement plan participants. When I speak to groups of employees, I often tell them about the “401(k) Diet.” I encourage non-participants to have $50 or $100 taken out of their pay per month, just to get started. I tell them that they won’t miss the money. The only thing they will miss is a little spare change, resulting in a few trips less trips to McDonalds. This will help them lose weight. So, not only will they save for retirement, they will also lose those ten pesky pounds they’ve been meaning to diet away.

Because of its structure, the Obama “stimulus” program will put a little spare change into everyone’s pockets each month. And I know just where it will go─McDonalds. As our recession progresses, look for McDonald’s sales to stay strong, and for people to put on the pounds. The next time you read about obesity becoming more and more of a problem in this country, look to the Obama stimulus as one of the prime culprits.

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The $30 Trillion Con

I don’t know about you, but I get this strange feeling that our government is deliberately covering up the biggest con of all time.

Let’s do the math. I am going to use round numbers here, so please don’t quibble with me about minutia.

U.S. Home equity is about $10 trillion. American homeowners have about $10 trillion in mortgages. Total home value is about $20 trillion.

Somehow, Wall Street found a way to sell $50 trillion to $60 trillion in securities (no one knows exactly how much was truly sold, but this is a general consensus), all based upon $10 trillion of U.S. equity.

Where did the money come from to buy all this stuff, you wonder? Most of it was borrowed. Where did the underlying value come from to justify the purchase of these securities? It was manufactured on paper. The value was never there; it was a ghost.

This should have been an easy problem to fix. Six months after the fall of Countrywide, one of our nation’s best teams of economists (University of Chicago) issued a white paper predicting that the total loss would be about $500 billion. This should have been the case―certainly not the $10 trillion to $20 trillion that has been lost to date.

Let me explain. Let’s say that a nightmare scenario occurred to cause 10% of all mortgages to default. 10% of $10 trillion is $1 trillion. The market could have absorbed this. Congress could have written a check. Even with no intervention, investors may have lost a few hundred billion. End of story.

Even as the Obama administration commits to stabilizing home values and subsidizing mortgages to make thing right, the world is going into economic free-fall.

What has happened is something so far removed from this that it can only be the result of massive ignorance, deceit or outright fraud. Subsidizing defaulted mortgages should have fixed the problem. This is the underlying asset (collateral) of the CDO (collateralized debt obligations) market. But this has done nothing. Nothing. When these securities were sold to investors, insurance companies, banks, etc., they were assigned bloated, inconceivably high values that could never be achieved.

In all my reading, I have not seen this mentioned as the cause. So, either I am stupid, the world is ignorant, or there is a massive cover-up underway. (I vote for the ignorant world).

The only way that fixing the underlying asset would not have corrected this problem would be that the values attributed to the securities sold were wildly overpriced. Wall Street took $20 trillion in securities. They broke them up into small pieces. Then they sold the pieces at a markup. If the SEC does the forensic accounting (provided these records have not been destroyed) I believe they will find that Wall Street took in more than $50 trillion on $20 trillion of value.

Using this math, $30 trillion in borrowed money has no collateral. And that, Martha, is why we are in this mess.

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I've Made Mistakes Too

I make a living by giving financial advice and selling books. Over my career, there have been times when I have done pretty well. There are other times when I have made some really stupid decisions, usually when I’ve sold any of my companies.

I have made some really poor personal decisions as well. I did make one great choice, though. That was marrying my wife. This lucky choice makes up for all the bad ones, proving that we don’t have to be right all the time, just more often than we’re wrong. Still, without Deb, I would probably be a lost soul.

When I make comments and recommendations, do not make the mistake of thinking that I am not flawed. I am flawed. We all are flawed. That is not to say that we can’t improve. I try to improve, every day. Sometimes I win. Other days are not so good.

Throughout my life I have tried to do what is right, particularly when it comes to others. I have not always succeeded. None of us do, not all the time. But I have tried to walk a good moral line. I have actually walked away from small fortunes, because doing so was the right thing to do.

When you read my words, I hope that they will make you think. Maybe, if I am lucky, you might join some cause that is important to me. The cause of freedom. The cause of family. The cause of morality. The cause of goodness over evil. The cause of fairness over trampling greed.

