Saturday, May 30, 2020

Mission Of Police Has Morphed From Serve And Protect

Again images of a cavalier and dismissive police officer with his knee on the neck of a handcuffed man that later died have brought people to the streets in protest of police brutality. This is not the first time police have overstepped their mandate. For years many officers have used a heavier hand than is necessary to enforce laws. While such heavy-handed treatment is most likely to be used on minorities and the young, it is often evident on anyone having the nerve to question the authority of someone wearing a badge. The reality is that police violence goes beyond black and white. Those granted the job of protecting and serving need to understand that "Do it because I said so" doesn't work. The bulk of the article below indicates little has changed over the last several years.

A news story on my local news channel in 2014 reported how a man faced charges stemming from Halloween party. It told how prosecutors charged a white  20-year-old man after police say he threatened them when they broke up a party on our local college campus on Halloween. According to court documents, police responded to a call about a loud party and while speaking with party-goers, officers noticed a half-empty vodka bottle on the floor. Police said when they went into the apartment, a very white fella was loud and refused to cooperate. After putting him in handcuffs and leading him out of the building via an elevator, he reportedly threatened the officer by saying he would beat and kill him. A struggle ensued and the officer used a Taser to subdue the man who was charged with resisting law enforcement, criminal mischief, and disorderly conduct.

Mug shot of White Man, provided by Sheriff's Dept.
The issue over police using unnecessary force and their attitude towards the public they are paid to serve is growing. Following the shooting death of  Brown in Ferguson and the controversial use of force on a black man in New York where choking contributed to his death, we should note abuses are being fostered upon people of every race and gender. Rather than simply an issue of racism, I contend this has more to do with the way the role of the police has changed over the last decade. The world has moved in the direction of becoming overly "politically correct" while the police have moved in the direction of flexing their muscle in a tight "boys club" where the first code is to protect your brother and ignore his transgressions. The post 9-11 propaganda of fear has been used to justify this change.

Abuse, violence, and unnecessary force is not used only on blacks and other minorities but is also employed on whites, or as I like to call them "people of non-color." In response to the incident above, I was not there but most likely more than one officer was in the elevator escorting him from the building. Even if I were alone with this handcuffed young man I would like to think that I could have brought him to the floor and held him down until another officer could arrive to help me. If so, tasering him stepped over the line. It should be noted many of these problems occur away from witnesses and cameras. If police wearing body cameras will help to protect the rights of Americans I think we best get on with equipping them with such. This causes me to wish for, "the good old days" when the police might have scolded this young man and told him to go to bed."

The media spins the protest sprouting up across America into being about blacks being abused but this spills over into the general demeanor of police and how they interact with all citizens. This is why so many young people and white faces are often seen in the protests. They understand at any time they might see their lives turned upside down by an officer with an attitude. The expansion of the NSA and the militarization of police forces across America reeks of a growing Orwellian police state that should concern us all. The feeling that many of these officers have they should be held to a different standard and are above the law has become an ugly reality across America. This is especially a problem in conservative or unenlightened areas where special economic incentives are often paid to police as a way to generate income for local government or the police department through fines, confiscation of money or property, and other fees. Enforcement of drunken driving laws and the war against drugs where even the most minor offense results in draconian and harsh penalties highlight just how skewed and warped enforcement has become.

Click on image to enlarge
It must be noted that during the Obama era the trend to add a military component to police forces across the nation continued unabated. Many people view this as the government's way to extend control and power over the masses in case a civil uprising ever occurs. More and more we see those paid with our tax dollars driving aggressive macho vehicles and strutting around in black uniforms with a swagger of intimidation. Letting your eyes move around the world you will see similarities in today's images of armor covered police in America with shields lined up in front of military vehicles facing protesters. This is something we thought only happened in fascist or repressive countries. So where's the public outrage?

To make matters worse it seems this aggression is spilling over into the personal lives of the police. Years ago an article in the Atlantic reported that studies suggest that domestic abuse and family violence are about three times higher in the law-enforcement community than in the general population. Studies show cops typically handle cases of police family violence informally, often without an official report. This 'informal' method is often in direct contradiction to legislative mandates and departmental policies. A paper in 2003 by the International Association of Chiefs of Police highlights the law enforcement community's failure to track these cases consistently or rigorously. Several studies dating back into the 1990s or even before confirm partner abuse is especially problematic when domestic abusers become the people we call for help. Being a police officer is a job that anyone involved in domestic abuse should be disqualified from because it gives them a lethal weapon, trains them to stalk people without their noticing, and relies on their judgment and discretion to protect the abused against domestic abusers.

To Protect And To Serve Was A Calling
When I received a phone call that one of my buildings had been broken into I remember how my encounter with the police was not good. I can only imagine the amount of disrespect a non-building owner might have to endure. I was not one time addressed as sir or asked for information as to what areas the alarm system covered, instead, twice one of the officers referred to me as slick, as in "Well, slick, I think they were after was the hard drive from the computer in the law office." This must have been an attempt to bond with me in some condescending way. He then boasted about how he was slated for "SWAT" training later in the day. Note, this was a man unable to comprehend the so-called "crime scene" he was viewing was not the work of a sophisticated criminal but the result of kids so inept they had also broken into an empty office at the far end of the building.

A young woman of non-color at another property I own who had an encounter with the police looking for someone in the area described them as "idiots with guns." The police mission in America seems to have morphed from "serve and protect" to "fighting a war on crime." This mixes in elements of maintaining order and searching for a terrorist under every bed. Many child psychologists and about every mother will tell you if you want to make a child more aggressive give them some toy weapons. It seems adults often react the same way and when police allow power to go to their heads they can to overstep the line. Most people understand police officers have a tough and difficult job, but while this may be distasteful to some police officers to hear this, "you are being paid by the citizens to do a job." Fear for your safety is not a defense for irresponsibly doing your job, if you are afraid another endeavor would be in order.

