It’s Class Warfare

After reading the president’s book, “The Audacity of Hope”, listening to his speeches and presentations I have come to the following conclusions.

President Barack Obama really understands the meaning of class warfare. His father deserted his mother. She was left to struggle with the challenges of survival for Barack and herself in the challenging world of Hawaii. It was his grandparents that helped with the financial challenges that he and his mother faced. Given the large group of wealthy people living and visiting Hawaii, Barack Obama learned the meaning of working class family vs. wealthy. Is it any wonder that he sees the need to increase the opportunities for those of us not born into a wealthy family? Many of us can relate to his view that our society has given an unfair advantage to the rich at the expense of the rest of us.

His view of how our nation functions now and how it ought to function is obviously the driving force behind his push for a stimulus package, an enlarged national budget, a new health care system, and the many other programs he has proposed. He is trying to remake much of the system that makes our society function. This is a tall order. He may not be successful. He apparently believes that reaching his goals is more important than a second term in office.

Obviously many people will oppose his objectives. It will not only be Republicans. Many Democrats will aslo see his ideas as un-American and foreign to our history. Many people reading this column will see his ideas of remaking America as socialist, communist, or some other form of government that they find offensive. They are wrong. His ideas are to make Amercan society more just for everyone. That is the reason I call President Obama’s ideas class warfare.

The warfare is evident in the today’s outrage over the multi million dollar bonuses given to AIG managers. Merrill Lynch managers were given bonuses just prior to Bank of America’s acquisition of that firm. It is obvious that will hear about other bonus packages given to other banking and Wall Street companies. Those people receiving the bonuses and their friends see nothing wrong with the wealth and power they have. They are in a financial class that most of us will never know. That is the reason we are going to see more class warfare. Will the wealthy and powerful win or will it be the rest of us? Stay tuned.

Union Supported “Card-Check” Is A Bad Idea

According to the United States Department of Labor accounted 2008 union membership was 12.4 percent of employed wage and salary workers. That is an increase from 12.1 percent a year earlier. Total union membership was 16.1 million people. In 1961 union membership totaled 30 million people. Clearly union membership does not have the impact on America that it had in the mid 20^th century.

Employees now vote by secret ballot election when deciding whether they want union representation in their workplace. Elections are overseen by the National Labor Relations Board, which has numerous procedures in place to ensure fair, fraud-free elections. Because of NLRB safeguards, employees can cast their vote confidentially, without peer pressure or coercion from unions or employers. The rub is that there can be delays of as much as six months from the time employees sign cards asking for an election until the actual election is held. However, most election do occur within 100 days.

Both unions and companies claim that there is harassment by the opposing sides during the period from card signing until elections occur. Pressure from employers during that campaign period does have an effect on unionization efforts. I can confirm that fact from personal experience.

The failure of unions to organize in so many companies is the result of business recognizing its responsibility to pay workers decent wages and benefits. A good example is foreign car manufacturers in the United States. They are not unionized but do provide their employees with reasonable pay and benefits.

If Congress passes the Employee Free Choice Act, employees lose their right to secret ballot elections. The bill would establish a so-called “card-check” union organizing system, in which a majority of employees simply sign a card in favor of union representation. The flaw in this proposal is it will increase the likelihood of coercion, intimidation, and pressure to sign those cards. The passing of this law will be payoff by the Obama administration to the unions that were vigorous supporters of Barack Obama’s presidential campaign. This will unfairly force unionization where it may not be wanted.

CONSEQUENCES

I just read a column by Thomas Sowell about the consequences of one’s actions. “It is amazing how fast people learn when they are not insulated from the consequences of their decisions.” Mr. Sowell’s comment reminded me of a boss who frequently commented on the consequences of the decisions we make in life. Also the decisions you made for the company that were not in its best interest.

There is a consequence to everything we do. You go shopping and the consequence is you have to pay the clerk for our purchase. If you are going to school and you fail to study, there is the possibility you will not receive a passing grade. When you buy a car with a down payment and fail to make the monthly payments it is likely that the car will be repossessed.

Thousands of Americans bought homes they could not afford. They managed to do this because the banks granted the loans without considering the borrower’s ability to repay the mortgages. Talk about consequences. Everyone is now suffering from those bad decisions. People are losing their homes and banks are holding thousands of mortgages that will never be repaid by the borrowers.

President Barack Obama campaigned on a platform of change and now he is implementing the changes he promised. Many people are upset, especially Republicans, about the things the president proposes to do. A majority voted for him so now that majority must live with the consequence of that election. A majority also elected George W. Bush president and we had to live with the consequence of that vote.