Life is not black and white. Everything we do has shades of gray. Choices have consequences, some good, some less good. Self-service often stands in the way of service to others. Service to others can stand in the way of self gain. Somewhere in the middle we find our own playing field.

In our own game of life, we’re like the one kid with the ball. We can share it with our friends, or we can play alone. Sometimes, the more we share, the more we enrich others and the more we have. But sometimes, the more we share, the less we have. Good guys do not always win. Sometimes life just sucks.

What I try to do is help others see the difference, and find ways to improve their lives without trampling on the opportunity and freedom of others. There are times when I read my words and wonder what gives me the right to stand on my little soap box and shout what I think, or what makes me some moral arbiter with wisdom others should hear. I’m not some great shining example of morality or achievement. I am just a man with things to say, perhaps something worthwhile, someone whose words might be heard above the din and sink in, somehow spreading light on the dark secrets of this crazy world that spins around us.

I felt that it was important for me to fess up to my own imperfections and frailties. It is so easy to sit behind this keyboard and sound like I (we) know it all. That we’ve got some magic answer that no one else can see.

The simple fact is, I don’t. None of us do. All we can do is our best. I do try to do my best, every day. I hope that you do too. Because if we all do our best, despite our flaws and mistakes, this world will be a far better place.

Geithner Plan Not Even Close

Today, Timothy Geithner’s proposed plan to restore order to our nation’s financial markets fell so far short of solving the problem that it completely missed the target. This plan is like using a popgun to take down a bull elephant, or steering through a tsunami in a boat made of cork with no rudder. It won’t happen. This plan does too little to restore capital to a completely bankrupt banking system, and it lacks the punch needed to get loans flowing to qualified consumers and businesses as soon as we need it (today).

$1 trillion just won’t do it, folks, not if we want a healthy world economy. The world was so leveraged on mortgages (30-50 times equity), that underfunding the bailout could still be disastrous. Geithner: Wake Up!

What we need is to reset bank capital, and set compensation plans in motion that will not allow executives to (metaphorically) rape the taxpayer. I know that this is a powerful and distasteful analogy, but truth is truth.

In 1992, Congress limited the corporate tax deduction on salaries in excess of $1 million. I threw up big warning flags then, and I am doing it still. By limiting the corporate deduction, companies are forced to compensate executives in other, tax-favored manners, usually in stock options. This caused (and still causes) executives to cook company earnings and make short-term decisions to affect short-term stock prices rather than long-term viability and solvency. Hence, all the leverage.

Executives are like entertainers and sports figures. There is a big market for top talent and they will get paid. By trying to “end corporate greed,” the 1992 Congress put corporate greed on steroids.

Here is what we need to do. We need to start fresh. We need to tear down this old fixer upper and build something new, something that will survive.

First, we need to restore banking capital to healthy levels. We should create an independent bank to purchase bad debt from financial institutions, particularly from the banks. Additional capital should be in the form of convertible debt at low interest rates. (I hate the thought of bank nationalization, but the taxpayers should get repaid somehow). Some will argue that this is inflationary. Restoring lost capital is far less inflationary than creating new capital. When compared to the alternative of fifty million people out of work, and an economy less than fifty percent of what it was, I will pay an extra one or two percent per year for goods for a while.

Second, the new bank should work out all the loan terms with the mortgages they have bought. This includes blanket agreements with creditors and affordable terms with homeowners with the ability to repay. Homes that cannot be refinanced should be sold in an orderly manner, not liquidated through rock bottom auctions. If this means renting properties until home prices stabilize, and this proves to be the most profitable solution, get it done. Remember, this is the taxpayer’s money and it is precious.

Third, changes must be made to compensation structures. We should restore the corporate tax deduction for salaries in excess of $1 million. This will encourage more long-term thinking. If we need to cap salaries, we should do it at levels comparable to other high-paying professions like athletes and performers. Business executives produce at least as much as entertainment figures (which athletes and performers are). If we want to cap salaries to a lower level, then cap the salaries of actors, musicians and athletes, too. Set a price cap on movie tickets, CD and download sales and baseball games. Do not try to cap executive salaries at abnormally low figures, because then all you will get is mediocrity. We don’t want mediocrity now, we need brilliance. We want these men and women making big money, provided they do so for their shareholders (and the taxpayers) over time. This is part of what made our country great.