Two issues have become very clear. the first, Americans should not have to be afraid of those we pay to protect us. The second is that society's inability to get people to obey its rules and laws has dire consequences. Not enforcing laws to deter minor acts of stealing and such impacts our culture over time. Sadly this is not a problem just in America. Across the world, the cost of enforcement and crumbling justice systems have forced courts to prioritize crimes by seriousness. This means many prosecutors are now letting petty criminals walk free for crimes such as shoplifting, minor assault, vandalism, and fraud. This is one reason young people across the nation feel empowered to smash $1,500 widows and loot using anger over police tactics as their justification.

Tuesday, May 26, 2020

Retail Store Closures Have Huge Impact On Communities

Across America many buildings stand empty or under-leased. They once housed thriving businesses that provided Americans with good-paying jobs. Over the last several years retailers have been closing stores and as the carnage rapidly accelerates this will be back in the news bigger than ever. The impact of these store closings all across America will be huge and take a huge toll on communities with a great number of jobs being lost forever. Much of this is linked to small businesses having its clock cleaned when forced to shutdown because of Covid-19, however, a lot is related to paying higher wages, compiling with new government regulations, and being forced to compete with big businesses backed by Wall Street money.

Abandoned Malls, A Canary In The Coal Mine
Retail closures come with a hidden cost to society that the average person fails to internalize. Retail closings will result in lots of other small businesses closing their doors. Not only will the retail employees lose their jobs but these stores support many local businesses. People often forget that the brick and mortar stores suffer several expenses not fostered upon online companies. All these constitute a sort of tax on these stores which benefits the community in which they are located.

These costs rapidly add up and include such things as maintaining landscaping, ensuring safe ingress and egress, or providing a parking lot for customers. Staffing for longer hours, for the convenience of customers, often results in being open when foot traffic would indicate a store should be closed. Dealing with security and shoplifters is another expensive burden. Over the last few years, stores such as Target and Macy’s have even had to face a slew of dishonest shoppers trying to sneak defectives products purchased online back as exchanges and trading them for a fresh unbroken product. I have seen this costly abuse recommended by several online shoppers that see this as an "easy fix" on how to handle defective merchandise.

Large retailers as a group are collectively set to lock the doors for the last time at thousands of stores this year. In the past I have written about how we should think about what kind of community and world we wish to live in and how best to preserve the nature and quality of the life we seek. I have even gone as far as to suggest consideration be given to levying an online transaction fee to level the playing field. The revenue from such a fee would be sent to local governments in the area where the sale originated or goods are shipped. The ugly reality that store closures are a cancer will soon be clear to those that have rushed to buy from online retailers. All this flows into what we will soon witness as rents fall, mortgages go unpaid, commercial real estate values fall, and the local tax base shrinks away. Defaults on loans and bonds in conjunction with the reduced property taxes for local communities now appears in the cards.

A Great Example Of  "And Its Gone!'
Even before Covid-19 struck, Credit Suisse predicted 25 percent of shopping malls might have to shutter their doors by 2022 if shoppers continued to move online and mall traffic declined. Now, Bloomberg, reports that landlords have been sending out thousands of default notices to tenants. These businesses have experienced a collapse in foot traffic, sales and cash flow due to the COVID-19 pandemic are simply unable to pay their debt obligations.

Restaurants, department stores, apparel merchants and specialty chains have in some cases gone as long as three months without paying rent. With many traditional brick-and-mortar retailers having very heavy debt loads and looking at nearly $1 trillion of debt coming due over the next 3 to 5 years if the economy turns south these closings might only be the tip of the iceberg. We are about to see a slew of empty buildings blighting our landscape and driving down the value of properties across the nation. This is occurring while online retailing giant Amazon continues to acquire a more significant share of the consumption pie.
Sadly, most politicians have a poor grasp of business and are more interested in pandering for votes than trying to create more sustainable communities. Washington lawmakers have shown little interest in addressing the issue of how online shopping plays into the overall economy other than initially granting it some rather large advantages. This has been followed by state and local officials going over the top in competing for what they call new industries and jobs. This often results in special tax breaks, deals, or incentives for companies such as Amazon in exchange for investing or locating a facility in their area. In the long run, this hurts and weakens companies already located and competing in their market but that often gets brushed aside.

In the last few years, department stores like Kmart, Macy’s, Sears, and JCPenney, and retailers including Best Buy, Payless, BCBG, Abercrombie & Fitch, and Bebe have decided to close dozens of locations. Some have even slid into bankruptcy or vanished completely. The fall of the once massive Toys 'R' Us name in 2018, should have drawn more attention. With more than 700 U.S. stores the Toys “R” Us chain was a prime example of just how much retail has changed in just the last decade. When KKR & Co., Bain Capital, and Vornado Realty Trust took over the company in 2005, the buyers justified the $7.5 billion price, in large part based on the supposedly valuable properties that came with the deal. If current trends continue, the drop in the value of these properties has only started and in the future will have a gigantic effect on the economy.

Much of this space is located in the large shopping malls that once flourished in commercial zones of suburbia and many now sit empty and abandoned. While some of the empty storefronts will be re-purposed many will not. Sadly, America has created a bureaucratic obstacle course to rehabbing buildings by adding a great deal to the cost. This makes demolition more appealing. Between meeting new regulations and codes dealing with the Americans with Disabilities Act (ADA) and other issues building owners often choose to simply tear down the structure and rip up the parking lot which is also required as part of the demolition. This reduces the often huge tax burden while they try to recoup part of their investment by selling off the land.