The decision to repeal the Glass Steagall Act is now being debated as the root cause of the current recession. I believe that the repeal resulted in the unintended consequences that have brought the world to the brink of depression.

The End of American Auto Manufacturing is Near

I predicted the American Auto Manufacturing Is Coming To An End! in August 2007. Trends seem to be confirming that prediction. It is not what I wanted but the handwriting has been on the wall for about 30 years. Each year imports have sold a greater percentage of the total United States sales. The American companies chose to ignore the fact that an ever shrinking number of buyers liked their products. The management of the American companies is to blame for the current situation. That this situation has grown critical when the entire economy is doing very badly only adds to a problem facing our government. Barack Obama must decide if the government should prop up the car manufacturers until the economy is strong enough to withstand the loss of thousands of auto manufacturing jobs.

My guess is that the U.S. government will support the car manufacturers for at least two years. The continuing support after an overall economic recovery is doubtful. Looking at European manufacturers that have government subsides will be enough motivation to discontinue subsidies at the earliest possible date.

I received Consumer Reports annual car edition just this week. Their conclusions about U.S. auto makers is devastating. Among the top 10 in their rating the only American car was the Chevrolet Corvette. Among the worst 10 cars, eight are American made. The three lowest rated cars are American made. Even worse in the overall rating of 15 manufacturers, the American companies took 12^th, 14^th, and 15^th place. Consumer Reports takes no advertising in order to prevent their ratings being influenced so I trust their evaluations. The have no axe to grind. Just a few years ago they rated all Hyundai cars very low but this year the Genesis 3.8 model landed on that list of top 10.

Today’s report on ABC World News that an Auditor Report Warns GM Survival ‘Doubtful’ only reinforces my opinion about the survivability of the American car companies.

Backwards No, Forwards Yes!

America is not the bastion of capitalism and free markets that Republicans want you to believe. If that were the case then there would be no protection for banks, auto manufacturers, and other large companies. There would also be no protection for the money you deposit in your bank. The market place would be totally free. There would be no controls.

The U. S. federal government has come to the aid of society numerous times during our history. The Pacific Railway Act of 1862 during the American Civil War and supported by U.S. government bonds and extensive land grants is an outstanding example of government aid to private industry. The state of New York built the Erie Canal. Construction occurred between 1817 and 1825 was a benefit to commerce. U. S. price supports for agricultural commodities date back to 1933. Many other programs started during the Great Depression are still impacting our society including Social Security, rural electrification, and the FDIC.

Are Republicans really opposed to upgrading our society to the 21^st century? Their argument today is that we cannot afford the cost now. The question is when could we afford the cost? They have continually opposed all improvements. They oppose those “extravagent” expenditures on infrasructure but willingly support more money spent for defense spending. Why do they not understand that money spent on education, railroads, highways, energy, and health care makes the United States a better nation?

The problem for Republicans is that they have been high jacked by radio talk show hosts. Most of those hosts are conservatives. They are primarily entertainers that earn more money when their audience is bigger. Rush Limbaugh and Sean Hannity couldn’t be happier. They are the leaders of a group that want to keep America in a category by itself. That category is looking backwards.

America is not about helping the rich at the expense of everyone else. America is about equality and opportunity for all!

Executive Pay

The United States system of free enterprise has made this nation one of the wealthiest in the world. To quote from Wikipedia, “free enterprise is another term for capitalism.” In this system we recognize the ability and right of everyone to earn as much money as possible regardless of their race, color, religion, or national origin.

A consequence of free enterprise is the accumulation of extraordinary wealth by some very smart and lucky people. They are the 1% of Americans who own 33.4% of the nation’s wealth.

If the stockholders of Google have no problem with four of their top executives each receiving 2008 bonuses of more than $1.2 million then why should the rest of us care?

I contend that the wealthy have gained control of the nation’s resources without the consent of the stockholders. After all, take a look at the people on the board of directors of the various corporations. They are not minor stockholders. They are executives in other large corporations. They ignore the will and intent of stockholders in order to help each other help themselves to extraordinary pay and bonus packages. BusinessWeek reported that the average income of top executives in major corporations is $4,000 per hour. How many of you reading this column has earned that amount of money?