Fourth, if an executive earns money from stock options, it should be paid into a trust. Payments to the executive can then be made from this trust, provided the company returns a certain return on equity over time. For example, let’s use a term of ten years. If an executive earns $20 million from stock options, the entire amount will be placed in trust. Each year, $2 million will be paid, provided the company remains profitable (within some reasonable parameters). This will significantly reduce the short-term thinking and outright fraud that has been perpetrated on shareholders and taxpayers.

Fifth, stop dictating that Fannie Mae (and other quasi-government organizations) conduct social policy and call it business as usual. These companies were forced to lend enormous sums of money in areas where traditional bankers feared to tread. Estimates are as high as 50% of loans. If the government wants to create social policy (which every government does), then do it with a separate organization. Fund it in a manner that is transparent to the taxpayer, not in a way that bankrupts the world.

There is no hiding from this problem. This entire mess has screwed the country for the next fifty years, perhaps forever. The economics of government, trade and tax policy have changed so dramatically that economists are going to have to rewrite all the texts. This will become one great experiment, where fortunes will be made and lost, where good people’s lives will be destroyed, and other nations (namely China) will become superpowers long before their time.

There is no sense in trying to restore things to the way they were. This will never happen. Never ever. All we can do is make the best of this situation. This will require drastic, dramatic and immediate action that is beyond anything we have ever seen. Our government must take bold steps, decisive steps and do it fast. Otherwise, we are going to be living in a world where today looks like the good old days.

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Has Cheating Become the American Way?

Yesterday, Alex Rodriguez admitted to taking performance enhancing drugs. It seems like every new member of the Obama administration has broken the law. The Bush administration convoluted the truth to commit us to war. The Clinton administration was run like a mafia whorehouse. A Congressman can run a prostitution ring from his Washington home and remain in an influential position of power. Wall Street can defraud the public of trillions of dollars and we just look the other way. Even an Olympic superstar can break our hearts.

What has happened to America? Have we become a nation of cheaters? Everywhere I look, I see people breaking the law with impunity and a clear conscience. “Everybody else is doing it…” we here from the cheaters. As if that makes it okay.

We are acting like teenagers, warping the truth into something we want it to be. Illegal aliens are needed in our society. Pedophiles must be understood, not punished. Drugs should be decriminalized because (name your reason).

I know that some laws are just stupid. Like that 55 MPH speed zone that should be 65 MPH, or having to stop for three full seconds at that stop sign when there is no one around. But things have grown out of whack.

The human genome wires us to conform, to follow leaders and to lead. Most of us have all three traits, mixed into some order of priority. The instinct to follow, this “flocking” behavior, makes us want to be like everyone else. We don’t want to be weird or wear the wrong clothes. There are those of us who buck the big trends, like wearing a nose ring, but this usually puts us into a smaller sub-group, not a solo experience.

As our media bombards us with examples of (previously) aberrant behavior, many in our society have found new groups that make them feel “normal.” We see pro athletes who use steroids or HGH, so kids think it is the way to succeed. We see pop stars doing drugs, so kids think it is cool. We see our national leaders cheat on taxes and their spouses, so we think it is fine for the little guy. We’ve even seen sex become not sex.

When I grew up, we left our house unlocked. Keys were left in the car, sometimes overnight. Young kids played away from home unsupervised. Sure, homes were robbed, cars were stolen, and children abducted. But it wasn’t “normal.” Criminals didn’t see a constant barrage of like-minded criminals being talked about, or even celebrated.

This free flow of information has allowed everyone to break into smaller and smaller sub-groups. It has allowed previously “aberrant” behavior to be considered “normal,” and to become accepted.

Along the way, our morals have begun to bend, our laws have grown more lax, and our society has begun to break at its seams. If this continues for much longer, our society will grow closer and closer to anarchy, were crime goes unpunished, where crime becomes more and more normalized, and deviant behavior becomes the norm. The rights of the few will outweigh the rights of the many, because we all belong to some group of the few.