US retail vacancy rates were at 10.2% in the fourth quarter of 2018, but are expected to go through the roof. America has far more retail space than it needs. The country now has roughly 24 square feet of retail space per capita, more than twice that of Australia and 5 times that of the UK. Much of it has been built in recent years using low-interest money as investors rushed to build malls and shopping centers under the premise that if they built it "they would come." The shift to buying from online retailers such as Amazon and overbuilding has broken retail's decade-old profit formula. The culling of unprofitable stores and bankruptcies has added to the number of empty storefronts and malls. Do not expect retail construction to recover anytime soon.

Last year more than 9,275 stores closed their doors while only 4,454 stores that opened in the same time period. While some people make the argument this is all part of "creative destruction"  where new technologies and better ways of doing things simply crowd out the old, something more sinister is going on here. Retail is in full-fledged liquidation mode as a result of being monkey hammered into submission by a wave of new reality sweeping across America. Not only have they been battered by online retailers such as Amazon but paying employees more so they can spend the money "elsewhere" simply does not work.

There are a number of trends at work behind America's retail apocalypse such as retailers taking on too much debt and our government giving online retailers special tax treatment. in the past, state and local governments have put packages together with special incentives to lure Amazon to build in their areas oblivious to the future damage this will cause. This is a company that often pays no taxes but sells billions of dollars worth of foreign-made goods and services to our government. Even the United States Postal Service has joined in this effort which destroys small local businesses by making deals to deliver goods at below their cost even on weekends. Add to this state and local governments that burden brick and mortar businesses with taxes and fees it is no wonder things are in such a sorry state.  

Consumers might someday regret throwing their communities under the bus for the promise of free overnight shipping. The closing businesses, both large and small are often viewed as the bedrock of our communities and with the closing of each one, a little bit of us goes with them. Consider this post a reminder of the massive amount of real estate taxes these stores pay. This money flows directly into the support of local police and fire departments as well as maintaining roads and such is a big disservice to the companies that also employ our friends and neighbors. These stores are where we go when we need something fast or that has to fit just right. As a final argument as to why we should support local stores, remember, that we the people will be forced to pony up more dollars in local real estate taxes as their contributions drop and local services are cut.

Saturday, May 23, 2020

It Doesn't Matter What You Think, Reality Is What It Is

It doesn't matter what you think, the reality we face is what we are seeing here on the ground. Reality is what it is and our government will as usual muddle through with poorly thought out politically correct solutions geared to kick the can down the road. This brings me little delight. I have gone a bit quiet lately because of how events are slowly unfolding, the keyword, in this case, is slowly. Rather than a wave washing over us we are experiencing a troubling drip after drip of bad news which a majority of the population has now come to accept as normal. You can put lipstick on a pig but no matter what you tell yourself, it is still a pig.

Holy Shit! This ain't good
In some ways what is happening to people across the world could be compared to what occurred when the white-man came to America. The Indians slowly traded their freedom for baubles and what they did not trade away was slowly taken by force. In this analogy, technology is the shiny promise unto which we sadly surrender our future. Beware, those that claim the promise technology is the key to a better future are not quick to share its rewards. They prefer to turn us into mindless slaves and government is a tool they employ in their efforts.

Exploding debt and a slow recovery following the 2008 financial crisis. Many of us claimed it really was not a true recovery but rather a debt-fueled false economy. All this continued with the aid of a few major distractions which took our eyes off the ball. Then the corona-virus hit. Looking back, the first diversion was the emergence of ISIS and the wave of refugees that destabilized Europe and the second was the trade war with China. This was another matter that was not resolved but ended in a small initial agreement that remains unfulfilled and the promise of a solution at some point in the future. This issue and all of the above should leave us unimpressed.

Recently we have been hearing more rumbling of growing conflict with China. It is difficult to argue such a possibility does not exist. This brings front and center the issue of throwing back the curtain and taking a harsh look at reality. Wake up, smell the coffee, and cast off the rose-colored glasses. when you do what you see before you is not pretty.  

So, where do we stand?
  • Today we are facing massive unemployment / retailers are closing
  • Local stores, the taxes they pay, and communities don't matter just buy online 
  • Many small businesses will never reopen following the Covic-19 shutdown
  • Travel and many large industries are in crisis
  • Governments across the planet, including here in America, now lock people in their homes
  • Interest rates have fallen to where people take on huge risk in search of yield  
  • A majority of Americans now believe the National Debt does not matter / MMT is accepted 
  • As long as the government will pay people not to work everything will be ok
  • While some jobs may move back towards our shores we still remain noncompetitive
  • Mega-companies continue to grow in power and dictate government policy 
  • If not for Central Bank shenanigans defaults would be the flavor of the day
  • Pushed ever upward by the Powers That Be the stock market has divorced from Main Street 
When all is said and done, the promise of free overnight shipping, an endless barrage of mind-numbing "entertainment" coupled with having an iPhone in your hand are poor substitutes for freedom. It is difficult to deny the lobbing power of huge technology companies such as Amazon and Apple that exploit America. This type of company often pays no taxes but sells billions of dollars worth of foreign-made goods and services to our government. Even the United States Postal Service has joined in the effort to destroy small local businesses by making deals to deliver goods at below their cost and on weekends. Add to this state and local governments that burden brick and mortar businesses with taxes and fees it is no wonder things are in such a sorry state.

I should not be the only person feeling uneasy about several of these trends. I fear, over time, they will lead to an outcome that will prove very unpleasing to a majority of Americans. This is not to spread fear but to question the sustainability of such policies and what they will do to our culture. The effect is already showing up in subtle ways. With each day people are altering their expectations of the future. The options we had are rapidly vanishing and we as individuals are losing the ability to create or even shape our destiny. Most troubling is society's general acceptance of this. This does not bode well for our children.