The recent failure of the largest banks, investment houses, and auto manufacturers is the result of mismanagement by those overpaid executives! However, since this is a free enterprise society those managers will continue to receive their high pay. Only the stockholders can change this situation. That change may require new laws that will give more power to the shareholders

There is one limit that does seem fair. When AIG, Bank of America, General Motors and the others who have come to the government for ask help from the tax payers, those tax payers have the right to limit pay, parties, and other perks.

Solving the California Drought

California is facing a drought says the governor and the mayor of Los Angeles. OK we all understand that we have a serious problem. There has been no discussion about ways to obtain additional water.

Other nations located in arid climates have looked to desalination. There are functioning facilities throughout the middle east and Australia. The most successful of them is the Askilon facility in Israel. The cost of producing drinkable (potable) water is ½ cent per gallon. That is about the same cost as the water provided by the Los Angeles Department of Water and Power.

Happily there is a desalination facility planned in San Diego County. For some unknown reason this project has been ignored by both Los Angeles Mayor Villaragosa and Governor Arnold Schwarzenegger. Poseidon Resources Group of Connecticut is about to build a facility in Carlsbad, California. The “project will provide San Diego County with a locally-controlled, drought-proof supply of high-quality water that meets or exceeds all state and federal drinking water standards.”

What I do not understand is the behavior of government in retaining the available water. There is the issue of water use on government property including the sides of freeways. Further there is the issue of broken fire hydrants that take weeks to repair. The biggest loss of water is in the Los Angeles River (really a giant storm drain system). There is no program in place to catch water from that river to add to our supply.

Until our government takes water conservation seriously the pubic won’t.

Your Credit Card Interest Rate is Going Up!

The big banks and credit card companies are at again! Despite billions in taxpayer bailouts, they’re hiking interest rates and raising fees on our credit cards, often for no reason whatsoever. In this collapsing economy, we don’t need the big financial institutions looking to our credit cards for ways out of their financial mess.

Members of Congress just reintroduced bills to rein in these abuses, and we need them to pass now! The Federal Reserve agreed credit card reforms are needed, but then gave the companies 18 months before they have to comply. When our rates go up, we’re lucky if we get 24 hours notice, not 18 months!! So until the middle of 2010, card companies can increase our rates and fees and continue to squeeze us to make up for their losses on Wall Street.

Please join me in sending an email to your elected officials urging them to pass credit card reforms and implement them now not in 2010. It is time to prohibit credit card companies from arbitrarily hiking interest rates on our card balances, and stop ‘bait and switch’ clauses that let them change interest rates and fees for any (or no) reason whatsoever.

The more people who send a quick message to their Senators and Representative, the better chance we have at putting Main Street, not just Wall Street, first in the economic recovery.

It Probably is to Good to be True

How much time did you spend learning about your new digital camera? You know, that 150 page manual that was enclosed in the box. Then there was your plasma TV that came with a 30 page 8×10 manual. I know you read the part on set up and then filed it away in a place you will never remember. Finally there is the 140 page Franklin Templeton Investments prospectus they send out annually to all holders of their funds. You probably didn’t even open that booklet that is far more important than the digital camera and TV operating guides.

The people who gave their money to Bernard Madoff or Allen Stanford for investment wanted to believe that it was safe and would grow faster than most other investments. Apparently they did not do the “due diligence” that everyone should. They simply had faith. They did not want to read the manual.

We talk to someone for 30 minutes and decide, based on that short discussion, to rely on an “investment counselor”, “financial advisor”, or “financial planner” to invest our hard earned savings in a way that will provide growth and protection. I especially like the TV ad where you see the outside of an office where someone inside has stopped in, on the way to work, to get vocal reassurances that he should focus on his long term goals and not be worried that his portfolio is tanking.

I look in the Franklin Templeton Investments prospectus (printed copy, the on-line version is 11 months old) and find the following statement under the title Temporary Investments:

“When a manager believes market or economic conditions are unfavorable to investors, the manager may invest up to 100% of the funds assets in a temporary defensive manner by holding all or a substantial portion of its assets in cash, cash equivalents, or other high quality short term investments. …”

Did you understand that? Although I have limited knowledge on investing I do know enough to look at the performance of this investment during the recent market collapse. I see a 52 week high of 7.14, a low of 5.92, and a current value of 6.51. OK, I am not happy but given the market situation the manager of this investment isn’t doing too badly. If he had made a mess of things I would dump this investment FAST.

What’s the idea I am conveying? Do your own investing. Do not rely on others. Don’t rely on words like “don’t panic” and “focus on your goals.” This is a bear market. You are trying to ensure your investments are safe. Remember, “If it seems too good to be true, it probably is.”