If we want to stop this gradual slide into the acceptance of cheating, immorality and the systematic trampling of individual rights (in the name of individual rights) we are going to have to begin holding our leaders and role models to higher standards of behavior. Our politicians will have to become good people, not good manipulators of the system. Our athletes will have to realize that the huge money they earn comes at a price. That price is responsibility, not to themselves, but to the children who follow their lead. Wall Street will have to stop rewarding the carnivores and promote the farmers.

If we don’t, I am afraid that the America we used to know, and even the society we know today, will seem like the days of innocence, something to look back on with nostalgia, and not something to emulate. God bless America, and please help us save her.

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U.S. To Be Sold

Like some sprawling conglomerate that can no longer meet its obligations, the United States is about to get broken up and sold to the highest bidder. So, we need to stop teaching Spanish in schools and switch to Chinese.

In less than two decades our nation has leveraged itself into bankruptcy. There is no actual capital in our banking system—none, except for local banks who stuck to their knitting, and did things the old fashioned way, with common sense.

Until now, financial institutions have been able to borrow money from the Fed at will. They have been allowed to give artificially high values to loans and assets they hold. If they were forced to fess up, and declare the true value of these assets, banks would have to call in all their good loans. That would shutter the nation faster than an alien invasion.

As our nation’s debt swells toward fifteen trillion (yes, Martha, trillions) our country is printing money as fast as the computer keys will move. Until now, we have been able to do this with low interest rates, as the world hunkers down and seeks safety in their investments. When all else is in the crapper, buy American. Unfortunately, this bunker mentality will not last for long. And when fear subsides, interest rates will spike. This will slow down business, as it becomes more expensive for companies to borrow. The Fed will be faced with the choice, to print money from thin air (with no one buying it) or pay higher and higher prices to lenders.

Just so we understand what we are talking about, let me do the math. The debt service on fifteen billion dollars (at 5%) is $750,000,000,000 per year. Seven hundred fifty billion per year. That is a lot of annual deficit.

Now, some of you may try to argue that our national debt is half that amount. You might say we shouldn’t include the five trillion we are guaranteeing for Fannie and Freddie. We shouldn’t include the trillions we are injecting into the nation’s banking system, or the amount for the coming national bank, the trillions more that we will have to spend to fix the damn system.

We aren’t in Kansas anymore, people! Wake up. This is real.

Our Congress is going to be faced with a no-win proposition. Borrow more and more money, even as we increase spending on entitlements, or print it and suffer with the inflation.

Look for a movement to sell our nation to the highest bidders, China and the Middle East. That’s right, Dorothy, look for the solution to be selling us out. Look for a movement to nationalize our nation's retirement system, because thieves go where the money is.

Imagine a national bank that holds a few trillion dollars in mortgage assets. Taxpayers are complaining about higher and higher taxes, a crumbling economy, etc. So, we go to China and say, “You know that $1.7 trillion you have in U.S. debt, that little piece of paper that says we’ll pay you a hundred billion a year in interest? How about we just swap? Our nation’s houses for your paper.

Now, it won’t happen that way, not our in the open. It will happen in subtle ways, a little at a time, until the sale is over. Even now, China is warning us not to protect our workers against cheap Chinese goods. They have us by the balls and they know they can bring us to our knees.

I will continue this discussion in later blogs, because it is something we have to understand before it is too late to save ourselves.

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In Government We Trust

As I sit to write this I have $21 in my wallet, a $20 bill and a (soon to be worthless) $1 bill. Looking on the back of these bills I see the words “In God We Trust.” On the $20 bill these words sit in the sky above the White House.

I wonder how long it is going to take Congress to change those words to “In Government We Trust.”

Our country was built by groups of malcontents and misfits who left their countries of origins to seek opportunity in a new land. They risked much to come here. They sacrificed. They produced. They overcame. With hard work, these (predominantly) God-fearing men and women defied the odds and created the finest nation this world has ever seen.

The United States grew from a unique combination of human nature and freedom. Individuals were free to stretch their abilities as far as they could go. Government’s role was protection and a bit of infrastructure. Taxes were low. We didn’t have an income tax until the “temporary” tax was instituted to help fund World War I. So much for temporary.

One of the great prices of freedom is the freedom to fail. Great success comes at great risk. Modest success comes at modest risk. I remember reading about our “energy shortage” back in the 1700s, when newspaper headlines read “World To Go Dark,” because of the shortage of whale blubber (for lamps.) I remember studying about market crashes and economic turmoil long before the Great Depression. Somehow we made it through all that, emerging stronger and better.