Sunday, May 17, 2020

Obama Suffered Scandal Upon Scandal Upon Scandal

The Obama Era Was Filled With Scandal
For years former President Obama remained more or less off the grid. It could be argued that it is not uncommon for an ex-president to stay out of the limelight. Several Presidents have done this even claiming it was for the good of the country and in an effort not to interfere with the country moving forward. Obama has recently reemerged and injected himself into the public spotlight, at times taking aim at President Trump and the way his administration is handling various situations. It is not surprising that President Trump is not pleased.

While our memory has a way of removing rough edges from events we should not try to whitewash the past and rewrite history to present a different picture of what really happened. Because of the stark contrast in the demeanor and style of Trump and Obama, the media has "photo shopped" reality. Obama has been painted as, a thoughtful, intelligent, capable man full of hope and able to bring us together. He did, after all, bring America's economy back from the brink of disaster following the Great Recession. Trump, on the other hand, is often portrayed as a divisive, dishonest, braggart, and a buffoon. The fact is during Obama's time as President the country suffered scandal upon scandal upon scandal, it might be fair to say we had "scandals galore."
Mosul, Reduced To Rubble On Obama's Watch
And then, there was Mosul. The destruction of Mosul and the many lives lost there stand as a monument of Obama's failings. We should not forget that during Obama's watch the once-proud Iraqi city of Mosul was reduced to rubble. This was done as a coalition of anti-ISIS forces try to retake the city. The very roots of ISIS were fed by America and its botched policies. The saying, "never throw stones if you live in a glass house" would lead people to think Obama should have remained in the shadows.

Looking back, there were so many, big and small scandals such as the fast and furious, the operation that sent guns into the hands of drug gangs in Mexico, they became difficult to track. In Las Vegas, the GSA went on a spending spree. A large number of sexual assaults occurring in the military. Solyndra which should be placed in the dictionary and defined as "what happens when politicians and bureaucrats play businessman with taxpayer money" failed. The CIA had a "prostitutes fiasco" in South America. Fisker Automotive failed, this deal reeked of government cronyism and waste. Add to this what looked like a "Benghazi coverup" (including the way it was handled in the second presidential debate) add the DOJ doing an over the top and wiretapping the Associated Press. 

Trump Will Leave None Of This Unaddressed
We should not forget some of the following if truth be told. The resurfacing of Mr. Obama and images of him opining with his chin tilted slightly upward motivated me to look back at some posts written during his time as President. Remember, because of his persona, a degree of optimism was in the air as he took office, across the world many people saw him as the answer to taking the whole world forward. Below are a few of those with links to the original as well as a few other comments on what history has revealed as major policy blunders flowing from his time in office.


Other major faux-pas, blunders or missteps of the Obama administration include;
  •    Generated the destabilizing "Arab Spring" 
  •    Failed in helping Iraq stabilize
  •    Horribly mishandling the situation in Syria and in doing so fund the creation of ISIS 
  •   Underestimating ISIS
  •   Aiding in turning Libya into a failed state
  •   Obama care failed to reduce health care cost but transferred them to other payers
  •   Failed to lessen racial strife, note Ferguson, Missouri, and other events
  •   Destabilizing Ukraine in a pissing war with Putin 
  •   IRS, when it targeted conservative groups
  •   Fast and Furious - where the US illegally sold guns in Mexico

To say we were awash in scandals during the Obama era is an understatement, fortunately for Obama, most Americans have the attention span of a gnat. To be clear, not everyone will agree with what I have listed as "faux-pas, blunders or missteps" but some will. Time tends to reveal whether the decisions we make are great, good, so-so, or were horribly wrong. If you feel this post was overly biased, unto you I say, sorry, sorry, sorry. In an effort to be transparent I confess I'm not a fan of either of these men and to be fair this post is not a critique of Trump's time in office. While some people may try or continue to paint Obama as Mr. Clean, a closer look at history rapidly dispels that image.

Footnote; This footnote is being added well after this article was posted. The comment below points out many of the examples used to signal scandal fall into the category of bad policy rather than being a scandal. Please note scandals need not be large or overpowering. Anytime a whiff of corruption is present the event moves into the area of scandal.

Saturday, May 16, 2020

I Think I Killed Him! - Watershed Events Shape Our Life

While human interest stories do not constitute a great percentage of what appears on this site, when someone blurts out, "I Think I Killed Him!" it sometimes gains merit. This story is a great example of how something as common as a simple argument can get out of hand and become a watershed event. These events often define our lives. A few seconds, a few inches, a few this or that can have huge consequences.

“The turning points of lives are not the great moments. The real crises are often concealed in occurrences so trivial in appearance that they pass unobserved.” George Washington

This post is to highlight the fragility all of us face as we move through life. Whether someone inflicts pain upon us or we are the source of the infraction. A news story that appeared on details how an argument has now morphed into a crime story. The article below has been edited slightly to fit my format and is followed by my interpretation of  what we all can learn from such events. This article caught my attention because of the far-reaching ramifications it will have on this woman, her children, and the cost to society. These will extend far into the future. 

     ‘I think I killed Austin!’ Court docs detail couple’s deadly fight

Jamie Faced With Watershed Event!

FORT WAYNE, Ind. — The woman jailed for stabbing her husband to death outside of his workplace Thursday afternoon was fighting with the man over a car seat, court documents say.Jamie S. Marsee, 24, is being held on initial charges of Aggravated Battery, Domestic Battery Resulting in Serious Bodily Injury, and Battery by Means of a Deadly Weapon in the fatal stabbing of 24-year-old Austin D. Harrison in the parking lot of Midwest Pipe and Steel at 2001 E. Pontiac St.