Make no mistake. Those days are gone. We are now entering an era of government planning and control that is fundamentally different that what our nation has ever seen.

We have ourselves to blame. And I fear there is no turning back.

To begin with, our entire banking system is bankrupt. A quick review of the math will prove my point. Before this “mortgage crisis” occurred, worldwide capital in the banking system was somewhere around $2 -$3 trillion. Based upon their capital, banks are able to make loans. The aggregate total that a bank can loan is a function of their capital—usually no more than ten to fifteen times that capital. Banks are able to “borrow” capital as well, but let’s keep things simple.

Somehow, the banking system figured ways to lend $50-$60 trillion based primarily on the inflated equity value of U.S. homes. As home values plummeted, so too, did bank capital. The United States has pledged $700 billion to the banking system. Governments around the world have pledged a somewhat similar amount. I estimate that it will take another $4 trillion or so, in the U.S. alone, to replace our banking system’s capital. This far exceeds the historic high water mark for banking capital. Ever.

We have always seen booms and busts in our economy. Remember hula-hoop’s and pet rocks? Cabbage Patch Dolls and Pong? These minor product fads take place on a much larger scale in the world economy. The latest craze was Mortgage-Backed Securities. But when economic crashes occur, we all suffer.

I have always believed that the free market gives the greatest number of people the greatest opportunity to succeed. But we have just witnesses the free market lead the world (except for government-run China) into bankruptcy. How sad is that? This is where I would use one of my little-used swear words.

There are a number of solutions to this problem. We can force our banks to fess up to their true capital position and let Bank of America and Citi fail. We can relax our banking capital standards, allowing banks to operate with no capital. This would require greater government guarantees, or there would be a further flight of deposits. The government can buy insolvent banks. This will mean that most major banks will become nationalized. Or, we could create a single national bank that would buy up the bad mortgage debt and high values, thereby replacing bank capital to working levels.

If we allow companies like Bank of America and Citi to fail, we will face another Great Depression. If we relax banking standards, our nation will have as much faith in banking as they have in politicians. If we nationalize many banks, we will have the government creating more social and political policy through its banking policies. In the long run, this might make the problem worse, not better.

As I see it, the only viable solution (I am simplifying here) that will allow the United States to keep any vestige of what made us great—our freedom— is for Washington to give banks a do-over, buy purchasing the bad debt and replacing capital. This would require a separate national bank whose only job is to purchase bad mortgages, negotiate new terms with homeowners and restore an orderly housing market.

In a later blog I will tell you who should get the blame for all this. It is a long, long list and it will surprise you.

I will also tell you why I am still optimistic for our nation’s economy.

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The Coming National Bank

Make no mistake; the economy is on the brink of a minor depression. So too, is the world. The United States has trillions of dollars in bad debt. Much of it is owned by financial institutions that have yet to completely fess up.

The first $350 billion in the bailout TARP package sent a small ripple through the financial community, salving fears of imminent collapse, but it has done nothing to swell the company coffers to the point where they will part with cash in the favor of loans to individuals and businesses.

Let me give you an idea of how bad this is has become. I have a client that is a very successful company. The company has no debt. They have millions of dollars in cash. They earn millions per year, and have tens of millions in annual revenues. This company went to purchase new company vehicles. The dealer was running a “special,” where financed vehicles received an additional $1,000 off the purchase price. This sounded like a good deal, so my client applied for financing. They were turned down. This is one of the most solid, privately held companies you will ever find, and they could not get credit from a car company that is dying to sell cars. How is the rest of American business going to survive and thrive? (By the way, this company simply paid cash for their cars.)

As low as interest rates are, banks still do not have the money to lend, or the margin for error that will allow them to take any risk at all. As the great philosopher, Mr. T used to say, “Pity the fool.” In this case, we are all fools.

All this leads me to believe that we are going to see one big time national bank. I would prefer the scenario where a separate bank is formed. This bank purchases the “bad debt” from major institutions and works out arrangements with the homeowners. If done right, there may not be too much of a loss. Eventually, this bank can wind itself down and stay out of the way.

The alternative is for the U.S. to begin purchasing existing banks. This would begin to fully nationalize banks, causing a whole host of new issues. Congress helped create this mess by mandating that Fannie and Freddie give low credit loans (some claim that this reached 50% of all loans). While I cannot fault the intent of the legislation, I can fault its economic soundness. This was bound to fail.

This would have become a problem, but nothing on the scale we have seen. What Congress failed to see (as did most other financial experts) was that investors (and investment banks) would rely on statements from Fannie and Freddie that these loans were sound. Capitalism would seize upon the interest rate plan and leverage these things to the hilt to create enormous profits and enormous (unforeseen) risk.

We ain’t in Kansas anymore. The world has changed—forever.

As much as I hate to see it, there are many good people, myself included, who are feeling the strong pinch of this economic slowdown. It is like a vice clamping down on opportunity. If business is the engine that pulls our prosperity, capital is the fuel that makes it run. We can have the best people, the best products and the best technology, but if we lack the capital to run our businesses, the whole train shuts down.

I expect that talk will quickly heat about creating a national bank. It will be another big hit to our national debt. I estimate $4 trillion. If done properly, this cost could shrink to less than $1 trillion by the time the debt is wound down.

When this comes to pass, and it will, look for the stock market to make a 20%-30% rally, as uncertainty fades. Then get ready for a long road back to our former prosperity. The increased national debt, plus our government’s inability to reduce its spending, has cause me to lower my growth expectations significantly.

All this said, we are still the land of opportunity. We have the intellectual capital and ingenuity to better our world from where it is today. Yes, we will have higher taxes. But there is great hope for anyone with the will and perseverance to succeed.

This reminds me of an old quote. It goes like this:

Press on. Nothing in this world can take the place of persistence. Talent will not. The world is filled with unsuccessful individuals with talent. Education will not. The world is full of educated derelicts. Genius will not. Unrewarded genius is almost a proverb. Persistence and determination alone are omnipotent.

Press on!

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Kudos to Jim Rice HOF

Yesterday it was announced that Jim Rice was voted into the baseball Hall of Fame. It was a long time coming (15 years) but an election well-deserved.

Jim Rice dominated baseball for a period of ten years, putting up near-steroid numbers in an era when beer, caffeine and greenies were the only performance enhancing drugs. His numbers paled when compared to the inflated totals of McGuire, Sosa and Bonds—athletes built up to gargantuan proportions by illegal drugs.

I am glad that Rice finally received his due. He was my favorite player for a decade and I still like and respect him as a man. I recently heard that he had Lasik surgery and can see well without glasses. Too bad Lasik wasn’t an option when he was playing. He was never comfortable with glasses and I still believe it was his eyesight that shortened his career, not his bat or his heart.

HOF is no longer a four letter word for the old left fielder. Now it is a badge he can wear with pride and honor.

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Detroit's Secret Plan

If you are baffled at how GM and Ford can rack up a combined annual loss of more than $50 billion and still call themselves viable without making drastic changes, don’t be. They have a secret plan.

Whatever rhetoric you hear from Detroit and Washington, don’t believe it.

The UAW has no intention to give up its contract. Why should they? This was bargained in “good faith.” (Some might argue that the threat of a strike is not good faith, but the fact is: both sides agreed to this deal.)

Management seems more intent upon joining the Washington bread line than fixing the fundamental flaws in its operations.

Here’s why. Detroit and Washington have a secret plan and it has two parts.

Nationalized health care. This will transfer the burden of Detroit’s massive health care costs for current and former workers to the American taxpayer.

Force their competition (Toyota, Nissan, Honda, BMW, Daimler, etc.) to join the UAW. This will level the cost field, as Detroit’s competition will have the same labor costs. It will also drive car prices up another $2,000.

This is why Detroit seems content upon taking handouts from Washington.

The Clinton’s made a strong push to nationalize health care during Bill’s first term. This attempt failed dramatically. Obama made it a central part of his platform, although he couched it in different words. The new administration will not hit us with it like the Clintons did, it will be presented as simply part of “the great solution” to our national ills. I see this as virtually inevitable. Whether it is the best thing for our nation will be debated for decades. Only time will tell.