Police were called to the steel warehouse around 2:40 p.m. after employees said a man had been stabbed. Medics arrived and pronounced him dead around 3:30 p.m. According to a probable cause affidavit, a witness said he was in a break room with the man – Austin Harrison – and overheard him on the phone yelling. A short time later, he heard more yelling outside and saw Harrison chasing Marsee around vehicles in the parking lot.

The man said he went out to break up the fight and saw Harrison holding Marsee in a bear hug. When he separated the couple, Harrison put his hand over his chest and he saw blood, the affidavit said. At that point, Harrison collapsed in a puddle of water.
Marsee tried to get Harrison up, but eventually drove away from the scene, the witness told police.

Another witness told police that Jamie dropped her children off with her around 11:30 a.m. and came back a couple of hours later with a knife and said, “Oh my God, I think I killed Austin. I think I stabbed him! I think I stabbed him,” the affidavit said. The witness said Marsee asked another person to get rid of the knife, and asked her to “clean it up or swab it with bleach,” the affidavit said.

Police investigated the incident at Midwest Pipe & Steel
Police found Marsee a short time later around Lake Avenue. In an interview with police, she said she and Harrison had been arguing earlier in the day and he told her to “get out.” She said she was going to leave for the night, but she wanted the car seat for her children, so she went to his workplace to get it. Marsee said Harrison came out “extremely upset” and got the car seat and threw it.

That made Marsee “furious” and she got a fishing filet knife and stabbed the tire of Harrison’s vehicle, the affidavit said. At that point, Marsee said Harrison grabbed her in a bear hug and spun her around, and they both had their hands on the knife. Marsee said Harrison stabbed himself in the chest then collapsed. She said at that point, she grabbed the knife and tried to help Harrison.


Many things in life are not planned or predetermined. In many ways, this all sounds like another sad story of woe rather than an actual and intentional crime of passion. It could even be described as a Greek tragedy of sorts in that it exposes the subject and the themes around human nature and ends badly. Back in Greece's days of old tragic plots were most often based upon myths from the oral traditions of archaic epics. In tragic theater, the narratives were presented by actors as a way of connecting with the audience and bringing the audience into the play.

It is reasonable to assume the young lady referenced above never envisioned when she woke that morning her day would spiral downward with such speed. One take-away from this tale is that the unexpected lurks in the shadows. Life is full of different events that can go sideways or south. Many of these will turn out to have little in the way of lifelong consequences, however, all of us are always just a small distance away from an event that could have a major impact on our life. I end with a few words of encouragement, while not a guarantee of a good outcome, discipline, and good choices do play into the odds of  successfully navigating our day.

The National Debt Clock Is Flashing A Major Red Alert!

The National Debt Clock is flashing a major warning, Red Alert! this morning while working on another article I happened to glance at this indicator and recoiled in horror. While most people are aware the national debt has exploded, it brought my focus back to this subject. Many of us that watch the economy closely are still trying to get our heads around the rapidly unfolding covid-19 crises and the impact of trillions of dollars flowing into the financial system. America's debt has soared past 25 trillion dollars and is now expected to leap by several more by the end of the year.
Click On Image To Activate

All this, of course, is in play even before it was announced that House Democrats have powered through the House another $3 trillion coronavirus relief bill. It is described as an election-year measure designed to brace a U.S. economy in free fall and a health care system struggling to contain the pandemic.

This debt surge would have been unimaginable just a year ago. The clock provided by US Debt provides a great deal of insight and information. a seldom and underused feature appears on the right-side of the top line, it is labeled "Debt Clock Time Machine." When you click on it you are provided with a view of where the debt and a slew of data for several periods in the past. It also provides a view of current expectations four years forward.

While it can be difficult to sort out much of this information, it is very helpful in identifying trends. With this in mind, it is important to note that the number of people living on government transfers of wealth has grown over the decades. Since the massive disruption in the economy resulting from the government’s response to covid-19 is likely to lead to a deep recession or depression marked by reduced dividends, an end to buybacks, and softer growth. The Trump administration's decision to jump into the breach by signing the CARES Act, a $2.3 trillion relief package, is another indication that his answer to such an economic disaster is mega-spending on hand-outs and social projects.

Sadly, because of the political environment, we are experiencing, Congress rapidly gave near-unanimous approval casting aside concerns about the deficit or the unintended social consequences it might usher in. A theory exists that during a situation such as we are facing, the Government's efforts to intervene are useless and may make things worse. Sometimes when the economy is melting down, it is best to do little or nothing because the free market will over time self-correct and return to a healthy balance. The problem at this time is two-fold, first, Trump doesn't view deficit spending as a problem and second, he touts the stock market as an indicator of his ability to return America to its days of glory as promised when he ran for office. Unfortunately, much of his economy is generated using this old trick of deficit spending.
Now Out Of Date! click to enlarge

The chart to the right shows how the deficit has exploded over the last three years. This indicates the Trump economy is a mirage based on deficit spending. Expect this not only to continue but get substantially worse. In the past, this spending coupled with market manipulation fueled by changes in the tax laws has caused stock buybacks to explode. The bottom-line is that we entered this crisis in the midst of a "false economy" and it is only by the grace of this huge deficit spending that we are not languishing at the bottom of a deep economic pit. Deficit spending is not a silver bullet without consequences and is a poor substitute for the free market when allocating capital to where it is most effective. It is not economic growth but simply a method of borrowing from the future.

Trump has displayed a strong tendency to boost the stock market at every opportunity. He often accomplishes his goal of rocketing the market higher even if only temporarily by "tweeting" what he views as market positive blips or banging away at Federal Reserve chairman Powell. Many are centered around, the idea of “trickle-down economics” and how lower tax rates trickle down to benefit the overall economy. It appears that Trumps sees a higher stock market as proof he is on the proper track but he is blind to how distorted markets have become. I contend that while Trump touts a fondness and respect for hard-working Americans his policies will continue to create a great deal more inequality.

Low-interest rates, coupled with printing money and deficit spending has always come with huge hidden costs. They include increasing speculation, distorting prices, and allowing boondoggles to be built while reducing income to savers. This money flows to big business and Wall Street first and less so to small local merchants. In short, it reeks of crony capitalism and fuels a false economy full of boondoggles. As for the economic concept of  “trickle-down economics,” the problem is that those at the bottom share only a few drops of the benefits while those at the top swim in a pool.

Circling back to the crux of this article, America's debt is soaring and small businesses and stores are closing in record numbers. Do not underestimate the importance of small businesses. Last year businesses with under twenty employees totaled some 30 million, employed over 54 million workers, and contributed 44 percent of all sales in the country. The economic scenarios before us include growing inequality, massive long-term unemployment, and propping up zombie companies. The Japanification of America is well on its way. Stagflation or run-away inflation is also a good possibility as history indicates that a soaring national deficit is never a free lunch. Trump may refer to the campaign against the coronavirus as a "war" but it is just a battle. The real war is still before us as we begin to deal with the carnage the politicians in Washington have unleashed upon us.

The President did not get us here on his own, he was assisted by a willing and complacent Federal Reserve and Congress. The combination of Nancy Pelosi and President Trump has been toxic to anyone interested in holding government spending at a reasonable level. It will be interesting how this plays out as the election draws closer. Trump's salvation may be that he faces an even greater free-spending Democrat as he argues that things would have been far worse if he had not taken us down this path. It is incredibility ironic that after criticizing Obama and the Democrats for taking us down this road we find Trumponomics is little different. Please forgive me for pointing out the obvious, the next Presidential election is currently not set to bring about an answer to this ugly dilemma.

Sunday, May 10, 2020

Flawed Presidential Election Process Gives Poor Choices

It appears that American voters will have to choose between Donald Trump and Joe Biden to be our next President. Both of these men are old. Biden sports signs of dementia and has been accused of corruption. Trump is considered divisive and not as truthful as many people would like. It could be said many voters are not jumping with joy. 

To say America has a flawed election process is an understatement. Early in each Presidential primary season, it becomes clear that we suffer from a defective election system. Over the years televised debates have not been of much help. Efforts to remove the process from power brokers in smoke-filled rooms has not drastically improved the system. The people who have the least say in this system remain the average voter. The political debates highlight our flawed election process.

America's primary system is not geared to putting the best-qualified choice in a position to move on but unfairly places the decision in the hands of voters in a few early primaries. These voters casting their ballots months before the rest of us set in motion a culling process that often nullifies our voice. I wrote a similar article four years ago highlighting the poor choices such a system can produce. Sadly, like in 2016, it again appears, we as a country will be forced to choose the least of two evils when deciding which candidate to elect President.

Reform of the election processes would benefit the country in selecting better leaders. A few years ago the animated comedy South Park produced a line that eloquently describes the choice before us. "an election decision usually comes down to a choice between a giant douche and a turd sandwich." I contend even the political debates highlight America's flawed election process in that while presenting us an opportunity to preview the Presidential contenders it does not result in anything more. This superficial peek at candidates so they can be weighed and measured to see if they have the right stuff is simply a dog and pony show.

When the Presidential primary debates begin to fill the airways the media is chocked-full of  stories about the individual candidates and their prospects. Speculation, spin, and unlimited efforts by the media to influence our decision as to who will become America's next leader go into full swing. Sadly, the people who will most likely have the least say are voters like you and me. These flaws become most evident when we are faced with actually narrowing down the choices before us.

Our political system was structured in a way that may have been acceptable in the past or when our country was first formed but since then it has morphed into an inefficient costly mess. This often results in not putting the best-qualified choice in a position to move on and has in recent decades concentrated the decision in the hands of a few voters in early primaries. By casting their ballots months before mine my vote is greatly devalued. By the time my state primary takes place, it no longer matters and the choice has been made for me.

Moving to the general election the process fails to improve. In the general election, any third party candidate hellbent on making a point can easily derail either party by drawing even a few votes thus having a major influence on who is elected. America’s presidential system is far from perfect and the flaws are exacerbated by the influence of the Electoral College. This misunderstood institution takes over after the general election and discounts the votes of many Americans voiding the idea that the person getting the most votes should win. 

This dinosaur created by our founding fathers created a buffer between the population and the selection of a President it also gave extra power to the smaller states. Over time this institution has grown obsolete and has become an obstacle to seeing all votes carry equal weight. In our system, the "outdated" electoral college makes the final call on who is elected. This means certain key states and "swing states" are guaranteed to get all the attention and the rest of us will be treated as an afterthought or second class citizens.

Flipping one swing state is the key between winning and losing. As noted earlier, in our current system the announcement of any "third party candidate" can quickly skew the results, this means candidates with an important message become "a spoiler" that can deny the best choice any hope. Our current system promotes the gridlock that polarizes our nation. It is geared in a way that a small active group at either the far left or the far right of the political spectrum gains far too much influence and this often leaves us forced to chose between the worst of two evils.

The best way to determine if a system needs change is to look at its goal or purpose. It is logical to think that if a group of intelligent people unencumbered by bias or partisan politics entered a room to devise a better process they would emerge with a far better system than currently exists. While all these systems have their supporters, much of this support is based on partisan politics. Reform of all these processes would benefit the country to choose better leaders.