With the rapid evolution of Socialistic thinking in America (the belief that government can solve everything—witness AIG, Lehman, Citi, Countrywide, Fannie & Freddie, etc.) it is a now just a small step to the next level. The Fed and Congress have poured trillions into failing companies and they (Congress) will soon explain that it is “far more efficient” to have single-payer health care. It is good for the country. Reminds me of the joke about the Canadian health care system: There is a ten month waiting list for a maternity bed.

Under current law, voting by employees deciding whether or not to unionize is a private matter. Votes are counted, with no one knowing how anyone votes. There is a bill that is making its way through Congress that will force “open voting” when company employees choose whether or not to join unions. This will place enormous pressure on those voting not to join unions. Many of us have seen how this can happen. I have seen (and felt) this myself. Should this bill become law, it will take little time for auto industry wages and benefits in right-to-work states to skyrocket.

Problem solved. Detroit is competitive again. Auto workers keep their substantial six figure jobs. They keep their benefits and their marvelous pensions. While you and I pay more in taxes and more for our cars.

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Theft In Detroit

In September, 2007 I warned of the impending collapse of the financial markets. I felt a little silly for the next month or so, as the stock market continued to climb. But I was certainly vindicated in the next 15 months. The Dow plunged from well above 14,000 to below 8,000.

Late last year I warned that the next collapse would occur in the Hedge Fund markets. Then we hear about the $50 billion lost by Bernie Madoff. This is more complicated than a simple financial failure, but the results are the same. Hedge fund managers had free reign to alter values (particularly with mortgage securities) to what they wanted them to be. Madoff is one of many.

This time I am going to address the situation in Detroit. According to General Motors documents, in 2006 the total cost per worker is approximately $73.26 per hour, or $146,520 per year. The Associated Press reported that this figure dropped to $69 per hour in 2008. This compares to an hourly cost of $48.00 per hour for Toyota, in this country. For you non-geeks this represents a disparity of $21 per hour, or about $42,000 per year per worker. Yikes! How would you like a $40,000 raise?

U.S. car makers pay an estimated $2,600 per car in excess wages and benefits to current and former UAW employees. This compares to about $300 per car for the Japanese car makers. This means that, before an American car leaves the lot, it must fetch $2,300 more than its competitors to achieve the same profit. Good luck. Unless this disparity vanishes, there is absolutely no hope for the U.S. auto industry.

I estimate that it will take $100 billion or more just to get these companies through the current business downturn. Even then, they will return to marginal profitability, if any, unless serious changes are made.

I don’t blame the unions for negotiating the best deals they could. But things change. Business changes. The world changes. And if companies cannot adapt, they will fail, or at least they should. Many companies have been forced to trim their work force. Some have lowered wages. Many have cut back capital expenditures and closed plants.

The UAW has given back some (little) of its gains, but many of the union contracts still call for exorbitant benefits (and salaries) to be paid to non-workers. Full health care is provided for early retirees. A worker still gets $30,000 per year put into his retirement accounts. Hello. This is the 21st century. These things don’t happen anymore. Do you get $30,000 put away each year into your retirement account?

In December the U.S. government stepped in with a temporary bail-out for U.S. auto makers, worth about $14 billion. This should help them stay in business for a few more months, until our new president can have his say. I fear that we will hear more spin and the problem will linger for years, with the U.S. taxpayer footing the bill.

If we are going to continue to subsidize union workers and inefficient businesses, we should at least understand what this really means to Americans.

Because of this wage disparity, every person who buys a new car will spend $2,000 more than they should, whether they buy American or not. Because of the UAW wage inflation, every competing car manufacturer is able to charge more for their cars and still remain competitive. Basic economics, folks.

Every person who buys a (relatively new) used car will pay more too. Used cars are priced in relation to new cars. If new cars cost more than they should, so will used cars.

Why should ten or fifteen million people per year pay more for their cars, just so UAW workers can keep their huge pension accounts? And why should the U.S. government subsidize this theft?

That’s not all. If Washington provides a long-term, $100 billion bailout, as I fear they will, this represents a $2,000 cost to each of fifty million tax payers. If you pay taxes (Social Security included) then your wallet will be affected. Do you want to send $2,000 to Washington and pay $2,000 extra for your next car, just so some early retiree can have free health care and a line worker will get his $30,000 pension deposit? I thought not.