The fact that positive change is highly unlikely does not mean a discussion as to how it can be reformed should not take place. For example, while "the winner takes all" primaries are quick and often less divisive to political parties, the notion that we should unite behind a flawed or lesser candidate because he or she is better known or financed makes no sense. I consider these "winner take all" contests an unfair way to allocate delegates. As noted earlier, often by the time my state primary takes place it no longer matters and the choice has been made for me.
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Across the world, Instant-runoff voting is used to elect those that best represent the choice of the people whether choosing a country's leader or a city mayor. This system is devised to let the best talent and most qualified candidates work their way to the top.

Years ago I realized a person does not have to know everything, but it is more important to know where to get the right answers, thus I defer to Wikipedia. On their site, they delve into the processes known as instant-runoff voting (IRV), alternative vote (AV), transferable vote, ranking choice voting, and preferential voting. These are variations of systems used to elect a winner from a field of more than two candidates in which voters rank the candidates in order of preference rather than voting for a single candidate. IVR has the effect of avoiding split votes when multiple candidates earn support from like-minded voters.

Some countries have devised ways to have quick elections and systems based on a run-off process where only the top two choices move forward. In such a system, ballots are distributed based on the first choice of each voter and if a candidate receives more than half the votes a winner is declared. If not the candidate with the fewest votes is dropped and ballots assigned to the eliminated candidates are recounted and added to the totals of those still in contention based on who is ranked next on each ballot. This continues until one candidate wins by obtaining a majority of the votes.

Sadly, even an incredibly fair and sound plan that substantially improved the process would not have a prayer of getting through our political system because the vested interest of those in power have little interest in such things and hold us hostage. Our two-party system and partisan politics tend to gravitate towards a system that eases getting the party's slated candidate elected or blocks an opponent, I reject that goal. We should elect officials that most represent the views and desires of a majority of the people while protecting those on the political fringe.

It is time to put each vote on equal footing. Today with instant communication and no area of the United States more than a few hours away by jet the least we can do to improve the election process is to eliminate the electoral college which skews attention during Presidential campaigns to key “swing states” and taints an already lengthy and expensive process. The cost of maintaining this antiquated dinosaur runs a billion dollars a year but no longer yields any real benefit and is in many ways harmful.

With our current system, we always find the election teetering  on a few hundred votes in states such as Ohio or Florida. Another major flaw with our current system is that  the announcement of any "third party candidate" can quickly skew the results. These candidates with a message can rapidly become "a spoiler" that denies our true or best choice any hope. All this magnifies the stupidity our Electoral College now brings into the current process.

Over the recent years, we have witnessed countries torn apart by burning, killing and tribal mayhem because the leaders in power stole the election, it should be pointed out that the winner-takes-all attitude is partly responsible for this problem. When the people's voice is ignored and both sides see the stakes too high to admit defeat the system will lose broad support. How ironic that all those constantly calling to crush inequality are busy scurrying about demanding that all votes treated as equal never place this into their line of vision.

Footnote; You owe it to yourself and America to at least do a "look-see" at this hilarious YouTube video that puts these debates in perspective. The best thing about it is you can simply turn it off if you don't enjoy it, we don't have that option when it comes to politics in general.

Saturday, May 9, 2020

They Will Write Books About This Financial Conundrum

Like The Hindenburg We Just Needed A Spark
What is occurring today is absolutely mind-boggling. Someday they are going to write books about this! While there have been some messed up financial conundrums over the years none rival the current situation now before us. The dilemma before us is a fast-moving enigma wrapped in a gossamer cloak. Not only are the players that make up the global political-financial complex busy buying up bad debt, stocks, and bailing out those they deem too big to fail, they have destroyed the concept of real interest on loans. They have trampled all over true price discovery the basis of a free market.

The budget forecast be damned, its full speed ahead. The only justification we need is saying it will be far worse if we do nothing. The bungled response of a delusional government so obsessed with the idea that by simply passing legislation they can make things happen should not be overlooked. The Paycheck Protection Program or PPP was originally funded with $350 billion but the money was soon gone. Of the thirty million small businesses in America, only 1.7 million received money from the 2.3 trillion dollar aid package passed to help sustain America during this difficult time.

This resulted in more funding but still, the last report I saw indicated only around 13% of the, less than half the businesses that were eligible, were approved before the fund was again depleted and 60% of these had yet to receive any money.  Just as poorly handled was rapidly getting out money promised to individuals and creating a system where many people could receive more money by collecting unemployment than returning to work. The problem is that when all is said and done, large businesses with access to cheap capital will again be the winners and the big losers are the middle-class, small businesses, and social mobility.

It has become difficult to comprehend the size of the failure the political-financial complex has designed. This is partly because stocks have continued to soar with every announcement of rising unemployment and even as businesses continue to fail or file for bankruptcy. Bad news is not good news. The sick idea that poor spending habits are the answer to achieving a faster-growing economy is absurd and twisted. This is not new, politicians seem unable to grasp the fact economic growth does not necessarily bring about economic strength or long-term prosperity. Following 9-11 I remember then-President George Bush encouraging and pleading for Americans to rush out and buy more junk.

In a world where central banks are pouring out money to stimulate an economy eager to die the question many people are asking is will it work? Until now it appears these actions are only postponing the inevitable. The folly and insanity of continuing down a path where each wave of failure costs more than the one before holds little potential. Stacking debt upon debt and bad loans upon bad loans has already proven to be an answer that doesn't work. The fact that country after country has joined in this game only extends the illusion it is a reasonable path of action.

As I bang out this piece behind me on a shelf is a book titled, "The Greatest-Ever Bank Robbery" by Martin Maver. It chronicles the collapse of the savings and loan industry in 1987 and how it would cost American Taxpayers upward of 500 billion dollars over the next half-century. That is a drop in the bucket compared to what we are witnessing today as the powers that be endeavor to paper over past financial sins by simply issuing more credit and debt.

Debt has exploded and as defaults grow wealth vanishes or is transferred. The economy is complex with ramifications that overlap and tie unrelated events together in ways that are difficult to imagine. When we look at how people spend the twelve hundred dollars donated by our surging deficit we find where it goes makes a big difference. Responsible people will most likely use their money in ways that yield a better result for society than if it is just squandered.

How money is spent matters. Failure to use money and credit wisely is a huge factor in why so many governments and people are broke. Paying down debt or paying for necessities pays dividends. Paying rent allows a landlord to pay their obligations and allows the money to move forward in an economically constructive way. Investments in things that add long-term benefits and pay dividends such as adding insulation to your home may not be flashy or bring instant gratification but they constitute a hand well played.

A list of ways to blow this money off that adds to our woes include things such as buying expensive goods produced in a distant land and imported. These goods do little to provide work for Americans or our communities. Ordering a slew of imported consumer goods on Amazon to be delivered below cost by an outdated, inefficient, subsidized United States Postal Service is the biggest slap in the face a person can bestow upon the economy.

Almost as bad is leveraging the money into more debt when you are already deep in a hole of debt. Unfortunately, many or most people will choose to use their money poorly, and that is a big part of the reason we are in this situation. What is almost impossible to grasp is the incredible size and magnitude of the extension of unjustified credit taking place in a relatively short period of time. This time we are talking trillions upon trillions of dollars being created out of thin air.

Swinging back to the key point of this article is that governments and central banks rival these people in bad spending and fuel these habits. While covid-19 can be viewed as the straw that broke the camels back. It would be unfair to think the disaster before us would have been avoided had the pandemic not descended over the world. Even before this mess disaster hovered above our heads in the form of ever-growing debt. Like the Hindenburg and all it needed was a spark.

Saturday, May 2, 2020

Massive Unemployment Surge Creates Challenge Ahead

One Face Of Unemployment Is Lost GDP
Unemployment has several faces. It will be interesting to see how America handles the massive unemployment caused not so much by covid-19 but the government's effort to hold employers responsible for the cost. When the government passed a law increasing employers' responsibility for paying workers even when there was no work for them, businesses countered by mass firings. This was both the logical move and the only way most businesses could survive.

Over time the lack of gainful employment acts as a cancer upon society. Some of the poorly crafted legislation recently passed in the capital of our nation could be considered incentivizing people not to work. The evidence of this can be found in the reports of employees not wanting to return to work because they see themselves making just as much or even more money staying home or being unemployed. When we couple this with the fact many people are unmotivated when it comes to rushing off and working for "the man" it is fair to understand why some people have adopted the attitude, I won't do that.

The evolution of the covid-19 crisis has disrupted supply chains and is starting to trigger food shortages across the country. It is causing many people to question whether an economic depression is unfolding as over 30 million people are now out of work after only six weeks. A matter of great speculation is just how rapidly the unemployment rate will fall back once this pandemic begins to subside.  Congress has decided to make it rather financially rewarding not to work, and millions upon millions of Americans are going to be more than happy to take advantage of that opportunity for as long as it lasts. It is only by creating a pathway that rewards those that wish to move upward on the social-economic ladder that this attitude can be changed.

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People tend to forget or push aside the matter of just how much unemployment cost society. This cost takes many forms. There are economic and social costs in this situation. They include a slew of things from, lower on-the-job training to things such as alienation and lost GDP. This can result in homelessness, depression, and even increase drug or alcohol addiction.

Lurking behind all this is the fact that State governments get the money to pay claims by debiting the employer’s Unemployment Insurance account or by raising the employer’s UI taxes. A deduction in the account balance may also cause a rate increase, this means each claim assessed to an employer’s account can result in a tax rate increase in future years. The cost of an individual claim can be significant but the higher tax rate for a business often has a much greater long-term impact. Many states use a three-year moving period to assign a tax rate and an awarded unemployment claim can affect three years of UI tax rates. This means the average claim can increase an employer’s state tax premium from $4,000 to $7,000 over the course of three years.

These increased UI tax rates will have a huge impact on an employer’s bottom line in the near future and this is something that is not being addressed. Instead, the focus is on unemployment. The situation is considered so significant that the Coronavirus Aid, Relief, and Economic Security (CARES) Act has expanded unemployment benefits to self-employed and part-time workers through Pandemic Emergency Unemployment Assistance, which provides up to 39 weeks of benefits beginning on or after Jan. 27, 2020, and ending on or before Dec. 31, 2020.

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To the right is a chart of what was paid out in recently in benefits. In March 2020, 3.89 billion U.S. dollars were paid out in unemployment benefits in the United States. This is an increase from February 2020, when 2.75 billion U.S. dollars were paid in unemployment benefits. This pales next to the more than 50 to 100 billion dollars we should expect to be paid out each month until this abates.

The ramifications resulting from this surge in unemployment have not yet been fully internalized, this is a huge deal. In the blink of an eye, the U.S. economy has wiped out all the job gains since the Great Recession and more. There were already 7.1 million unemployed Americans as of March 13, according to the U.S. Bureau of Labor Statistics. When this figure is combined with the newest job losses, we are looking at more than 33 million unemployed, or a real unemployment rate of 20.6%. This would be the highest level since 1934.

History shows that creating good sustainable jobs is no easy task. Considering the cost of massive unemployment is increased tax rates and social decay, it is time we face the great-conundrum of how best to save jobs. This massive unemployment surge poses a huge cultural shock that must not be ignored. During the time ahead we should expect the fabric of society to be tested, it may even  unravel. Do not expect the answers to flow out of Washington but understand, now is the time we level the playing field between small and big business. When all is said and done, Main Street matters more to most Americans than Wall Street.